Business

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


British Steel’s Chinese owners have asked the government for a rescue package worth several hundred million pounds to continue opening their massive steel works in Lincolnshire, sparking fears of thousands job.

Jingye, which acquired Britain’s second-biggest steelmaker in default in 2020, has told ministers it needs financial support to keep its operations at Scunthorpe, according to two sources familiar with the matter. believe.

British Steel’s representative in the UK has met Business Secretary Jacob Rees-Mogg twice in the past two weeks to discuss aid needs, which was first reported by Sky News.

British Steel employs about 4,000 people, most of whom work at blast furnaces in Scunthorpe, although thousands of other jobs in the supply chain depend on the company. Jingye, which paid around £50 million in 2020, said at the time it planned to invest £1.2 billion in the steelmaker over the next decade.

The business division on Saturday declined to comment on British Steel’s aid request but said that the government “is working at the company’s rapid pace to understand how best to move forward as it seeks to secure a more sustainable future”.

The spokesperson added: “We recognize that businesses are feeling the impact of high global energy prices, particularly steel producers,” noting that the government has provided more than 780 million pounds to help the sector with electricity costs since 2013.

British Steel said it was “investing hundreds of millions of pounds” into its long-term future but “like most companies, we are facing a significant challenge due to the economic downturn, rising inflation and particularly high carbon and energy prices.”

British steelmakers have faced a perfect storm of soaring energy prices and rising inflation, which has already outpaced steel prices sharply due to soaring demand in the wake of the Covid pandemic.

In particular, unprecedentedly high energy prices have weighed on companies’ costs. Although last month the government said it would give businesses six months’ worth of support the equivalent of a package offered to consumers, industry executives have separately warned that certainty will be needed. price certainty next year.

Another emerging challenge for British Steel and Britain’s largest steel producer, Tata Steel UK, is decarbonisation. Both companies will need financial support to help reduce the carbon footprint of their blast furnace facilities.

The Financial Times reported in July that Tata Steel UK’s Indian owner had told ministers it would forced to close its operations at Port Talbot in Wales if it weren’t for government support to help reduce its carbon footprint and invest in less energy-intensive, electric arc furnaces.

Decarbonizing the UK steel industry is crucial if the country is to meet its pledge to reach net zero greenhouse gas emissions by 2050. The Climate Change Commission, a government advisory body, advised that the industry should be “near zero” by 2035.

Alun Davies, national official for the Community, the steelworkers’ union, urged the government to do “whatever it takes to secure the future of steelmaking in British Steel”.

He added: “Closing UK steelmaking capacity and replacing it with high-carbon imports from China or anywhere else would weaken our country and ridicule other commitments. government net zero”.

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