Why the UK government is not ruling out nationalising key British steel plant
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The British government has refused to rule out nationalising the last plant in the UK that makes steel from raw materials as the global trade war increases pressure to preserve the nation's ability to supply domestic industry with the steel it needs.
The Scunthorpe steel works operated by British Steel may soon run out of the iron pellets used to produce steel in two massive blast furnaces unless the government steps in, according to local politicians and unions. That's because the plant's owner, China's Jingye Group, cancelled orders for these essential raw materials amid negotiations for increased government support.
The news comes two weeks after British Steel said it was considering closing the blast furnaces because they are no longer financially sustainable due to 'challenging market conditions,' tariffs and increased environmental costs.
The government is continuing negotiations with the company after Jingye rejected an offer of £500 million (€577.6m) to help modernise the plant. When asked on Tuesday what the government was prepared to do to keep the plant open, Prime Minister Keir Starmer said he was 'absolutely committed' to steel production in Britain.
'All options are on the table in relation to Scunthorpe,' he told a parliamentary committee.
British Steel and its forebears have been making steel at Scunthorpe for more than 130 years, building on the UK's development of improved steelmaking technology during the Industrial Revolution. The plant currently employs about 2,700 people.
Jingye bought British Steel in 2020 and says it has invested more than £1.2 billion (€1.4bn) to keep the plant running in the face of 'ongoing production instability.'
UK steel output down
Nationwide, UK steel output has fallen 80% since the late 1960s due to high production costs and the rapid growth of Chinese production, which pushed down prices around the world.
Britain, the world's fifth-largest steelmaker in 1970, produced just 5.6 million tons of steel in 2023, or 0.3% of global output. By comparison China produced 1.02 billion tons, or 54% of worldwide production.
Britain's remaining steelmakers are now under pressure to reduce carbon emissions amid the threat of global warming. Most have shifted to electric arc furnaces that make steel from recycled material.
That has left Scunthorpe as the only factory with blast furnaces capable of turning iron ore into virgin steel.
Union officials say British Steel needs to order more iron pellets within the next few days to ensure delivery before the plant runs out of raw materials in late May.
'We are in real threat of losing these furnaces,' Thomas Smith, a steelworker and representative of the trade union Community, told Sky News this week. 'If we miss them deadlines we'll come to a point where we'll have to make a decision whether we turn them both off,' he added.
During a debate in the House of Commons on Monday, lawmakers said Britain needed its own steelmaking industry to preserve its economic independence amid a burgeoning trade war fuelled by US President Donald Trump's new import tariffs.
Martin Vickers, a member of Parliament who represents the area adjacent to Scunthorpe, said he believes Jingye isn't involved in 'meaningful negotiations.'
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'I have come round to the view that nationalisation on a temporary basis is, in this instance, the only way,' he said Monday in the House of Commons. 'It will secure the jobs and secure a future for steel production in Scunthorpe.'
Industry Minister Sarah Jones said Jingye was continuing to talk with the government.
'We have been clear in our belief that the best way forward is for Scunthorpe and British Steel to continue as a commercially-run business with private investment and with the government acting in support,' she said. 'But I can tell the honourable gentleman that no options are off the table.'
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