
British Steel will not revisit Teesside arc furnace plans in Redcar
British Steel said it would not revisit plans to build an electric arc furnace (EAF) at one of its plants, even though it was consulting on the closure of an alternative site for the machinery.It was reported in January the firm had shelved plans to build an EAF in Lackenby, near Redcar, in favour of building two at its Scunthorpe factory, which is at risk of closure.Conservative Tees Valley Mayor Ben Houchen said the Scunthorpe proposals had been unworkable and "economically flawed", as he criticised the government's handling of the situation.The Department of Business and Trade declined to comment on Mr Houchen's claims but said it had committed £2.5bn to rebuilding the sector.
On Thursday, British Steel said its two blast furnaces in Scunthorpe were "no longer financially sustainable" and launched a consultation into closing the factory, a move which has put 2,700 jobs at risk.Houchen said he had warned the government the deal to move the arc furnace plans entirely to Scunthorpe would end in collapse."We had a serious deal on the table to bring an electric arc furnace to Teesside," he said. "It would have secured jobs, attracted investment, and delivered a long-term future for green steelmaking in the UK. For whatever reason, that deal was quietly dropped."A spokesperson for British Steel said while the Scunthorpe facilities were being consulted on it would continue to operate its rolling mill in Skinningrove, Redcar.
'Steel is our identity'
On Wednesday, Industry Minister Sarah Jones told the Business and Trade Select Committee British Steel's owner, Jingye, had rejected a deal from the government, which the BBC understands involved a cash injection of £500m.In a joint statement, local Labour MPs Anna Turley and Luke Myer, along with Redcar and Cleveland Borough Council leader Alec Brown, said they were "deeply concerned" about Jingye's rejection of the offer."This development raises the possibility of impacts on workers at Lackenby and Skinningrove, as well as their families and our communities," they said."Steel is not just an industry, it is part of our identity. For generations, steelworkers have been the backbone of our communities, and we are determined they will remain so in the years ahead."
Unions Community, GMB and Unite have called on the government to do everything it can to secure the Scunthorpe site, including using £2.5bn it had set aside for the steel industry."Jingye's announcement is devastating and sets up a disastrous cliff edge for British Steel and its dedicated workforce," said Community assistant general secretary Alasdair McDiarmid."We urge the company and the government to conclude an agreement to prevent a catastrophic outcome."
Business and Trade Secretary Jonathan Reynolds said he understood it was a "deeply worrying time for staff" and he would work tirelessly to reach an agreement with the company.British Steel chief executive Zengwei An has said consultations on the closure were "a necessary decision given the hugely challenging circumstances the business faces".
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Sky News
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But there is a sting in the tail: that stay of execution will only last until 9 July - on the basis of President Trump's most recent pronouncements. 1:00 For anyone following these events from the corner of their eyes, this might all sound a little odd. After all, didn't Sir Keir Starmer announce only a few weeks ago that British steel and aluminium makers would be able to enjoy not 25% but 0% tariffs with America, thanks to his bold new trade agreement with the US? Well, yes. But the prime minister wasn't being entirely clear about what that meant in practice. Because the reality is that every trade agreement works more or less as follows: politicians negotiate a "heads of terms" agreement - a vague set of principles and red lines. There then follows a period of horse-trading and negotiation to nail down the actual details and turn it into a black and white piece of law. In this case, when the PM and president made their big announcement 28 days ago, they had only agreed on the "heads of terms". The small print was yet to be completed. Right now, we are still in the horse-trading phase. Negotiators from the UK and the US are meeting routinely to try and nail down the small print. And that process is taking longer than many had expected. To see why, it's worth drilling a little bit into the details. The trade deal committed to allowing some cars to pass into the US at a 10% rate and to protecting some pharmaceutical trade, as well as allowing some steel and aluminium into the US at a zero tariff rate. When it comes to cars, there are some nuances about which kind of cars the deal covers. Something similar goes for pharmaceuticals. Things get even knottier when you drill into the detail on steel. 2:13 You see, one of the things the White House is nervous about is the prospect that Britain might become a kind of assembly point for steel from other countries around the world - that you could just ship some steel to Britain, get it pressed or rolled or worked over and then sent across to the US with those 0% tariffs. So the US negotiators are insisting that only steel that is "melted and poured" in the UK (in other words, smelted in a furnace) is covered by the trade deal. That's fine for some producers but not for others. One of Britain's biggest steel exporters is Tata Steel, which makes a lot of steel that gets turned into tin cans you find on American supermarket shelves (not to mention piping used by the oil trade). Up until recently, that steel was indeed "melted and poured" from the blast furnaces at Port Talbot. But Tata shut down those blast furnaces last year, intending to replace them with cleaner electric arc furnaces. And in the intervening period, it's importing raw steel instead from the Netherlands and India and then running it through its mills. Or consider the situation at British Steel. There in Scunthorpe they are melting and pouring the steel from iron made in their blast furnaces - but now ponder this. While the company has been semi-nationalised by the government, it is still technically a Chinese business, owned by Jingye. In other words, its steel might technically count as benefiting China - which is something the White House is even more sensitive about. 👉 Tap here to follow Politics at Jack and Anne's wherever you get your podcasts 👈 You see how this is all suddenly becoming a bit more complicated than it might at first have looked? This helps to explain why the negotiations are taking longer than expected. But this brings us to the big problem. The White House has indicated that Britain will only be spared that 50% tariff rate provided the trade deal is finalised by 9 July. That gives the negotiators another month and a bit. That might sound like a lot, but now consider that that would be one of the fastest announcement-to-completion rates ever achieved in any trade negotiations in modern history. There's no guarantee Britain will actually get this deal done in time for that deadline - though insiders tell me they think they could be able to finalise it in a piecemeal fashion: the cars one week, steel another, pharmaceuticals another. Either way, the heat is on. Just when you thought Britain was in the safe zone, it stands on the edge of jeopardy all over again.