British Steel Seeks $570 Million Rescue Package

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The owner of the U.K.'s second-largest steelmaker. British Steel Limited (BSL) (Scunthorpe, England). is requesting £500 million (US$570 million) in financial aid from the U.K. government to help rescue the company.

China's Jingye Steel has had numerous meetings with Enterprise Minister Jacob Rees-Mogg over the past fortnight in an effort to keep the company afloat and save more than 4,000 jobs according to separate reports from Sky News and the Financial Times. Jingye rescued the company at the end of 2020 with a commitment to invest £1.2 billion (US$1.36 billion) to keep its key manufacturing sites at Teesside and Scunthorpe running. For additional information, see November 18, 2020, article - British Steel Saved By China's Jingye.

Both companies refused to comment on the state of ongoing talks but British Steel has admitted that business is tough thanks to soaring gas and electricity costs and carbon credits. "We are investing hundreds of millions of pounds in our long-term future but like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation, and exceptionally high energy and carbon prices, a spokesperson told the media. "We welcome the recent announcement by the U.K. government to reduce energy costs for businesses and remain in dialogue with officials to ensure we compete on a level playing field with our global competitors."

According to a spokesperson at the government's Department for Business, Energy & Industrial Strategy (BEIS): "The government is working at pace with the company to understand the best way forward as it seeks to secure a more sustainable future. We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we have announced the Energy Bill Relief Scheme to bring down costs. This is in addition to extensive support we have provided to the steel sector as a whole to help with energy costs, worth more than £780 million (US$886 million) since 2013."

It is unclear how the current situation will affect the nine active projects being tracked by Industrial Info across the U.K. sites, including the planned addition of an electric arc furnace at the Teesside beam mill. Most of British Steel's employees work at the company's Scunthorpe blast furnace and steel plant, where the products span the construction, rail, specialist steel and wire rod sectors. Most of the products are exported to the European Union (EU) and Turkey. Parent company Jingye employs 23,500 people, and alongside its core steel and iron making businesses, it also has interests in tourism, hotels and real estate.

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