LONDON: British Steel, owned by China’s Jingye Group, has announced plans to shut down its two blast furnaces in Scunthorpe, potentially cutting up to 2,700 jobs. The decision, driven by rising environmental costs and US tariffs, could take effect as early as June.
For years, British Steel has warned that its steelmaking operations in northeast England are unprofitable. The company has been in prolonged discussions with the UK government, seeking financial support to transition to greener steel production. However, negotiations have failed to secure a deal, prompting British Steel to begin consultations on closing its blast furnaces and related operations.
The move reflects the long-term decline of Britain’s steel industry, which has struggled against high domestic energy costs and competition from cheaper imports.
Market Pressures and US Tariffs
British Steel cited “highly challenging market conditions, the imposition of tariffs, and higher environmental costs associated with high-carbon steel production” as key reasons for the closures.
The situation worsened when former US President Donald Trump imposed a 25% tariff on steel imports in March, further straining British Steel’s finances. The company reported losses of £700,000 (US$905,240) daily at its Scunthorpe site. The UK steel industry exports over £400 million worth of steel to the US annually, accounting for about 5% of total exports.
Impact on Workforce and Future Prospects
The closures could affect between 2,000 and 2,700 jobs, with the total workforce at Scunthorpe standing at 3,500. British Steel stated it remains committed to working with the government to explore future options for the business.
UK Business Minister Jonathan Reynolds confirmed that discussions are ongoing but stressed the need for job guarantees before any public funds are allocated.
“If I’m putting public money in, I need guarantees on jobs,” Reynolds said at a recent event.
The Future of UK Steelmaking
Steel production began in Scunthorpe in 1890, and if these closures proceed, Britain will no longer have any operational blast furnaces. Instead, the country is transitioning to electric arc furnaces, which use recycled steel and produce lower carbon emissions.
However, this shift is costly. The UK government has already committed £500 million to help Tata Steel build an electric arc furnace at Port Talbot, Wales, scheduled to open between late 2027 and early 2028. That transition led to 2,800 job losses.
British Steel reportedly rejected a similar £500 million investment offer from the government, according to Sky News. Meanwhile, the government has set aside £2.5 billion for the steel industry and is expected to unveil its long-term strategy for the sector in Spring 2025.
