British Steel has launched consultations that two blast furnaces can be closed at Scunthorpe, putting 2,700 jobs at risk from a 3,500 workforce.
The company said the explosion reactors are “normal financially sustainable” due to severe market conditions, tariff levies and increased environmental costs.
The BBC understands that British Steel expects to inject £1 billion in government funds to maintain its business, but was provided £500 million.
An official spokesman for the prime minister said the government has made a “generous offer” to British Steel and will continue to work with the company and its Chinese owner, Jinji, to ensure its future.
He said talks about the closure with British steel chief executive Zengwei “is a necessary decision given the extremely difficult situation facing businesses.”
Trade Group Steel Director Gareth Stace said the British Steel announcement was a “vital moment” for the sector, and that the steel industry is “officially in crisis.”
Regional Union General Secretary Roy Ricks called it a “dark day” and urged Jinsy and the British government to “restart negotiations before they’re too late.”
The GMB union called it “devastating news,” but united general secretary Sharon Graham said potential unemployment was “disgrace.”
“British Steel is guilty of trying to hold the government for ransom while using its dedicated workforce as pawns,” she said.
British Steel has been owned by Jingye since 2020. The Chinese company says it invested more than £1.2 billion in British Steel to maintain its business, claiming it suffered an economic loss of around £700,000 a day.
The company has submitted a £2 billion business plan. This was set by the company’s Chief Commercial Officer Allan Bell on Wednesday talking to the Business & Trade Select Committee.
“We concluded that the only viable option for British steel to go on to decarbonase is to move to 100% electric furnace steel production,” he said.
“This is a project we estimate of £2 billion, so it’s not a project that the private sector can implement without government support.”
The BBC understands that the government was expected to meet this investment on a 50/50 basis.
However, the government provided £500 million, which was rejected by British Steel.
In answering urgent questions about the future of Scunthorpe Steelworks, Minister of Business and Trade Sarah Jones said the government has made a “generous and conditional offer of financial support.”
She said the offer followed “a few months of intensive involvement with British steel.”
Jones said the company must “provide the necessary commitments and provide which taxpayers expect very correctly in exchange for substantial public funds.”
“It’s a shame they haven’t done that yet or haven’t accepted our offer.”
She reconsidered the closure plan and called on the company to accept government offers.
British Steel said it will “continue to work with the UK government to explore options for the future of its business.”
The company has launched formal consultations with the workforce and unions, beyond three options.
By early June 2025, the closure of the blast furnace, steel operations and Scanda’s plot mill had been closed in September 2025 at future locations, with the closure of the blast furnace and steel operations and the closure of the steel operations.
Jonathan Reynolds, Secretary of Business and Commerce, said: “We know this will be a very worrying time for our staff, and while this is a British Steel decision, we will continue to work tirelessly to reach an agreement with the company owner, ensuring the future and protecting taxpayer money.
“It is clear that in the UK there is a bright future for steelmaking. We commit to up to £2.5 billion to rebuild our sector and will soon publish steel plans, defining ways to achieve a sustainable future for our labor, industry and communities.”
