BRITISH Steel has announced the start of a formal consultation that could lead to the closure of its two blast furnaces in Scunthorpe, placing up to 2,700 jobs at risk from its 3,500-strong workforce.
The move comes amid mounting financial pressures and a collapse in negotiations over government support, with the company rejecting a £500 million offer towards its planned £2 billion transition to greener steel production.
The firm, owned by Chinese conglomerate Jingye since 2020, is pursuing a shift to electric arc furnace (EAF) technology as part of its drive to decarbonise operations.
Speaking before the Business and Trade Select Committee, British Steel’s chief commercial officer Allan Bell said: ‘We have concluded that the only viable option for British Steel moving forward to decarbonise is to move to 100% electric arc furnace steelmaking.
‘This is a £2bn project we estimate, so it is not a project that the private sector is going to be able to implement without government support.’
However, expectations of a 50/50 public-private investment split fell through when the government offered £500 million — far short of the £1 billion British Steel had hoped for.
Chief executive Zengwei An said the decision to launch the consultation was ‘a necessary decision given the hugely challenging circumstances the business faces’.
The consultation outlines three potential paths, each involving the phased closure of Scunthorpe’s blast furnaces and associated operations.
The earliest possible closure date is June 2025, with other options extending to September 2025, or a later, unspecified date.
The company cited unsustainable financial conditions, tariffs, and rising environmental costs as driving factors behind the decision.
Unite general secretary Sharon Graham condemned the move, stating: ‘This announcement of job losses is quite simply a disgrace. British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns.’
She added: ‘In discussions with Unite, the government has clearly moved and has made an offer to invest heavily in British Steel (Jingye). This offer comes with long-term job guarantees — anything less would be a complete misuse of taxpayers’ money.’
Graham urged British Steel to ‘withdraw its job threats and work with the government and Unite on a sustainable way forward which is in the best interests of the workers, their communities and the wider economy’.
She also emphasised that ‘the UK has the opportunity of becoming a leader in green steel and British Steel should be at the forefront of that transformation’.
The GMB union labelled the news ‘devastating’, while UK Steel’s director general Gareth Stace warned the sector was ‘officially in a crisis’.
