The UK government is considering temporarily nationalising British Steel as the company stares down the barrel of an impending black hole in its finances. British Steel, meanwhile, has been in the hands of the Chinese company Jingye since 2020. It recently declared that its two blast furnaces in Scunthorpe are “no longer financially sustainable.” In short, ministers should be deeply alarmed. They argue that it’s just days until they lose the ability to secure the necessary raw materials to maintain the momentum and keep the furnaces sizzling.
In recent months British Steel has lost in the region of £700,000 per day. Yet Jingye has already poured more than £1.2 billion into the British Steel since it acquired it, desperate to keep the company alive. So the company is under intense pressure to get a new order of raw materials. More specifically, it depends on iron ore pellets to ensure productivity in its blast furnaces. Without this order, which needs to be placed in the very near future, the steel production at Scunthorpe is highly uncertain.
The government has already offered £500 million in support to facilitate a transition from blast furnaces to electric arc furnaces. This change is important for British Steel’s long-term success. At the same time, we can’t forget that we need to act now to address our national crisis.
Government representatives have repeatedly touted their fierce desire to protect steelmaking jobs and keep steelmaking in the UK on life support. Sarah Jones emphasized this priority, stating, “Our priority is respecting workers, safeguarding jobs, and retaining steelmaking.” The UK government is mulling over nationalizing British Steel in order to keep it afloat, as the company weathers fears of job losses. Without that commitment from state leaders, an estimated 2,700 jobs are on the line.
Whether British Steel can survive has become a key issue in the Lincolnshire mayoral election. This election is happening on May 1st. Candidates from the Liberal Democrats and the Green Party are persistently challenging the Conservatives in the election. Another tactic they employ is stressing the importance of steel production to the commission’s local economy.
Martin Vickers, a local MP, voiced concerns about Jingye’s actions, noting, “It is very obvious that Jingye has cancelled the raw material orders that are essential to keep the furnaces going. Those orders were due in mid-May.” He further warned of the impending crisis if another order could not be placed soon: “When I was at the steelworks on Friday, I was told that unless another order for iron ore pellets could be placed this week, it would be too late.”
Prime Minister has reiterated the government’s commitment to steel production in the UK, stating, “I’m absolutely committed to steel production in this country.” Trade Secretary Kemi Badenoch warned against nationalisation being the first port of call.
Debates on the future of British Steel continue. At the same time, the government says it is committed to finding a long-term viable future for the Scunthorpe steelworks. The events highlight a larger problem facing UK manufacturing and the effect it can have on communities.