Thousands of jobs are in danger after British Steel revealed plans that could involve closing its two blast furnaces.
Approximately 2,700 positions are in jeopardy following the initiation of a consultation by the United Kingdom’s second-largest steel manufacturer. This comes shortly after the company’s Chinese proprietors declined a government subsidy worth £500 million.
Trade unions have responded by calling this a ‘dark day’ for the nation’s steel industry – while calling for urgent government intervention.
British Steel made an announcement today regarding the potential closure of its two blast furnaces, steelmaking activities, and a decrease in steel rolling mill capacity in Scunthorpe. They indicated that anywhere between 2,000 to 2,700 jobs could be affected.
The primary stakeholder of the company, Jingye, disclosed that they have infused over £1.2 billion since 2020 to sustain operations. Despite this investment, they pointed out persistent ‘production instability’ and substantial daily financial losses amounting to roughly £700,000.
British Steel said its blast furnaces and steelmaking operations were ‘no longer financially sustainable’ – blaming market conditions, the imposition of tariffs by US President Donald Trump and higher environmental costs connected to the production of high-carbon steel.
The company had sought support from the Government for a major capital investment in two new greener-energy Electric Arc Furnaces – but no agreement has yet been reached following months of negotiations.
The three options now being considered include closing the blast furnaces, steelmaking operations and Scunthorpe Rod Mill by early June.
A steel worker is pictured at one of the British Steel’s blast furnaces, now under threat, during ‘tapping’ at the plant in Scunthorpe
At risk of closure under today’s plans is British Steel’s major plant in Scunthorpe (pictured)
Also up for consultation are shutting the blast furnaces and steelmaking operations in September or else closing the blast furnaces and steelmaking operations at a future point beyond that month.
British Steel chief executive Zengwei An said today: ‘We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel.
‘But we believe this is a necessary decision given the hugely challenging circumstances the business faces.
‘We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time.’
The announcement comes after it was revealed how the company had rejected a written offer of £500million in Government subsidy from the Business Secretary Jonathan Reynolds.
Industry Minister Sarah Jones told a committee of MPs yesterday afternoon that the offer was proposed earlier this week but turned down by Jingye, which is reported to have requested at least £1billion from ministers.
She told the business and trade select committee: ‘We are still in talks with them at the moment.’
Steel unions Community, GMB and Unite responded to today’s announcement by calling on the Government to do everything possible to secure the future of steelmaking in Scunthorpe.
Industry Minister Sarah Jones, pictured last month during a visit to Leven in Fife, told an MPs’ committee yesterday than a government subsidy offer to British Steel had been rejected
The steelworks there is the UK’s last remaining primary steelmaking facility.
The unions last month published a report setting out an alternative pathway towards decarbonisation at British Steel that would keep open the two existing blast furnaces alongside two new electric arc furnaces to be built on the same site.
That would need an extra £200million of public funding to mitigate carbon costs in the meantime, according to the study.
Community’s general secretary Roy Rickhuss CBE said today: ‘This is a dark day for our steel industry and for our country. We urge Jingye and the UK Government to get back around the table to resume negotiations before it is too late.
‘Cruciallly, Jingye have not ruled out retaining the blast furnaces during a transition to low carbon steelmaking if they can secure the backing of the Government.
‘The closures at Scunthorpe would represent a hammer blow to communities which were built on steel, and where the industry still supports thousands of jobs directly and thousands more through extensive supply chains.
‘Given that we are now on the cusp of becoming the only G7 country without domestic primary steelmaking capacity, it is no exaggeration to say that our national security is gravely threatened.
‘This would be catastrophic at any time, let alone in the current era of geopolitical instability and volatility. Steel is an essential component of defensive infrastructure, just as it is to wider plans to invest in growth across the country.
Prime Minister Sir Keir Starmer visited British Steel’s Scunthorpe manufacturing site in June 2023 when leader of the opposition
“At this critical juncture, the Labour government must do everything it can to secure the future of steelmaking at Scunthorpe – it would be unthinkable for them to let it die on their watch.
‘If the Government chooses to let Scunthorpe die it would make a mockery of their grand ambitions to deliver growth through massive infrastructure investment, because British Steel is our only steelmaker than can produce the construction steels the country needs for our roads, railways, schools and hospitals.’
GMB’s national officer Charlotte Brumpton-Childs said: ‘This is devastating news for the people of Scunthorpe and the whole of UK steelmaking.
‘But it’s not too late – we urge Jingye and the government to do everything in their power to save this vital domestic industry.’
British Steel along with fellow manufacturing giant Tata Steel warned earlier this month that British steel customers were cancelling orders after being ‘spooked’ by US President Donald Trump’s tariffs.
Their comments came as Mr Trump told reporters aboard Air Force One there would be no exceptions to a 25 per cent tax on global steel and aluminium imports.
Tata’s UK chief executive Rajesh Nair told Westminster’s business and trade committee: ‘The customers are spooked and the customers are wanting to go to other suppliers to make sure that they don’t get caught in the tariff warfare.
‘So customers are already talking to us and wanting to cancel orders and in some cases are asking us for compensation for potential orders.’
And British Steel’s chief commercial officer Allan Bell, who said the group supplies around 50,000 tonnes of steel into the US market, told MPs: ‘We’ve got customers that are concerned about the impact of the tariffs and, at the moment, are considering order cancellation.’
Sir Keir and Mr Trump discussed the situation in a call on the evening of Monday last week, Downing Street said.
Unlike the European Union, which announced counter-measures on a range of American goods, the UK Government has resisted taking immediate retaliatory action against the tariffs.
Officials said ‘all options’ remained on the table to respond in the national interest.
Mr Reynolds last month unveiled the government’s ‘Plan for Steel’ consultation, suggesting investment in the industry of up to £2.5billion.
He insisted: ‘The UK steel industry has a long-term future under this government.
‘Britain is open for business, and this government has committed up to £2.5billion to the future of steel to protect our industrial heartlands, maintain jobs, and drive growth as part of our Plan for Change.’
