British Steel closure, owned by the China-based Jingye Group, is facing severe challenges that could endanger its UK operations. The company is consulting on the potential closure of two blast furnaces in Scunthorpe, England. Financial instability and significant market challenges are causing these closures.
Financial Struggles and Jingye’s Investment
Jingye acquired British Steel in 2020 and invested over $1.5 billion to maintain Scunthorpe operations. Despite these investments, British Steel continues to face financial losses, reportedly about 700,000 British pounds ($905,000) per day. The company has invested in projects like a steel mast service center, rail stocking facility, and new billet caster. However, these measures haven’t resolved the financial issues, leading to potential restructuring.
Rejected Government Proposal and Market Pressures
Sky News reports that Jingye rejected a British government proposal to convert Scunthorpe’s blast furnace complex into an electric arc furnace (EAF) operation. The British government offered 500 million British pounds ($647 million) for this conversion, similar to the deal accepted by Tata Steel in Port Talbot, Wales. Despite continued talks, British Steel said no agreement had been reached. As a result, the company is considering the closure of its blast furnaces and reducing rolling mill capacity.
Consultation and Employee Impact
British Steel has started consulting with employees and unions about the potential closure. Three scenarios have been presented, all involving layoffs and the idling of blast furnaces. The scenarios suggest that the furnaces could shut down as early as June 2025 or as late as beyond September 2025.
An Zengwei, CEO of British Steel, acknowledged the difficulty of the decision. “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,” he said. Despite these challenges, British Steel will continue engaging with its workforce, unions, suppliers, and customers.
The Road Ahead
As British Steel faces uncertainty, the future of its Scunthorpe operations is unclear. The company will continue working with the UK government to explore future options. However, for now, the closure of the blast furnaces seems inevitable due to financial struggles and industry pressures.
Leave a Reply
You must be logged in to post a comment.