UK Government Recalls Parliament to Vote on Saving British Steel’s Blast Furnaces

Emergency Session Held to Prevent Imminent Closure of Scunthorpe Plant

The UK government has recalled lawmakers for an emergency session to vote on a law to keep British Steel’s blast furnaces open, as a full nationalization of the company becomes increasingly likely. The company, owned by China’s Jingye Group, employs 3,500 people at its Scunthorpe plant, which has been in question after the government and the company failed to agree on a funding deal to switch to greener steel production.

Government’s Urgent Action

The government recalled lawmakers, who had been on Easter recess, to pass a law that will give them the power to direct the company’s board and workforce, ensure they get paid, and order the raw materials needed to keep the blast furnace running. This move is the first since the Falklands War in 1982, and the government said it needs to act with urgency to avert the imminent closure of the blast furnaces, which are operating at a loss of £700,000 (US$915,600) a day.

Options on the Table

Business Minister Jonathan Reynolds told lawmakers that a transfer of ownership to the state remains on the table, and it may well be the likely option given the company’s behavior. He still hopes to partner with the private sector to secure a long-term future for British Steel, but emphasized that a failure to act today would prevent any more desirable outcome from being considered.

The Consequences of Closure

If the blast furnaces were to close, it would leave Britain as the only G7 country unable to produce so-called virgin steel from iron ore, coke, and other inputs. British Steel was already struggling in an over-supplied global market before the rise in energy costs of recent years, and US tariffs of 25% on all steel imports, taking effect in March, have delivered another blow.

Government Support Package

The government has already earmarked £2.5 billion for the steel industry and plans to publish a strategy for the sector in spring 2025. Funding to keep the plant running would come from existing budgets, and Reynolds said that Britain would be dependent on foreign imports if the Scunthorpe furnaces were to close. UK Steel, the industry body, welcomed the proposed law.

Nationalization and Rescue

If British Steel were nationalized, it would be the biggest state rescue since a number of banks were taken into government hands in 2008. Less carbon-intensive electric arc furnaces, which make new steel from scrap, are being built at Tata Steel’s Port Talbot site, following a government support package worth £500 million. However, the new electric furnace will not start producing steel until late 2027 or early 2028.

Conclusion

The UK government’s emergency session and proposed law aim to prevent the imminent closure of British Steel’s blast furnaces and give more time to negotiate a permanent future for the company. While nationalization is on the table, the government hopes to partner with the private sector to secure a long-term future for British Steel. The consequences of closure would be significant, leaving Britain as the only G7 country unable to produce virgin steel.

FAQs

* Why is the government recalling parliament for an emergency session?
The government needs to act urgently to avert the imminent closure of British Steel’s blast furnaces and give more time to negotiate a permanent future for the company.
* What would happen if the blast furnaces were to close?
If the blast furnaces were to close, it would leave Britain as the only G7 country unable to produce virgin steel from iron ore, coke, and other inputs, and Britain would be dependent on foreign imports.
* What is the government’s plan to support the steel industry?
The government has earmarked £2.5 billion for the steel industry and plans to publish a strategy for the sector in spring 2025. Funding to keep the plant running would come from existing budgets.