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UK government officials are scrambling to secure access to critical coal and iron ore supplies to keep Britain’s last two remaining blast furnaces firing after emergency legislation was passed to keep British Steel afloat.
A shipment of coal, needed to fire up the furnaces, is currently docked in the port of Immingham in Lincolnshire, having been ordered but not paid for by British Steel’s Chinese owner, Jingye Group, according to two people briefed on the situation.
Officials were on Sunday working closely with British Steel’s local management to secure new cargoes of coke and iron ore to continue production, people close to the company confirmed.
The government is racing to prevent the furnaces cooling to the point where they can no longer run. Turning them on again is not impossible, but is a costly and lengthy process.
Closing British Steel’s two furnaces would leave the UK as the only G20 country without the ability to make steel from scratch.
Prime Minister Sir Keir Starmer took the extraordinary step of recalling parliament on Saturday during Easter recess to pass emergency legislation allowing the UK to wrest control of operations at British Steel from Jingye.
The new law gives the government powers to control management and workers at the plant to ensure production continues. While Jingye remains the main shareholder for now, the legislation is a key step on the road to nationalisation of British Steel.
Business secretary Jonathan Reynolds told MPs that while his preferred option would be to find a private sector partner to help finance the future transformation of the steelmaker, the more probable option was full nationalisation.
He said that shareholders would be paid a fair market rate in the event of nationalisation but added: “In this case the market value is effectively zero.”
One official said there were other shipments of raw materials in transit to the UK and the government was working to ensure they arrived at the Scunthorpe plant imminently.
The steelmaker’s local management was considering working with other industry players to secure raw materials. More than a dozen businesses had offered raw material support to the company over the past 24 hours, according to people familiar with the matter.
The company is also reassessing whether it was possible to reverse the decision made by Jingye executives to idle one of the furnaces on a temporary basis, one of the people said.
“No options are off the table right now and the sole focus is retaining blast furnace operations,” they said.
The government has intervened to preserve primary steelmaking in the UK and to protect 3,500 jobs in the sector.
Reynolds was unable to confirm on Sunday that the government would definitely be able to procure enough raw materials to keep the furnaces burning, telling the BBC that the situation remains “difficult and challenging”.
Reynolds added that the “conscious decision” by Jingye “to sell existing supplies of raw materials, is the significant change that required the government to step in.
Acknowledging the sensitivity of the steel industry to strategic national interests, Reynolds said: “I would not personally bring a Chinese company into our steel sector.”
Asked whether there was a “high trust bar” for Chinese companies controlling UK businesses, he said: “Yes, we have got to recognise that.”
Reynolds told Sky News that whether the government could trust Chinese companies after Jingye’s handling of British Steel would depend on which sectors they operated in.
He said: “I think we have got to be clear about what is the sort of sector where, actually, we can promote and co-operate, and ones frankly where we can’t.”
The intervention has led to fresh scrutiny of the former Conservative government’s decision to sell the UK’s last strategic steel group to a Chinese company in 2020.
Reform UK leader Nigel Farage said that Jingye was clearly “a bad actor” and criticised the Tories, telling the BBC on Sunday: “They effectively gave a strategic industry to a foreign opponent.”
Reform is seen as Labour’s main rival in the local elections on May 1, and Farage has sought to position his party as the principle political advocate for key industrial sectors across Britain.
Reynolds said that British Steel recorded £233mn in losses in the last financial year but that the cost of the steelmaker collapsing completely would have exceeded £1bn.
The Conservative MP for Chingford and Woodford Green, Sir Iain Duncan Smith, said on Saturday that the previous Conservative government “should never have awarded [Jingye] the contract”.
“I warned them about that,” he told MPs. “It is time for us to make sure that we deal with China at face value and do not accept the pretence that this company is private or in any way detached from its government. That is a critical point.”
Jingye did not immediately respond to a request for comment.
