(Alliance News) - Unions on Thursday called upon the UK government to help secure the future of British Steel, after the company announced it is consulting on closing blast furnaces, raising fears of heavy job losses.
Community, the GMB and Unite said it was "devastating" news that British Steel's Chinese owner Jingye is launching a consultation on closing the blast furnaces at Scunthorpe steelworks this June, or at a later date if an agreement with the government can be reached.
Scunthorpe steelworks employs thousands of workers directly and through supply chains throughout the UK.
The company said that since it took over British Steel in 2020 it has invested more than GBP1.2 billion to maintain operations amid ongoing production instability and "significant" financial losses of around GBP700,000 a day.
It said: "Despite this, the blast furnaces and steelmaking operations are no longer financially sustainable due to highly challenging market conditions, the imposition of tariffs, and higher environmental costs relating to the production of high-carbon steel.
"The company had sought support from the UK government for a major capital investment in two new electric arc furnaces.
"However, following many months of negotiations, no agreement has been reached.
"As a result, the difficult decision has been made to consult with employees and to consider proposals to close the blast furnaces and steelmaking operations and reduce rolling mill capacity."
The company will begin formal consultation with its workforce and unions from Thursday.
British Steel Chief Executive Zengwei An said: "We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel. But we believe this is a necessary decision given the hugely challenging circumstances the business faces.
"We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time."
Unions published a report last month setting out how to decarbonise steelmaking at British Steel, which would involve the continued operation of Scunthorpe's two existing blast furnaces while two new EAFs are constructed on site.
The plan, which unions said would secure a move towards greener steelmaking while maintaining primary steelmaking capacity throughout the transition, would require an additional GBP200 million of government support to mitigate carbon costs in the interim period, said unions.
Community General Secretary Roy Rickhuss said: "This is a dark day for our steel industry and for our country.
"We urge Jingye and the UK government to get back around the table to resume negotiations before it is too late.
"Crucially, Jingye have not ruled out retaining the blast furnaces during a transition to low-carbon steelmaking if they can secure the backing of the government.
"The closures at Scunthorpe would represent a hammer blow to communities which were built on steel, and where the industry still supports thousands of jobs directly and thousands more through extensive supply chains.
"Given that we are now on the cusp of becoming the only G7 country without domestic primary steelmaking capacity, it is no exaggeration to say that our national security is gravely threatened."
By Alan Jones, PA Industrial Correspondent
source: PA
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