UK takes emergency control of British Steel, avoids shutdown of operations

The UK Parliament in a rushed sitting on April 12 approved a bill that effectively gives the UK government control of British Steel, allowing the company's steelmaking operations to continue.

The UK Prime Minister Keir Starmer recalled the Parliament(opens in a new tab) to vote on emergency legislation to prevent the shutdown of British Steel's blast furnaces at the Scunthorpe site, a specific intervention taken in exceptional circumstances, the government said.

After the bill passed both the Houses of Parliament, it received a royal ascent, turning the bill into legislation.

"The legislation will give the government the power to direct the company's board and workforce, ensure they get paid, and order the raw materials to keep the blast furnace running," the UK government said.

The move was specifically aimed at preventing British Steel's Chinese owner Jingye Group's plans to shut(opens in a new tab) the two blast furnaces and steelmaking operations at Scunthorpe.

"If the blast furnaces were to be immediately switched off, this would put at severe risk the future of steelmaking at this unique site," according to the UK government.

Jingye Group had proposed an immediate shutdown of the operations, a proposal considered as a "heartbreaking and pivotal moment" for the UK steel sector, according to UK Steel Director General Gareth Stace.

Jingye's investments in British Steel have risen to more than £1.2 billion since 2020, an attempt to maintain operations amid ongoing production instability and significant financial losses of around £700,000/day ($950,000/day).

"We made a generous offer of support to the company and I am deeply disappointed that we have been forced to take these measures, but Jingye have not been forthright throughout this process, and left us no choice but to act," UK Business Secretary Jonathan Reynolds said in a statement.

The UK taking over the British Steel operations "will maximize the chances of securing domestic steel production -- a crucial national capability which was at risk of collapse under the site's current ownership," the UK government said.

The UK government said it remained committed to the UK steel industry(opens in a new tab), with security and renewal at the center of its plans for the sector.

To keep the Scunthorpe operations running, the UK government said all funding will come out of existing budgets and no additional borrowing is expected to support any further intervention.

UK's second-largest steelmaker British Steel has been producing steel for 160 years. The company makes wire rod, sections, special profiles, rail, and semi-finished products, which are used in the construction, yellow goods, automotive, engineering, earth moving, and mining sectors.

Platts, part of S&P Global Commodity Insights, assessed UK HRC at GBP530/mt DDP West Midlands on April 10, stable week over week.