UK Steel Industry in Crisis: British Steel's Looming Closure Threatens Thousands of Jobs

British Steel is initiating consultations that may lead to the closure of its two blast furnaces in Scunthorpe, endangering as many as 2,700 jobs from a total workforce of 3,500. The company cites severe market conditions, rising tariffs, and escalating environmental costs as reasons for this drastic measure, asserting that the blast furnaces have become financially unviable. Despite a request for a £1 billion government financial lifeline to sustain operations, British Steel was only offered £500 million, which it considered inadequate.

The Prime Minister’s spokesperson described the government’s offer as “generous” and indicated continued engagement with British Steel’s Chinese owner, Jingye, to secure the company’s future. British Steel’s CEO, Zengwei An, emphasized the necessity of the consultation as a response to the business’s challenging situation, while representatives from trade unions and trade groups voiced grave concerns over the impending job losses, labeling the situation a crisis in the steel sector.

Jingye, which acquired British Steel in 2020, claims to have invested over £1.2 billion into the company and is facing significant financial losses estimated at around £700,000 per day. The firm has proposed a £2 billion plan to transition to a 100% electric arc furnace steelmaking model, highlighting that this investment would require substantial governmental support, which the company believes should be a shared 50/50 commitment.

Despite ongoing consultations, Business and Trade Minister Sarah Jones expressed regret that British Steel has not yet committed to the government’s financial offer, urging the company to reconsider its closure proposal. The government remains optimistic about the future of steelmaking in the UK, stating that it is committed to investing up to £2.5 billion to revitalize the sector and is preparing a Plan for Steel to ensure a sustainable future for the industry and its workforce.

The consultation process will explore three options regarding the operations at Scunthorpe: closure by early June 2025, closure by September 2025, or a delayed closure beyond September 2025.