British Steel, already in a precarious situation has reportedly declared a top level emergency with its Scunthorpe site. This facility manufactures the majority of Network Rail’s tracks. The plant, which is now losing £700,000 every day, a state of affairs that has been deemed as “no longer financially sustainable” by the plant’s executives. Washington state’s closure consultations started back in March. In turn, the UK government has passed an extraordinary law to nationalize the operation.
The Scunthorpe facility alone employs some 2,700 workers. It is the last site in the UK able to produce virgin steel — an essential component for high-end construction including major infrastructure projects such as new nuclear power plants. This may seem a minor detail, but the government’s insistence that the plant be built this way is significant. Without it, the UK would be left as the only G7 country that cannot make virgin steel.
This crisis is the result of ongoing financial negotiations between British Steel’s owner, Jingye Group, and the British government. And yet Jingye rejected a £500 million financial support package. Instead, they requested more than twice that amount, while providing virtually no commitments to fair operations at the plant. The Tracy Mines The government alleged that Jingye had asset stripped coking coal and iron ore as essential industries. This move makes it much harder to keep that plant’s production alive.
So holding onto the blast furnaces requires a constant supply of raw materials. If the temperature in these furnaces drops too low, they can take permanent damage. Restarting them costs more than building one from scratch and it’s a complicated, lengthy shutdown-and-restart process. Allan Ball, a British Steel representative, highlighted the severity of the situation when he said,
“We know the coal is in the UK, we know the raw materials are in the country. We need to make sure we get it into the blast furnaces.” – James Murray
The environmental impact of moving and procuring raw materials to the Scunthorpe plant is significant. Many industry players recognize this necessity. Dozens of businesses, including steel producers Tata and Rainham Steel, have offered to assist by supplying raw materials to the government.
As talks drag on, the threat of a possible shutdown hangs heavily on Scunthorpe and its workers. The local economy relies on this site to keep its head above water. Its fate is very important—not only to its employees, but the whole civic industrial community of the region. Allan Ball stepped back from going too far into the weeds in discussions, but kept coming back to the urgency to act yesterday.
That’s a very fluid and changing environment right now. The government is doing its utmost to find workable solutions to prevent the shutdown and secure the livelihoods of thousands of employees. The issue is time sensitive—not only for the sake of the restoration but for those workers directly employed by British Steel. It affects a wider constituency of businesses that depend on steel making in the UK.