Jingye, the Chinese owner of British Steel, has asked the UK government for a rescue package of up to £500m to keep open its steel works in Lincolnshire, with insiders claiming thousands of people will be made redundant if ministers reject the request.
Jingye, which bought the country’s second-biggest steelmaker out of insolvency in 2020, has told ministers it needs financial support to keep its operations at Scunthorpe viable.
The company has warned that it is losing about £1m a day and is seeking an estimated £400m-500m of support, which includes around £100m to offset the rapidly rising cost of carbon permits.
According to a report in the Financial Times, UK representatives of British Steel have met business secretary Jacob Rees-Mogg twice in the past fortnight to discuss the need for aid.
The steel company employs about 4,000 people, most of them at the energy-intensive blast furnace works at Scunthorpe. Thousands more jobs in the supply chain are also dependent on the company.
Jingye, which paid about £50m in 2020, said at the time it planned to invest £1.2bn in the steelmaker over the next decade.
''We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers.”Statement from the business department of the UK government
The UK business department said the government was ‘working at pace with the company to understand the best way forward as it seeks to secure a more sustainable future’. It added: “We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers,” noting that the government has provided more than £780m of support to help the sector with electricity costs since 2013. British Steel said the company was ‘investing hundreds of millions of pounds’ in its long-term future but that ‘like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation and exceptionally high energy and carbon prices’.
Source: Financial Times