Up to 2,700 jobs are at risk at British Steel’s Scunthorpe plant as its Chinese owner, Jingye Group, announces plans to shut down the site’s two remaining blast furnaces and scale back rolling mill operations. The decision follows the UK government’s rejection of a proposed £500 million financial support package.
British Steel, the UK’s second-largest steelmaker, cited severe financial pressures, rising environmental costs, and the lingering impact of tariffs as key factors behind the move. In a statement, the company said, “Challenging market conditions and significant ongoing financial losses have made it unsustainable to continue operating the blast furnaces and wider steelmaking operations.”
The company has initiated a consultation process with its 3,200-strong workforce and trade unions to assess the scale of potential redundancies. The closures could lead to job losses ranging from 2,000 to 2,700, depending on the outcome of discussions.
British Steel’s Chief Executive Zengwei An acknowledged the gravity of the announcement, calling it “an extremely difficult day for our staff, their families, and everyone associated with British Steel.” However, he maintained that the decision was necessary to address the business’s long-term viability.
Struggles in a Changing Industry
Steelmaking at Scunthorpe dates back to the 1890s, and the site has played a crucial role in UK infrastructure projects, particularly in providing rail track and structural steel. However, the industry has faced growing challenges in recent years, including increased competition, rising production costs, and regulatory pressures to reduce carbon emissions.
Jingye Group acquired British Steel in 2020 after the collapse of previous owner Greybull Capital. Since then, the company has invested £1.2 billion into the business but claims it is currently losing £700,000 per day—or approximately £250 million annually—due to production instability and financial losses.
Despite extensive negotiations with the UK government, no agreement was reached to secure funding for a transition to electric arc furnace technology. Jingye had sought over £1 billion in state support to facilitate the shift, similar to plans at Tata Steel’s Port Talbot plant. However, without a deal, the company has opted to close its blast furnaces instead.
Trade and Tariff Concerns
The company also cited trade restrictions and tariffs as additional hurdles. British Steel’s Chief Commercial Officer Allan Bell recently told MPs that the firm had lost export business due to canceled US contracts, raising concerns over the potential influx of cheap foreign steel into the UK market.
“The indirect impact of potential diversion of steel originally bound for the US market into the open market is our biggest concern,” Bell warned.
Calls for Government Intervention
Trade unions and industry groups are urging the government to intervene, arguing that Scunthorpe is a strategically vital asset. They stress the importance of maintaining a domestic steel industry amid global market fluctuations and the challenges posed by foreign ownership.
This announcement comes amid broader restructuring in the UK steel sector, with Tata Steel also cutting 2,500 jobs in Port Talbot as it transitions to electric arc furnaces. Without government intervention or a last-minute deal, the closure of Scunthorpe’s blast furnaces could mark the end of traditional steelmaking at one of Britain’s most historic industrial sites.
