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This development could leave the UK unable to produce its own new steel and completely reliant on foreign sources.
British Steel, the UK’s only remaining primary steel producer, has announced potential plans to shutter its final plant, attributing the decision to “challenging market conditions” which includes the 25% tariffs on steel imports imposed by former U.S. President Donald Trump.
The U.S. placed broad tariffs on vital metals imports the previous month, with the duties affecting all steel and aluminum entering the U.S. starting on March 12.
According to a statement from British Steel, “The blast furnaces and steelmaking operations are no longer financially sustainable because of very difficult market conditions, the introduction of tariffs, and higher environmental costs related to producing high-carbon steel.”
The Scunthorpe plant is losing £700,000 ($900,000) daily, in spite of over £1.2 billion in investment from its Chinese owner Jingye since 2020.
The announcement occurred just weeks after the U.S. tariffs were implemented and amid a deadlock between Jingye and the UK government regarding a financial rescue package. The UK government has been encouraging steel producers to adopt greener technologies, like electric arc furnaces (EAFs), despite warnings that this expensive transition will increase the UK’s dependence on foreign supplies.
Last week, local media reported that Jingye had turned down the UK government’s latest £500 million subsidy offer, arguing that the new furnaces would cost over £2 billion, with London expected to cover half of the expense.
British Steel stated that it will begin redundancy consultations with unions and is considering three options: closure in June if no agreement is reached with London, and temporary shutdowns in September or later if funding is secured. They indicated that between 2,000 and 2,700 jobs are at stake.
British energy minister Sarah Jones informed parliament on Thursday that while the government prefers the company to return to negotiations, it is “looking at all options,” including potentially nationalizing the steelmaker. Business Secretary Jonathan Reynolds stated that the government is “working tirelessly” to find a resolution.
The UK steel sector, once a global leader employing over 300,000 people, now represents only 0.1% of the nation’s economy.
Tata Steel, which is Indian-owned, announced last year that it would close its last two blast furnaces at Port Talbot in Wales. However, Tata later obtained a £500 million government subsidy as part of a £1.25 billion project to replace the furnaces with EAFs, which are scheduled to commence operations in 2027.