Posted on 14 Apr 2025
The UK government has taken control of British Steel after the recalling of Parliament for a rare Saturday sitting on 12 April to debate its Steel Industry Bill, in a bid to keep blast furnaces alight at Scunthorpe, Kallanish reports.
The Steel Industry (Special Measures) Bill, which was approved by both parliamentary houses and became law after being granted Royal Assent, is not yet full-blown nationalisation, as ownership of the assets has not been transferred.
Jonathan Reynolds, the Secretary of State for Business and Trade, said during Saturday’s debate that the government had been negotiating in good faith with British Steel parent company Jingye. It had made a “generous” offer “that included sensible, common-sense conditions to protect the workforce, protect taxpayers’ money, and create a commercially viable company for the future,” he observed. “Despite our offer to Jingye being substantial, it wanted much more – an excessive amount, frankly."
The offer was likely an improvement on the £500 million ($654m) believed to have been offered by government in late March, which Jingye rejected.
“However, we remained committed to negotiation, but over the past few days, it has become clear that the intention of Jingye was to refuse to purchase sufficient raw materials to keep the blast furnaces running. In fact, its intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably and unilaterally closed down primary steelmaking at British Steel,” Reynolds added.
He also highlighted the government had offered to purchase the raw materials to keep the BFs going. However, “a counter-offer was instead made by Jingye: that we transfer hundreds of millions of pounds to it, without any conditions to prevent that money, and potentially other assets, being immediately transferred to China,” Reynolds noted.
“Jingye also refused the condition of keeping the blast furnaces maintained and in good working order,” he added.
Meanwhile, Reynolds said that if there was a transfer of ownership, the government would pay fair market value for the assets, but “in this case, the market value is effectively zero”.
He also noted that Jingye’s “intention has been to keep the downstream mills … and supply them from China, rather than from Scunthorpe.”
“A transfer of ownership to the state remains on the table. It may well, at this stage, given the behaviour of the company, be the likely option,” Reynolds continued.
However, he added that government's “aspirations for British Steel remain a co-investment agreement with a private sector partner to secure a long-term transformation … The state cannot fund the long-term transformation of British Steel, nor would it want to.”
British Steel previously announced its transition to electric arc furnaces would cost £1.2 billion ($1.6 billion).
Gareth Stace, UK Steel director general, welcomed the new legislation. “A blast furnace is a dynamic piece of machinery. If the fires go out, it is nigh on impossible for it to be brought back to life – so a solution to keep them running is time-critical. It is, therefore, vital that the blast furnaces remain operational during negotiations, providing some security and breathing space in the short term, and this legislation will ensure this can happen,” Stace asserted.
Source:Kallanish
