Prime Minister Keir Starmer's government has swooped in to prevent the closure of British Steel's main plant in Scunthorpe, northern England, after its owner, the Chinese group Jingye, halted orders of coking coal and iron ore.
The Labour government, which stopped short of nationalising British Steel over the weekend, is trying to buy the raw materials to keep the plant running and hoping to find a new private investor for the plant.
Jingye bought British Steel in 2020 and says it has invested more than GBP 1.2 billion to maintain operations, but that it has been losing around GBP 700,000 per day.
- China tensions -
"Towns like Scunthorpe need industries," consultant radiographer Nick Barlow, 36, who has lived in the town for six years, told AFP.
"Pretty much everyone in Scunthorpe knows somebody that's affiliated to the steel works. It's how the town was formed. everything sort of revolves around it. It's the heart of the town."
Former steelworker Jim Kirk, 66, worried that any closure of the plant would leave Scunthorpe a "ghost town" accusing Beijing of trying to "run it down, stop it so that they can import their cheap steel over here".
But a Chinese foreign ministry spokesman said Monday the UK should "avoid politicising trade cooperation or linking it to security issues, so as not to impact the confidence of Chinese enterprises in going to the UK".
Some opposition British MPs accused Beijing of interference -- with Christopher Chope of the main opposition Conservative party accusing Jingye of "industrial sabotage".
Starmer's spokesman on Monday said Downing Street is "not aware of any deliberate acts of sabotage" at the Scunthorpe steelworks.
He added the government is "confident in securing the supply of materials needed" to keep running the two blast furnaces at the plant -- the last in the UK which makes steel from scratch.
He said materials would reach the plant in the "coming days", as restarting the furnaces once they go out is extremely difficult.
Other firms, including Tata and Rainham Steel, have offered to help secure supplies, government minister James Murray told Times Radio.
- Jobs threatened -
Failure to secure enough supplies to keep the furnaces running could seriously damage the plant -- and risk making Britain the only Group of Seven country without virgin steelmaking capacity needed for everything from railways to bridges.
"If we hadn't acted, the blast furnaces were gone and in the UK primary steel production would have gone," Business Secretary Jonathan Reynolds said Sunday.
He added Jingye had turned down an offer of some GBP 500 million ($658 million) to buy materials, instead requesting more than twice that amount with few guarantees the furnaces would stay open.
The government saw the possible closure of Scunthorpe as a threat to Britain's long-term economic security, given the decline of the UK's once robust steel industry -- and the threatened loss of some 2,700 jobs.
Reynolds said the UK had been "naive" to allow its steel industry to be bought by the Chinese company, and that he "wouldn't personally bring a Chinese company into our steel sector".
China possesses mostly minority interests in a number of key UK industries, from water to energy and Heathrow airport, giving rise to security concerns and occasional spats.
"The purchase of British Steel by a Chinese company shows how intricately market conditions, strategic corporate decisions, and the quest for investment in a failing sector interact," Patrick Munnelly, a strategist at broker Tickmill, told AFP.
David Henig, an analyst at the European Centre for International Political Economy, said "economic security challenges" affected all of Europe.
"There can also be issues with nationally owned companies, so this is very much about governments having to monitor their economies and respond where necessary."
Despite the fallout over British Steel, Starmer's administration has been at pains to improve relations with Beijing, with several high-ranking ministers holding bilateral talks in hopes of spurring economic growth.
UK govt races against time to keep steel furnaces running
London (AFP) April 14, 2025 -
Britain's government on Monday raced to secure raw materials to keep the country's last steelmaking blast furnaces running, as Beijing warned the UK against politicising the takeover of Chinese-owned British Steel.
Prime Minister Keir Starmer's government swooped in on Saturday to prevent the closure of British Steel's main plant in northern Scunthorpe after its Chinese owners Jingye halted orders of raw materials such as coking coal and iron ore.
The Labour-run government must now secure the materials to keep the two blast furnaces at the plant -- the last in the UK which makes steel from scratch -- running.
Government minister James Murray said officials were at the site on Monday.
"Their role is to make sure we do everything we can to ... get those raw materials to the blast furnaces in time," Murray told Times Radio.
Other firms including Tata and Rainham Steel have also offered help securing supplies, the minister added.
Charlotte Brumpton-Childs from the GMB trade union said she was "wholly reassured" that coking coal bound for the plant will be "paid for and unloaded over the next couple of days" at a nearby shipping terminal.
However, Murray and Business Secretary Jonathan Reynolds were unable to guarantee they would be able to keep the twin furnaces going.
Blast furnaces are difficult to restart once switched off.
Failure to secure enough supplies to keep them running could seriously damage the plant -- and risk making Britain the only G7 country without virgin steelmaking capacity needed for everything from railways to bridges.
- China tensions -
"If we hadn't acted, the blast furnaces were gone and in the UK primary steel production would have gone," Reynolds said on Sunday.
Reynolds said Jingye had turned down an offer of some GBP 500 million to buy materials, instead requesting more than twice that amount with few guarantees the furnaces would stay open.
Murray clarified Jingye's actions "don't speak to the actions of all Chinese companies".
A Chinese foreign ministry spokesman said the UK should "avoid politicising trade cooperation or linking it to security issues, so as not to impact the confidence of Chinese enterprises in going to the UK".
Earlier on Sunday, Reynolds said the UK had been "naive" to allow its steel industry to be bought by the Chinese company, and that he "wouldn't personally bring a Chinese company into our steel sector".
Some opposition British MPs accused Beijing of interference -- with Tory MP Christopher Chope accusing Jingye of "industrial sabotage".
However, the government tried to tread a fine line to avoid inflaming tensions and risk fragile -- but improving -- ties with China.
"It might not be sabotage, it might be neglect," Reynolds told the BBC, clarifying that he did not believe Beijing had been involved in the recent events.
- 'Sensitive' -
While some sectors were "more sensitive than others", a lot of "UK-Chinese trade is in non-contentious areas," Reynolds added.
Starmer's administration has been at pains to improve relations with Beijing, with several high-ranking ministers holding bilateral talks in hopes of spurring economic growth.
However, there are still security concerns and occasional spats, including over the weekend when a UK MP was denied entry into Hong Kong, sparking concerns from Britain's foreign ministry.
Jingye bought British Steel in 2020 and says it has invested more than GBP 1.2 billion ($1.5 billion) to maintain operations, but was losing around GBP 700,000 a day.
The government saw its possible closure as a threat to Britain's long-term economic security, given the decline of the UK's once robust steel industry -- and the threatened loss of some 2,700 jobs at the plant.
The government, which stopped short of nationalising British Steel, is still hopeful of finding a private investor.
"We want to find a private sector partner to co-invest," Murray told Sky News, adding nationalisation remained a "very likely option".
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