The UK government has stepped in to prevent the imminent closure of British Steel’s Scunthorpe plant, now facing significant financial difficulties under its Chinese owners, Jingye. With thousands of jobs at risk and the future of the country’s last virgin steelworks in jeopardy, officials rushed legislation through parliament over the weekend, marking a pivotal moment for the struggling steel industry.
Emergency Legislation Passed
On 12 April 2024, Prime Minister Keir Starmer announced that the government would take control of British Steel after an urgent bill was passed by parliament. This legislation aims to ensure the blast furnaces at the Scunthorpe site remain operational, safeguarding the employment of around 2,700 workers.
Financial Implications for Jingye
- Jingye acquired British Steel in 2020 and claims to have invested more than £1.2 billion (US$1.5 billion) in operations.
- The company has reported losses of £700,000 (US$916,000) per day, declaring the plant financially unviable.
- Starmer insists that retaining this manufacturing capacity is vital for Britain’s economic security.
Government’s Future Plans
Business Secretary Jonathan Reynolds acknowledged that state ownership might be necessary, stating, “All options are on the table to secure the future of the industry.” While Saturday’s legislation stops short of full nationalisation, it does provide the government with authority over operations at the site.
Concerns Over National Security
Reynolds described the situation as a wake-up call regarding the risks of foreign ownership of critical infrastructure. He noted that the previous government was too naive in allowing such sensitive industries to fall into foreign hands, specifically citing the role of Chinese ownership in the current crisis.
Protests and Worker Sentiment
The tension at the Scunthorpe site escalated over the weekend as workers protests led to Chinese executives being denied access to essential parts of the facility. According to reports, police attended the scene to manage the unrest but no arrests were made.
As the Scunthorpe plant prepares for a potentially different operating model, Reynolds is confident that the government can negotiate better terms for keeping operations active. However, future investments and sustained operations will require careful handling and significant negotiations with Jingye.
In a rare parliamentary session, Starmer reassured steel workers, declaring that the government’s unprecedented action would anchor a shift towards revitalising a declining industry. As the nation braces for the future of steel production, the coming weeks are crucial in determining the balance between public and private interests.