British Steel announced yesterday that it will consult on the closure of its two blast furnaces, steelmaking operations and a reduction of steel rolling mill capacity at its Scunthorpe. Since 2020 the shareholder of British Steel, Jingye, has invested more than £1.2 billion to maintain operations amid ongoing production instability and significant financial losses of around £700,000 a day.
Investments to date include over £300 million in strategic capital projects such as a ‘state of the art’ mast service centre in Skinningrove, a rail stocking facility and a new billet caster. Despite this, British Steel says 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 (EAF). 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 today (27 March 2025). The consultation will propose three options: closure of the blast furnaces, steelmaking operations and Scunthorpe rod mill by early June 2025; closure of the blast furnaces and steelmaking operations in September 2025; closure of the blast furnaces and steelmaking operations at a future point beyond September 2025. In the meantime, British Steel says it will continue to work with the UK Government to explore options for the future of the business.
Hugely challenging circumstancesZengwei An, British Steel CEO, 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.”
UK Steel director general Gareth Stace said: “The proposal to close iron and steelmaking at Scunthorpe marks a heartbreaking and pivotal moment for our sector. It is a shocking blow to the 3,400 workers, our sector and to the whole community in Scunthorpe. This gut punch to UK steelmaking will have a profound impact, felt throughout the British economy.
“All options should be on the table, and we need a secure future for our steel industry. The end of steelmaking at British Steel would mean we have a major gap in capacity to meet the future demand of the nation and will be an irreparable break in the armour of national security.
“This devastating decision will cause untold disruption and damage to our supply chains, threatening jobs, businesses and the nation’s economic strengths. The steel industry is officially in a crisis. UK Steel has been sounding the alarm. Government must get back to the negotiating table to urgently stop the lifeblood draining from our sector and take action to rebuild the steel industry.”