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Released January 09, 2023 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. Chancellor has come under pressure from fellow government ministers to step in and prevent the closure of British Steel's (Scunthorpe, England) two blast furnaces in Scunthorpe in northern England.
In a joint letter to Chancellor Jeremy Hunt, Grant Shapps, the Business Secretary, and Michael Gove, the Leveling-up Secretary, have called for an injection of £300 million (US$360 million) to save one of only two steelmakers left in the country and save up to 4,000 direct jobs. British Steel has informed the government, according to the letter, that it may have to shut one furnace in the coming month, with the other to follow later in the year. It is believed that Chancellor Hunt has asked the Treasury to investigate the situation.
"Every other G20 nation has maintained domestic steel production and, while we do not think that this should come at any cost, we do believe it is in Her Majesty's Government's (HMG's) interest to offer well-designed and targeted funding which unlocks private investment, achieves a good outcome for taxpayers, and enables transformed, decarbonised and viable domestic steel production to continue in the UK in the long-term," the letter stated. "We do not want to become reliant on steel sources elsewhere in the same way that energy security has become self-evidently important. Moreover, our steel requirement will increase by 20% due to large domestic infrastructure projects already committed to in the U.K."
In October, Industrial Info reported that British Steel had requested £500 million (US$570 million) in financial aid from the U.K. government to help save the company. The company was originally rescued by China's Jingye Steel 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 October 11, 2022, article - British Steel Seeks $570 Million Rescue Package.
The letter added: "Closing one blast furnace would be a stepping-stone to closure of the second blast furnace, resulting in a highly unstable business model dependent on Chinese steel imports. The local economic impact of closing both blast furnaces is estimated to be in the region of £360 million to £640 million (US$430-765 million), with a further £500 million (US$598 million) to £1 billion (US$1.2 billion) liability for HMG through compulsory liquidation, insolvency and land liabilities. Given the magnitude of the liabilities due to fall on HMG in the event of blast furnace closure, and following the Prime Minister' steer, we would like officials to test whether net government support in the region of £300 million (US$360 million) for British Steel could prevent closure, protect jobs and create a cleaner viable long-term future for steel production in the United Kingdom."
It is unclear how the current situation will affect the nine active British Steel projects being tracked by Industrial Info across its U.K. sites, including the planned addition of an electric arc furnace at the Teesside beam mill. Tata Steel (Mumbai, India), the U.K.'s largest steelmaker, has also requested financial aid from the government. In 2020, the company unsuccessfully petitioned for roughly £500 million (US$598 million) in government support to weather the coronavirus pandemic. For additional information, see May 25, 2020, article - U.K. Steelmakers Need More Government Cash to Survive.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
In a joint letter to Chancellor Jeremy Hunt, Grant Shapps, the Business Secretary, and Michael Gove, the Leveling-up Secretary, have called for an injection of £300 million (US$360 million) to save one of only two steelmakers left in the country and save up to 4,000 direct jobs. British Steel has informed the government, according to the letter, that it may have to shut one furnace in the coming month, with the other to follow later in the year. It is believed that Chancellor Hunt has asked the Treasury to investigate the situation.
"Every other G20 nation has maintained domestic steel production and, while we do not think that this should come at any cost, we do believe it is in Her Majesty's Government's (HMG's) interest to offer well-designed and targeted funding which unlocks private investment, achieves a good outcome for taxpayers, and enables transformed, decarbonised and viable domestic steel production to continue in the UK in the long-term," the letter stated. "We do not want to become reliant on steel sources elsewhere in the same way that energy security has become self-evidently important. Moreover, our steel requirement will increase by 20% due to large domestic infrastructure projects already committed to in the U.K."
In October, Industrial Info reported that British Steel had requested £500 million (US$570 million) in financial aid from the U.K. government to help save the company. The company was originally rescued by China's Jingye Steel 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 October 11, 2022, article - British Steel Seeks $570 Million Rescue Package.
The letter added: "Closing one blast furnace would be a stepping-stone to closure of the second blast furnace, resulting in a highly unstable business model dependent on Chinese steel imports. The local economic impact of closing both blast furnaces is estimated to be in the region of £360 million to £640 million (US$430-765 million), with a further £500 million (US$598 million) to £1 billion (US$1.2 billion) liability for HMG through compulsory liquidation, insolvency and land liabilities. Given the magnitude of the liabilities due to fall on HMG in the event of blast furnace closure, and following the Prime Minister' steer, we would like officials to test whether net government support in the region of £300 million (US$360 million) for British Steel could prevent closure, protect jobs and create a cleaner viable long-term future for steel production in the United Kingdom."
It is unclear how the current situation will affect the nine active British Steel projects being tracked by Industrial Info across its U.K. sites, including the planned addition of an electric arc furnace at the Teesside beam mill. Tata Steel (Mumbai, India), the U.K.'s largest steelmaker, has also requested financial aid from the government. In 2020, the company unsuccessfully petitioned for roughly £500 million (US$598 million) in government support to weather the coronavirus pandemic. For additional information, see May 25, 2020, article - U.K. Steelmakers Need More Government Cash to Survive.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
