Did the UK Take a Steel Giant Hostage to Save Its Industry?
The UK Parliament recently passed a law allowing the government to take control of British Steel, a major player in the local steel industry. The move follows Chinese owner Jingye’s plans to shut down two operating blast furnaces at its Scunthorpe site.
A Bold Move Towards UK Steel Industry Preservation
The House of Commons, Parliament’s lower chamber, was recalled from its Easter break on April 12 to pass a bill that would prevent the plant’s furnaces from ceasing operations.
“The move will maximize the chances of securing domestic steel production—a crucial national capability which was at risk of collapse under the site’s current ownership. This is a very specific intervention taken in exceptional circumstances,” the government said in an April 12 statement.
“The legislation will give the government the power to direct the company’s board and workforce, ensure they get paid and order the raw materials to keep the blast furnace running,” the statement said.
The release went on to note, “In the meantime, the government has instructed the company’s UK management to continue running the plant to ensure the furnaces keep burning. This legislation means that anyone employed at the plant who takes steps to keep it running, against the orders of the Chinese ownership, can be reinstated if sacked for doing so.” The site remains under Jingye’s control at present, meaning the government has not nationalized it.
Are you under pressure to generate cost savings in this new, tariff-heavy environment? Make sure you are following these 5 best practices to dominate the steel industry.
Officials Weight in on Jingye’s Management
On the day of the release, Business Secretary Jonathan Reynolds stated that public ownership was a likely option, though the ideal solution would be to find a strategic investor. Reynolds stated that it had become clear that Jingye Steel planned not to buy sufficient volumes of raw materials needed to keep the furnaces operating and that it would cancel and refuse payments on orders. The BBC quoted him as saying, “The company would, therefore, have irrevocably and unilaterally closed down primary steelmaking at British Steel.”
In addition to the UK government taking control of the plant, British Steel announced the appointment of Allan Bell as interim CEO and Lisa Coulson as interim CCO on April 14. The organization classified that move as effective immediately, having been approved by Secretary of State Angela Rayner, Deputy Prime Minister. Reports quoted Rayner as saying the government has paid for coking coal and raw materials to keep the furnaces operating.
Concerned about a more volatile steel industry? Stay informed with MetalMiner’s Monthly Metals Index Report, offering monthly price insights across ten metal industries.
Jingye Previously Sought Billions in Aid
In 2019-2020, Beijing-headquartered Jingye Group acquired British Steel from London-based investment company Greybull Capital, which had previously acquired it from Tata Steel in 2016. The steelmaker announced that it would begin consultations on permanently shutting down the blast furnaces in late March, as it had not reached an agreement with the UK government on financial aid to convert the plant to green steelmaking.
The firm also cited difficult market conditions, the imposition of import tariffs by the United States and environmental costs as reasons for the planned shutdowns. Jingye had sought as much as £2 billion ($2.63 billion) in state assistance for the conversion to green steel—plans which the company first announced in late 2023.
That amount would potentially account for up to 80% of the £2.5 billion ($3.3 billion) the UK Government had earmarked for the nation’s steel sector. It would have been in addition to the £500 million ($660 million) in aid given to Tata Steel to convert the Port Talbot plant’s hot end from blast furnace/basic oxygen furnace technology to electric arc furnace technology.
Shuttering Blast Furnaces Poses Unique Problems
Blast furnaces operate continuously in multi-year “campaigns” and cannot be shut down easily, as large temperature variations can damage the vessels’ interior lining and disrupt the chemical process. Because of this, restarting one actually requires building a new furnace.
This represents a significant expense for a steel plant, as the thousands of bricks needed for the lining feature specialized, high-cost materials. Some of these bricks must be a specific shape and be precisely placed by workers, depending on their position in the furnace.
Further complicating matters is the fact that blast furnaces must be shut down gradually through a process that can take several weeks. This is necessary to properly tap the furnace for all viable pig iron, prevent gas release and allow the hearth to cool safely.
Cut through the noise and get clear, expert-backed insights on the global steel industry when you sign up for MetalMiner’s weekly newsletter.
British Steel’s Skinningrove Rolling Mill Still Operational
British Steel’s Scunthorpe site originally had four operating blast furnaces named after Queens Regnant: Mary, Bess, Anne and Victoria. Together, they had a total pig iron capacity of 4.7 million metric tons per year.
According to the company’s website, the plant can also produce 4.5 million metric tons of crude steel via three 330-metric-ton basic oxygen converters. Further downstream, the plant produces sections, rails, merchant bar and wire rod for the construction, automotive and engineering sectors, supplying various global markets. These figures highlight how critical the site is to the UK steel industry.
British Steel’s Skinningrove rolling mill in Teesside, northeastern England, also rolls construction steels. As markets absorb the news, steel industry insiders continue to watch for what might happen next.
Need to identify which parts of your steel buy are most affected by tariffs? Insights SV pinpoints the components with the highest tariff exposure, guiding your sourcing strategies.
