UK government takes temporary control of British Steel amid supply crisis

The UK Government has passed emergency legislation to take temporary control of British Steel, the country's last remaining traditional steelmaker, amid growing fears of imminent production shutdowns at its Scunthorpe plant.

The decision, approved by Parliament in a special Saturday session, gives Business and Trade Secretary Jonathan Reynolds authority over the company’s leadership and operations. The immediate aim is to secure raw material deliveries, ensure employee wages, and maintain operations at Scunthorpe’s two blast furnaces.

British Steel confirmed in a press release that essential raw materials were now being delivered to its Immingham Bulk Terminal and will soon be transported to its main facility. "This is a monumental time for our people and our business," the company stated. "We now have great hope." It also expressed gratitude to the UK Government, employees, customers, and industry partners for their support, calling the workforce “the finest steelmakers in the world.”

The government’s move follows weeks of tense negotiations with British Steel’s Chinese owner, Jingye Group, which had warned of potential shutdowns due to mounting financial losses, rising environmental costs, and stalled state aid talks. Jingye claimed it had invested more than £1.2 billion since acquiring the company in 2020, but said it was losing approximately £700,000 per day.

Tensions escalated after the company halted raw material orders, threatening the immediate viability of the blast furnaces. Industry experts warned that if operations ceased and the furnaces cooled, restarting them would be technically complex and prohibitively expensive — potentially leading to permanent closure.

The UK’s decision to intervene was also shaped by strategic concerns. Scunthorpe is the last site in Britain capable of conventional steel production. Its closure would leave the UK as the only G7 country without such capacity, posing risks to the construction, defence, and rail sectors. British Steel currently produces the vast majority of the country’s railway tracks.

Although Reynolds described the current intervention as temporary, he acknowledged that nationalisation was now "likely," while reaffirming the government’s preference for a longer-term private solution.

The parliamentary session had been convened during the Easter recess at the request of Prime Minister Keir Starmer. Meanwhile, reports surfaced that workers at Scunthorpe had blocked Jingye executives from accessing certain parts of the site, amid rising tensions over the company’s handling of the crisis.

British Steel’s press release struck a resolute tone: “In the most testing of circumstances, [our employees] are pulling out all the stops to ensure we keep Britain’s last two blast furnaces operating… The heavens reflect your labours. And for that, we are truly grateful.”

Source and Photo: British Steel