• Monday, April 15, 2024

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British Steel seeks government help for modern furnaces as job cuts loom

British Steel’s support could run as high as £500m, matching a similar package granted to Tata Steel

FILE PHOTO: A general view shows the British Steel works in Scunthorpe, Britain, May 21, 2019. REUTERS/Scott Heppell

By: Pramod Thomas

BRITISH STEEL is in talks with the government about funding for a shift to cleaner manufacturing, which would include shutting blast furnaces and probable job losses.

Owned by China’s Jingye Group, Britain’s second-biggest steelmaker on Monday (6) outlined a £1.25 billion ($1.55bn) plan to make steel in a less carbon intensive way by installing electric arc furnaces at its sites in Scunthorpe and Teesside, northeast England, replacing ageing blast furnaces.

Unions have warned the shift could lead to between 1,500 and 2,000 job losses, as the new facilities would require fewer workers. The company currently has a workforce of 3,200.

In a deal in September aimed at securing the future of Tata Steel, Britain’s biggest steelmaker, the government pumped £500 million into the company, which alongside British Steel has complained that high energy costs make it uncompetitive.

British Steel wants a similar level of government support.

“We remain in talks with the government,” British Steel CEO and president Xijun Cao said in a statement, adding its proposals were subject to “appropriate support” from the government.

Britain has offered British Steel a package worth more than £300m pounds, the government’s Business and Trade ministry said.

The Chinese industrial giant rescued former state-owned company British Steel from bankruptcy in 2020, after the UK steel sector had long struggled with fierce Chinese competition.

In reaction to Monday’s announcement, the GMB trade union warned it was “deeply concerned”.

“Any scheme that would close the blast furnaces in Scunthorpe would be another hammer blow for UK steel,” said GMB official Charlotte Brumpton-Childs.

“Potential job losses on this scale would be devastating for the people of Scunthorpe.”

British Steel did not specify UK state support but the government said it had negotiated a “generous” funding of more than £300m.

“Our commitment to the UK steel sector is clear, and we continue to work closely with industry, including British Steel, to secure a sustainable and competitive future for the sector and its workers,” a government spokesperson said.

“We have offered a generous support package including more than £300m of investment for British Steel to cut emissions (and) help safeguard jobs.

“It is for British Steel to manage commercial decisions for the future of the company, and we cannot comment on ongoing commercial negotiations beyond that.”

British Steel said it had started talks with trade unions about its plans and aimed to have the new furnaces operational by late 2025.

The Trades Union Congress (TUC) umbrella union group called on the company to halt its plans and get around the table with unions.

“Workers won’t stand back and watch as Britain’s steel industry is dismantled in real time,” the TUC said in a statement.

However, media reports had previously suggested that British Steel’s UK support could run as high as £500m, matching a similar package granted to Tata Steel.

Under the deal with Indian-owned company, the government said 5,000 jobs would be safeguarded, raising the prospect of 3,000 redundancies from a UK workforce of 8,000.

The funding would help finance a new electric arc furnace at Tata Steel’s Port Talbot plant in south Wales. The plant is the UK’s single biggest carbon emitter, and the government has been looking to help the firm to replace dirty blast furnaces.

The £500m is part of a £1.25bn investment from Tata Steel, whose operation in Port Talbot also supports some 12,500 jobs in the supply chain.

The Tata Group in July announced plans for a £4bn factory to manufacture electric car batteries, as part of UK aims to hit net-zero carbon emissions by the middle of the century.

(Agencies)

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