Wedoany.com Report-Apr. 15, The UK Government has assumed control of a steel plant in Scunthorpe, Lincolnshire, previously at risk of shutting down. On a rare Saturday session, Members of Parliament convened to pass an emergency law enabling the government to oversee operations and maintain activity at the facility’s two blast furnaces.
The Conservatives also voted in favour of taking ownership of the plant but criticised Labour for letting the situation become so urgent.
The Scunthorpe plant is the UK’s sole producer of virgin steel, essential for significant construction endeavors, including housing and railway projects. Its closure would have left the UK as the only G7 nation without domestic virgin steel production, a capacity the government views as vital for economic growth.
Before the vote, the government engaged in discussions with Jingye Group, the plant’s owner and a prominent steel manufacturer, to ensure the facility’s continuity. Last month, Jingye reported daily losses of £700,000 (6.74 million yuan) and began exploring the possibility of closure. To prevent this, the government proposed purchasing the raw materials needed to sustain operations. However, Business Secretary Jonathan Reynolds noted a shift in the company’s stance: “The company had no intention of buying the necessary materials and intended to cancel and refuse to pay for existing orders.”
Reynolds further explained the implications: “The company would therefore have irrevocably and unilaterally closed down primary steel making at British Steel.”
British Steel’s history includes its formation in 2016, when Greybull Capital acquired Tata Steel’s product division for a nominal £1. Following financial challenges that prompted a government intervention to avert insolvency, Jingye took ownership in 2020, pledging £1.2 billion ($1.6 billion) to enhance the plant’s competitiveness and sustainability.
Under the new legislation, while Jingye retains ownership of the Scunthorpe site, the government, led by Reynolds, will manage the plant and its 2,700 employees. Reynolds indicated that nationalization remains a probable course of action.
The government is now urgently working to secure the materials required to keep the furnaces operational. Shutting down a furnace complicates and increases the cost of restarting production, making continuous operation a priority.
This intervention underscores the government’s commitment to preserving the UK’s steelmaking capacity, ensuring the Scunthorpe plant continues to support major infrastructure projects and maintain employment in the region.
