British Steel: thousands of jobs at risk after £500m subsidy rejected
Thousands of jobs have been put at risk after British Steel announced plans to significantly reduce operations at its Scunthorpe steelworks.
Up to 2,700 employees are expected to be impacted by the move which would see the closure of two blast furnaces and steelmaking operations as well as a reduction of steel rolling mill capacity at the site.
British Steel said 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”.
The announcement comes after China-based Jingye, the owner of British Steel, rejected a £500m state rescue package yesterday.
The plans, which are subject to consultation, include three options for the site.
Option one would see the blast furnaces, steelmaking operations and Scunthorpe Rod Mill closed by early June.
The second option would lead to the closure of the blast furnaces and steelmaking operations in September.
The final option includes the closure of the blast furnaces and steelmaking operations ‘at a future point” beyond September.
British Steel CEO Zengwei An said: “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 British Steel revealed an eightfold increase in its pre-tax loss in its most recent financial report.
In a release making the announcement, British Steel pointed to the more than £1.2bn that has been invested by owner Jingye to maintain operations and suffering losses of around £700,000 a day.
Business and trade secretary Jonathan Reynolds said: “I know this will be a deeply worrying time for staff and, while this is British Steel’s decision, we will continue working tirelessly to reach an agreement with the company’s owners to secure its future and protect taxpayers’ money.
“We’ve been clear there’s a bright future for steelmaking in the UK. We’ve committed up to £2.5bn to rebuild the sector and will soon publish a Plan for Steel setting out how we can achieve a sustainable future for the workforce, industry and local communities.”