British Steel is poised to receive almost a third of a billion pounds to save it from collapse and help structure a cleaner future.
The government is understood to be ready to meet pleas from the Scunthorpe-headquartered company, with a £300 million package on the table, to be issued in instalments, should the Chinese-owned firm meet certain conditions.
Soaring energy prices have hit the steelmaker hard, while demand shrinks as the economy slows. Negotiations started late last year, with chief executive Xifeng Han making the case clear in a recent statement.
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Chancellor Jeremy Hunt is said to be prepared to support the foundation industry giant, which employs almost 4,000 people in the UK - the majority in North Lincolnshire. It is thought the measures could also save the Government an even bigger bill should the business fall, Sky News has reported.
Neither British Steel or government representatives from the Treasury or BEIS have yet commented, but it is claimed the funding will be linked directly to attempts to get British Steel to decarbonise, by helping it to replace the company’s blast furnaces in Scunthorpe with electric alternatives. Renewables could generate the necessary energy requirement, with the world’s leading offshore wind farms connecting to the grid just 15 miles away on the banks of the Humber Estuary.
Work on hydrogen-powered production in the North East is already in early stages, with British Steel unveiling its Net Zero roadmap in late 2021. Officials told then how government support was essential, ahead of the Russian invasion of Ukraine that has changed the state of the economy.
It is understood formal details could emerge in the coming days, with the backing dependent on protection of jobs, and a further £1 billion of private investment over the next decade. Since being bought out of liquidation by Jingye Group in 2000 - completing just as Covid hit UK shores - £330 million has been invested.
A Government source told news agency PA that the “Business Secretary considers the success of the steel sector a priority and continues to work closely with industry to achieve this”.
The source said that the Government recognises the “vital role that steel plays within the UK economy, supporting local jobs and economic growth”, adding that it is “committed to securing a sustainable and competitive future for the UK steel sector”.
Scunthorpe MP Holly Mumby-Croft has played a key role between government and the works. She raised the issue in Prime Minister’s Questions earlier this month, with a debate following last week.
Not immediately available to comment on the latest situation, Ms Mumby-Croft said last week: “Steel is a vital strategic industry. A healthy supply of steel underpins everything we do - it is irreplaceable when it comes to defending ourselves or building the infrastructure we’ll rely upon well into the future. The Government knows this, and I was delighted to hear the PM confirm to me this week at Prime Minister’s Questions the government remains committed to a thriving steel industry.
“We have seen huge support from Conservative governments for the steel industry, including extensive support to the steel sector to help with pressures like energy costs worth more than £800 million since 2013 on top of support from the Energy Bill Relief Scheme and extensions of the UK’s steel safeguards.
“I’ve always stood up for the steel sector here. The conversations between British Steel and the Government are ongoing, and I know we are all committed to finding a long-term, sustainable solution.”
Union GMB has responded to an "expected announcement the Government will invest £300 million in British Steel".
Charlotte Brumpton-Childs, GMB national officer, said: "Any investment in the UK’s beleaguered steel industry is welcome. But ultimately this is a sticking plaster – it does nothing to address the wider issues in the industry; catastrophic energy costs and a grossly uneven international trading environment."
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