British Steel is expected to announce the closure of its coking ovens which will result in the loss of 300 jobs.
The announcement over the closure of the plant in the town of Scunthorpe in Lincolnshire is expected later today (Wednesday, February 22).
It is not known when the plant will close yet, and the number of mandatory redundancies has also not been revealed.
Coking ovens are used to convert coal into coke, which burns at the higher temperatures required by the two remaining blast furnaces.
The closure means British Steel will have to import coke.
The closure of the coking ovens is viewed as a concerning sign for the UK steel industry’s health.
Union officials told the BBC that the industry “is on a knife edge”.
UK Government sources described the decision as “disappointing,” given that talks between British Steel’s Chinese owners Jingye, Tata, and the Treasury about a £300 million support package for each company are still ongoing.
A British Steel spokesman said: “Unfortunately, like many other businesses we are reluctantly having to consider cost-cutting in light of the global recession and increased costs.”
Jingye has invested £330 million over three years and is committed for the long term, but British Steel is “faced with significant challenges due to the economic slowdown, rising inflation, and exceptionally high energy prices,” a spokesperson said.
The spokesperson added that UK steelmaking is “uncompetitive” internationally.
According to union sources, the government offers have been rejected so far because they come with too many strings attached, such as job guarantees for ten years.
They also say the offers are insufficient to cover the estimated £2 billion cost of transitioning from blast furnaces to more energy-efficient electric arc furnaces.
Electric arc furnaces are fed with recycled steel because they do not burn hot enough to produce virgin steel.
Currently, sending scrap steel to Turkey and Indonesia is less expensive than recycling it here.
While admitting the importance of the industry “in the communities in which they operate.”
Business Secretary Kemi Badenoch recently stated that it is “not a given” that the UK requires a steel industry.
The number of voluntary and compulsory redundancies will be discussed next week, and it is possible that the company will close by the end of the year.
There are also concerns about additional job losses throughout the plant.
British Steel was considering 800 job cuts at its Scunthorpe plant in early February.
A Jingye representative described government support discussions as “unsatisfactory” at the time.
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According to the representative, the proposed assistance package did not address energy, labour, and carbon costs, as well as low domestic demand.