Taxpayer-backed green shift risks 800 British Steel jobs
BRITISH STEEL is considering up to 800 job cuts as it plans its shift to green steel. The threat of job cuts comes as the Chinese-owned steel maker is in talks to receive £300m of taxpayer cash to help switch from making the metal in carbon-intensive blast furnaces to using electric arc furnaces.
The electric versions need fewer workers at a steel mill because processes such as operating the coke ovens are not needed. But the government cash is likely to come with strings attached around jobs, Sky News reported.
An announcement around the investment was said to be in the works and due to be announced last week, but discussions with British Steel and its larger rival Tata are continuing.
The pair dominate the UK steel industry and supply the car, aviation and food industries. Both have threatened job cuts if the Government fails to step in with assistance on funding the switch. It is estimated the bill to decarbonise the industry is about £6bn, most of it for British Steel’s plant in Scunthorpe, Lincs, and Tata’s mill at Port Talbot in Wales. British Steel did not respond to a request for comment.
The latest threat comes after the prospect of making 2,000 people redundant last year if it did not get the funding it needs.
Last year it emerged that Jingye, the Chinese company that acquired British Steel three years ago, has injected only a fraction of the £1.2bn it promised to invest. Filings showed that £156m of capital that has been invested was injected as loans, meaning nothing has been invested in equity, according to
account filings. Structuring Jingye’s investment as debt rather than equity means should the Scunthorpe plant tip once more into insolvency, the Chinese company’s loans would be repaid before staff and suppliers.
British Steel employs more than 4,000 people and is considered a nationally-significant asset. British Steel’s plight has become increasingly more perilous since Rishi Sunak became Prime Minister. Downing Street is now understood to be taking a tougher approach towards state aid for the Chinese-owned company.