British Steel is considering cutting up to 2,000 jobs due to substantial monthly losses of £30m
These potential cuts, representing nearly half of the 4,500-strong Scunthorpe-based British Steel workforce, are part of a transition towards more environmentally friendly steel production, which involves adopting electric arc furnaces instead of polluting blast furnaces that rely on coal to melt iron ore.
The UK government has proposed £300m in support for Jingye Group, the owner of British Steel.
The money would be used to facilitate the shift to electric arc furnaces. However, negotiations are ongoing, and the link between the cash injection, job preservation, and the Chinese group’s £1bn remains unclear.
No decision has been made yet
The decision remains in the deliberation stage, and no definitive decisions regarding the restructuring have been reached.
“We continue to work closely with industry, including British Steel, to secure a sustainable and competitive future for the UK steel industry,” commented the Department for Business and Trade spokesperson.
The government recently approved a £500m support package for Tata Steel. This funding has been provided to support the transition to electric arc technology at the Port Talbot steelworks in Wales.
British Steel must become more sustainable
The steel industry in the UK faces a significant challenge in decarbonisation due to its substantial energy needs and the use of coking coal in the iron smelting process.
As a result, the industry is grappling with increasing costs and stiff competition from inexpensive steel production in countries such as China.
“While decarbonisation is a major challenge for our business, we’re committed to transforming British Steel into a green and sustainable company providing long-term, skilled and well-paid careers for thousands of employees and many more in our supply chains,” said a spokesperson for British Steel.
“As part of our journey to net zero, it is prudent to evaluate different operational scenarios to help us achieve our ambitious goals, and we are continuing to assess our options,” they continued.
The restructuring plan follows a recent industry meeting in which British Steel revealed that it has been incurring monthly losses of up to £30m. The steel production sector has been affected by rising costs associated with carbon credits and significantly higher energy prices, primarily resulting from Russia’s invasion of Ukraine.
In a statement, British Steel said: “The matter will be resolved at the earliest opportunity. We manufacture iron and steel and continue to work closely with our customers to satisfy demand and ensure they get the high-quality products they require.”
