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UK government to hold crunch talks with British Steel owner over 2,000 job losses

By Nagasunder in UK Business News, posted November 7, 2022

The owners of Britain's second-largest steel maker will meet Business Secretary Grant Shapps for crucial talks over massive job cuts.

On Monday, November 7, Mr. Shapps will speak with Jingye Group executives in an effort to persuade the Chinese firm not to shut down one of the two blast furnaces at British Steel's Scunthorpe facility.

This past weekend, insiders claimed that Jingye, which assumed possession of a bankrupt British Steel in 2020, had become more pessimistic over the talks since Rishi Sunak became Prime Minister.

British Steel had started ordering the equipment needed to permanently shut down one of the blast furnaces in Scunthorpe.

The decision means as many as 2,000 employees at the corporation could be laid off

Mr. Sunak is anticipated to adopt a more pessimistic tone in the talks over a government bailout.

Former business secretary, Jacob Rees-Mogg formally began discussions with Jingye last month about providing hundreds of millions of pounds in funds to assist British Steel in its decarbonization.

Whitehall stipulated Jingye could not eliminate positions at British Steel while the negotiations were taking place as one of the prerequisites for the talks.

The largest participant in the UK's steel industry, Tata Steel, has also asked the government for financial assistance.

Earlier this month, a Whitehall insider told Sky News that negotiations were "going on with the steel sector, particularly Tata and British Steel, to safeguard the sector's long-term survival."

Around 4,000 people work at British Steel, while thousands more are employed by the company's supply network.

The Department for Business, Energy and Industrial Strategy (BEIS) declined to comment on Saturday, November 5, while a British Steel spokesman said: "We are continuing formal talks with the UK Government to help us overcome the global challenges we currently face.

"The government understands the significant impact the economic slowdown, rising inflation and exceptionally high energy and carbon prices are having on businesses like ours and we look forward to working together to build a sustainable future."

Energy-intensive industries have long complained rising costs are endangering their capacity to function.

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After years of international trade disputes over dumping, China's contribution to world steel production would make any subsidies much more divisive.

After discussions for an emergency £30 million government loan broke down, the Official Receiver was appointed in May 2019 to take control of the company.

British Steel was formed in 2016 when India's Tata Steel sold the business for £1 to Greybull Capital, an investment firm.

As part of the deal that secured ownership of British Steel for Jingye, the Chinese group said it would invest £1.2bn in modernising the business during the following decade.

Source: Sky News

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