British Steel Plans to Close Steelmaking Operations
- Business Bankruptcy Companies World
Global Business Magazine- 4 minutes read
Faced with the dim prospects of survival, the UK’s second largest steelmaker British Steel on Thursday that it was planning to close its two blast furnaces and steelmaking operations in the northern England town of Scunthorpe, after its Chinese owner Jingye failed to reach an agreement with the UK government.
The company had sought support from the UK Government for a major capital investment in two new Electric Arc Furnaces (EAF), which would emit far less carbon into the atmosphere, for which the company required more than $269 million. However, following many months of negotiations, no agreement has been reached.
Jingye, who became a majority shareholder of company in 2020, has invested more than $1.56 billion to maintain operations amid ongoing production instability and significant financial losses of around $908 million a day.
The investments to date include over $389 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 were 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.
Three Options Proposed
The company has started formal consultations with its workforce and unions this morning and proposed three options.
While closure of the blast furnaces, steelmaking operations and Scunthorpe Rod Mill by early June 2025 is the first option, the second and third choices are closure of the blast furnaces and steelmaking operations in September 2025, and closure of the blast furnaces and steelmaking operations at a future point beyond September 2025 respectively.
The UK’s Business and Trade Secretary Jonathan Reynolds said that the government will continue working tirelessly to reach an agreement with Jingye as they have been clear there is a bright future for steelmaking in the UK.
British Steel CEO Zengwei An, said that this was an extremely difficult day for the 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,” An added.
