British Steel’s Chinese owner seeks multi-million pound government bailout package

The Chinese owners of British Steel have asked the government for a relief package of up to £500m to keep the company’s sprawling steelworks in Lincolnshire running. This has created new fears for thousands of jobs and the potential closure of some of Britain’s last furnaces. .

Jingye, which bought the country’s second-largest steel maker after it recovered from bankruptcy in 2020, needs financial support to keep its operations in Scunthorpe alive, according to three sources familiar with the situation. told to

The company warns it is losing around £1m a day and is seeking an estimated £400m to £500m. British Steel’s UK representative has met business secretary Jacob Rees Mogg twice in the past two weeks to discuss the need for assistance.

The steel company employs about 4,000 people, most of whom work at the energy-intensive Scunthorpe blast furnace plant. Thousands of jobs in his chain of supply also rely on the company. Jingye, who paid around £50m in 2020, said at the time that he planned to invest £1.2bn over the next decade.

UK steelmakers are facing a perfect storm of softening demand from higher energy prices, higher inflation and a broader economic downturn that has undermined steel price gains after the coronavirus pandemic. increase.

The business unit said the government “is working in tandem with the company to understand how best to secure a more sustainable future”.

Noting that the government has provided more than £780m in support to help with electricity costs since 2013, it said, “Businesses, particularly steel producers, are feeling the effects of high global energy prices. I am aware that there are,” he added.

British Steel said it was “investing hundreds of millions of pounds” for its long-term future, but “like most other companies, we are facing economic slowdowns, rapid inflation, energy and carbon We are facing significant challenges due to the unusually high prices for the products,” he said.

The government said last month it would provide six months of support to companies to keep energy prices in check, but industry officials have privately said they will need more firm information about prices next year.

An additional challenge looming over British Steel and Tata Steel UK, the UK’s largest steel producer, is decarbonisation. Both companies need financial support to reduce carbon emissions in blast furnace operations.

Zinge told ministers that about £100 million alone would be needed to mitigate the rising cost of buying carbon credits under the government’s emissions trading scheme, according to two people familiar with the matter. rice field.

The UK government has adopted a unique scheme after Brexit under which heavy polluters must purchase a permit to cover each tonne of carbon dioxide or greenhouse gas. It does, but the number gradually decreases each year.

The Financial Times reported in July that the Indian owner of Tata Steel UK told ministers, forced to shut down If Port Talbot, Wales had not secured government support to reduce carbon emissions and invested in energy-saving electric arc furnaces.

Decarbonizing the UK steel industry is key to meeting the government’s pledge to achieve net zero greenhouse gas emissions by 2050. The Community, a steelworkers’ union, said its members wanted to know their jobs were safe. Both parties turn the tables to strike out a deal that will protect steelmaking at Scunthorpe. ”

Meanwhile, the government restricted the information regional grid operator Electricity North West could share with China’s state-owned shareholders after deeming a 35% stake posed a “national security risk.”

The intervention was triggered under the National Security Investment Law after China’s CNIC transferred part of its 35% stake to another company owned by Beijing’s State Development and Investment Corporation. British Steel’s Chinese owner seeks multi-million pound government bailout package

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