Unions condemn proposals by China’s Jingye that will make UK only G7 country unable to make steel from scratch
British Steel is planning to shut down its two blast furnaces and steelmaking operations in Scunthorpe, a move that could put up to 2,700 jobs at risk. Unions have described the decision as “devastating”.
The company, which is owned by China’s Jingye, said it would immediately begin consultations with its workforce and unions on redundancies resulting from the planned closures, as well as a reduction in steel rolling-mill capacity.
The closures will affect between 2,000 and 2,700 workers out of a workforce of about 3,500, according to British Steel, and will mark the end of steelmaking in Scunthorpe after 160 years of production.
The proposals, which were condemned by the unions Unite, GMB and Community, will leave the UK as the only G7 country without the ability to produce steel domestically from scratch. This follows Tata’s announcement last September that it was closing its two blast furnaces at Port Talbot in south Wales, resulting in the loss of 2,500 jobs.
The industry body UK Steel said the Scunthorpe closure would mean the UK losing vital steelmaking capabilities in rail, heavy sections and light sections, which are critical to transport, infrastructure and construction. This would make customers dependent on international supplies.
Its director general, Gareth Stace, said: “The end of steelmaking at British Steel would mean we have a major gap in capacity to meet the future demand of the nation and will be an irreparable break in the armour of national security.”
British Steel argued that despite investment of more than £1.2bn by Jingye since 2020, the Scunthorpe site had run up losses of £700,000 a day. The business now faces the added challenge of the 25% levy imposed on all steel imports to the US by Donald Trump last month. “The blast furnaces and steelmaking operations are no longer financially sustainable due to highly challenging market conditions, the imposition of tariffs and higher environmental costs relating to the production of high-carbon steel,” it said.
The company set out three options: closure of the blast furnaces, steelmaking operations and Scunthorpe rod mill by early June; closure of the blast furnaces and steelmaking operations in September; or closure in the future. Under the first option, no electric arc furnaces would be constructed as replacements, but in the other two scenarios the more environmentally friendly EAFs would be built.
Last month the steel unions asked for an extra £200m from the government to support Scunthorpe to keep the UK’s two remaining blast furnaces open while electric replacements were built. Jingye has been in talks with the government for many months on the EAF plans but was not able to reach an agreement.
The British Steel owner is understood to have rejected a £500m state rescue package offered in a letter sent by the business secretary, Jonathan Reynolds, on Monday, with Jingye looking for government support of £1bn to fund the EAF replacements, which are estimated to cost more than £2bn.
The energy minister Sarah Jones told parliament on Thursday: “Our preferred approach by far is that British Steel comes back to the table, talks with us about the offer on the table and we have that private sector investment in the future, but of course we are looking at all options.” These could, in theory, include nationalisation. Downing Street said: “We’ve made a generous offer to British Steel designed to deliver a sustainable future for staff, industry and the local community … we’ve got a £2.5bn plan to rebuild the sector. “We will continue to work with British Steel and with the company’s owners to secure its future and deliver on a good outcome. But we’ve made that offer and that’s obviously up to the company involved.”
The Unite national officer Linda McCulloch said: “There is now a duty on the government to do everything it can to prevent a catastrophic outcome. As the last primary steelmaking facility in the UK, Scunthorpe is a vital strategic asset.”
Roy Rickhuss, the general secretary of the union Community, said it was “no exaggeration to say that our national security is gravely threatened”, adding: “We urge Jingye and the UK government to get back around the table to resume negotiations before it is too late.
“Crucially, 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 government has committed £500m to build an EAF to make virgin steel at Port Talbot, but work is not due to start until 2027. In the meantime, the UK will have to rely on imports from abroad and scrap steel fed into EAFs, raising national security concerns about supplies for the defence sector. The energy minister told the business select committee on Wednesday: “There is a debate to be had about how we as a country define the importance of steel, whether you’re talking about virgin steelmaking or steel more broadly.
“There is a reason why Russia bombed all the blast furnaces in Ukraine pretty much straight away; because countries need steel not just for defence but to build the roads and the infrastructure.” Asked whether the UK needed virgin steel, she said: “Yes.”
