British Steel has announced plans to shut down its steelmaking operations in Scunthorpe, placing up to 2,700 jobs in jeopardy.
The proposal, which includes the closure of blast furnaces, steelmaking facilities, and the Scunthorpe Rod Mill, follows unsuccessful negotiations with the UK government over financial support for a green transition.
British Steel stated that it has been unable to secure an agreement with the UK government for financial support to sustain operations and invest in Electric Arc Furnace (EAF) technology, which offers a more environmentally friendly alternative to traditional steelmaking methods.
The company, owned by China’s Jingye Group, has launched a consultation process and is considering three options:
Shutting down the blast furnaces, steelmaking facilities, and Scunthorpe Rod Mill by early June 2025.
Ceasing blast furnace and steelmaking operations in September 2025.
Closing the blast furnaces and steelmaking facilities at a later, unspecified date beyond September 2025.
British Steel blames financial struggles for proposed closures
In a statement, British Steel said that since 2020, the shareholder of the steel company, Jingye, has invested more than £1.2 billion to maintain operations amid ongoing production instability and significant financial losses of around £700k a day.
Investments to date include over £300 million in strategic capital projects such as a state-of-the-art mast service centre in Skinningrove, a rail stocking facility, and a new billet caster.
Despite this, 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.
British Steel CEO Zengwei An acknowledged the hardship the announcement brings to workers and their families, but defended the move as a necessary step given the “hugely challenging circumstances” the company faces.
“We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time,” An stated.
The company insists that it will continue discussions with the UK government in search of a sustainable way forward.
However, the lack of an agreement so far has placed the future of the plant in doubt.
Unite union accuses British Steel of holding the government to ransom
The Unite union has strongly condemned British Steel’s decision, with general secretary Sharon Graham accusing the company of using its workforce as leverage to secure a larger financial package.
“This announcement of job losses is quite simply a disgrace,” Graham said.
British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns.”
She added that the government had already offered a substantial investment deal that included long-term job guarantees.
“British Steel must now withdraw its job threats and work with the government and Unite on a sustainable way forward which is in the best interests of the workers, their communities and the wider economy,” she urged.
Why did Jingye reject the £500m government support package
The controversy comes amid reports that British Steel’s parent company, Jingye, has rejected a £500m support package from the UK government.
The funding was intended to assist the transition to greener electric arc furnaces (EAFs) to replace the existing blast furnaces.
Sky News reported that the proposed sum matched the amount granted to Tata Steel last year as part of a £1.25bn package to aid the transition to low-carbon steel production.
However, Jingye has reportedly been pushing for a much larger sum—potentially exceeding £1bn—to make the shift viable.
Government sources say that if British Steel accepted the £500m deal, job losses would still occur, but could be staggered over a longer period, easing the economic impact on workers and the region.
The UK government has made green steel production a key part of its industrial strategy, aiming to reduce carbon emissions while preserving domestic steelmaking capabilities.
However, the scale of financial support required remains a contentious issue.
Jingye argues that the transition is unfeasible without increased government backing, but ministers are reluctant to commit further taxpayer funds without guarantees on jobs and investment.
Scunthorpe’s future uncertain as nationalisation talks resurface
With British Steel rejecting the government’s offer, the fate of the Scunthorpe plant remains uncertain.
Industry Minister Sarah Jones told MPs that discussions were ongoing, and an urgent question on the matter is expected in the House of Commons on Thursday.
The government remains under pressure to secure a deal that protects jobs while ensuring the steel sector transitions to cleaner production methods.
Some reports suggest nationalisation is being considered as a last resort, though ministers have not publicly confirmed this.
British Steel was acquired by Jingye in 2020 after a period of public ownership, but the company has since faced financial difficulties.
It currently employs several thousand workers across sites in Scunthorpe, Teesside, and other locations.
For the thousands of workers at British Steel’s Scunthorpe plant, the uncertainty is deeply concerning.
Many fear that if an agreement is not reached soon, large-scale redundancies will devastate the local economy.
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