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One of Britain’s steelworks is to come into public ownership after the government said it would take over Yorkshire-based Speciality Steel UK (SSUK).
Jonathan Reynolds, the business secretary, said officials would “work towards” acquiring the company to protect the jobs of its 1,300 workers in Rotherham, Stocksbridge and Brinsworth in South Yorkshire and Wednesbury in the West Midlands.
The insolvent steelmaker, formerly part of the tycoon Sanjeev Gupta’s industrial empire, fell into administration last year and its day-to-day operations have since been run by the government’s official receiver.
The Norwegian steel startup Blastr Green Steel had been in talks to buy SSUK, but hopes had faded over the summer for a private sector takeover after a deadline to finalise a deal passed in June.
The steelworks and its staff have been described by Reynolds as important strategic assets for the UK. SSUK is the largest producer of “green steel”, made using less-polluting electric arc furnaces.
Reynolds said: “We do not intervene in private companies lightly. But nor can we simply stand aside and allow the future of this company and over 1,300 jobs to be decided by default.
“Working towards public acquisition will keep options open while we work with local leaders, workers, industry and investors to determine the best long-term future for these sites, which could play a vital role in the future of the growth-driving sectors in our industrial strategy, including defence and advanced manufacturing.
SSUK went bust last year after longstanding financial issues under previous ownership, particularly after the collapse of its primary lender Greensill Capital in 2021. A high court judge at the time found the company was “hopelessly insolvent”, with only £650,000 in the bank after running down its reserves.
Since then, the government has been funding the wages of its workers, costing £3.5m a month. The plants have not been producing steel for the last year, though some staff remain on its sites to maintain equipment.
Ministers’ preference was for a private sector buyer, but after what were described as “extensive discussions” with Blastr, officials decided the company’s offer could not provide the desired long-term stability for SSUK.
A Blastr spokesperson said: “We are disappointed by the government’s decision today concerning Speciality Steel UK, and we were not informed in advance. Over the course of several months, we have advanced our plans for a private sector solution to acquire SSUK – and were today on site in South Yorkshire with investors and strategic partners. We have a fully-funded proposal – at no cost to the British taxpayer – that is ready to complete within 12 weeks.”
Mark Bula, the Blastr chief executive, quit the company unexpectedly at the end of last month, with its finance boss, David Morant, taking his place.
The shadow business minister Bradley Thomas said it was “surprising” that the government had moved away from a private sector buyer after picking a preferred bidder. Speaking in parliament, he asked Reynolds: “Other than a new prime minister who’s committed ideologically to nationalisation, what has changed
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Reynolds added there was “nothing ideological” about the move and that he would “not go into the detail” about why Blastr’s bid fell through. He accused the Conservatives of a “legacy of neglect” during their 14 years in government.
The government has committed to spending up to £2.5bn on the steel industry through the national wealth fund. About £500m of that was put towards converting Tata Steel’s blast furnaces into electric arc furnaces.
The South Yorkshire mayor, Oliver Coppard, said he was pleased the government had taken action, adding: “It’s the next important step forward, giving us more time to find the best possible outcome for our steelmaking communities – places where people have faced economic challenges and real barriers to opportunity for far too long.”
Roy Rickhuss, the general secretary of the Community union, welcomed the intervention but said the lack of a credible buyer was “a disappointing outcome”.
He added: “SSUK is a unique and integral component of the UK’s steelmaking capabilities, without which we would be entirely reliant on foreign suppliers for high-value speciality inputs to our critical energy infrastructure and our advanced manufacturing base, including the defence industries. We cannot allow British industrial sovereignty in these areas to be lost.”
