British Steel given the green light to install new electric arc furnaces at its Scunthorpe facility. This step is a crucial component of their transition to greener production methods. This positive provision has triggered alarm bells for unions as it stands to threaten thousands of jobs. The Scunthorpe complex directly employs some 2,700 workers. Most recently, it was bailed out with essential raw materials, such as coking coal and iron ore to maintain the operation of its blast furnaces, financed by the government from current budgets.
In the meantime, British Steel is losing £1 million a day. Its Chinese owner, Jingye, claims that the company is losing £700,000 per day. The governor intervened and signed emergency legislation. This decision effectively nationalizes the company amid fears Jingye would have closed the company’s operations. Yet instead of continuing down this path, the government is not even seeking full public ownership of British Steel. Instead, it’s luring private money independent of the city to continue operating the plant.
Since March, Jingye has launched consultations on nearly 450 job losses at the Scunthorpe facility. The unions are right to be concerned that the new electric arc furnaces will deepen the loss of jobs. British Steel had previously rejected this £500 million government offer to help ensure continued operation of the plant. They asked for more than double that amount, all the while not providing the necessary guarantees of long-term job security.
Shutting down the Scunthorpe plant would be a disaster. It would be the effective end of the UK’s capacity to produce virgin steel, which would have huge implications for the industry. Virgin steel-making means getting iron from ground up sources. This purification and treatment phase of the steel making process lays the foundation for high-quality steel that will stand beneath important construction projects.
Sarah Jones, a representative from the Department for Business, reassured stakeholders regarding funding:
“We have a £2.5bn fund for steel within the department for business so we won’t be drawing down on any extra resources and people can be reassured of that.” – Sarah Jones
Jones further stressed the government’s determination to make sure that British Steel stays open. She highlighted a collapse in talks with new owners Jingye. The company’s decision not to buy critical raw materials in the course of consultations, she deemed an act of bad faith.
Jonathan Reynolds, an important player in these discussions, brought up the inherent difficulties when working with foreign firms. He particularly zeroed in on the stickiness in sensitive sectors such as steel. He stated:
“I think you would look at a Chinese firm in a different way.” – Jonathan Reynolds
Reynolds explained that global steel production is dealing with the over-production and dumping of steel products, especially from China. He stressed the necessity for action in this specific case, stating:
“I was keen to stress the action we’ve taken here was to step in, because it was one specific company that I thought wasn’t acting in the UK’s national interest.” – Jonathan Reynolds
As American steelmakers transition towards electric arc furnaces, it’s a step towards modernizing operations and reducing their environmental footprint. That also begs the question—what does that mean for employment stability and the Building America’s Future workforce of tomorrow? Reynolds acknowledged that new technologies and facilities might shift employment needs at the Scunthorpe site:
“That might be new technology, new facilities, that might have a different employment footprint. The staff here absolutely know that; they know they need a long-term future.” – Jonathan Reynolds
British Steel have lots of hard work ahead of them. It urgently needs to deepen its funding and solidify its operational future. The negotiations between the government and Jingye will be crucial in determining whether the Scunthorpe plant can continue producing steel essential for various sectors in the UK.