The UK government is considering renationalizing British Steel in a bid to protect thousands of jobs at its Scunthorpe site, amid stalled negotiations with its Chinese owner, Jingyi, over a £1bn investment plan.
Business Minister Jonathan Reynolds is leading discussions with Jingye to determine a financing agreement for the company’s transition to green steel production. However, with little progress being made, sources indicate that the government is open to taking over the company, reversing Margaret Thatcher’s 1988 privatization of the steel industry.
One Whitehall insider suggested that nationalization was a “last resort” because of the large financial commitment it would entail. However, unions and industry advocates are urging the government to act decisively to protect the Scunthorpe plant, which employs 4,000 people and remains the UK’s only producer of steel from iron ore.
British Steel’s blast furnaces in Scunthorpe, which account for 0.8% of the UK’s carbon emissions in 2023, are at the heart of the debate. Plans to replace it with an electric arc furnace – crucial to meeting the UK’s goals of achieving net-zero emissions by 2050 – have been delayed because Genji has resisted committing to the necessary investment, leaving the government liable for the full cost.
The renationalization process will not be without challenges. Experts warn that allowing blast furnaces to cool without proper shutdown procedures could render them unusable, while managing operations while converting to electric ovens could cost tens of millions.
The decision also has political implications. Labor leader Keir Starmer has criticized past neglect of the steel industry, vowing to make Britain a leader in steel production. Sharon Graham, Secretary General of Unite, welcomed the prospect of nationalisation, saying: “The UK Government being an investor of first resort is an important first step.”
Negotiators face a tight deadline, with British Steel expected to exhaust its current supply of raw materials by the end of January. Unions, including GMB and Unite, have proposed a multi-union plan to protect jobs and production, and called on the government to prioritize nationalization over taxpayer support for private sector failures.
British Steel, which was briefly nationalized in 2020 before its takeover by Genji, has struggled with rising costs and increased global competition. The ongoing standoff raises questions about the future of UK steel production and its role in national infrastructure and security.
A spokesman for the Business Secretary stressed the Government’s commitment to securing a “green steel transition” that supports jobs and delivers value for taxpayers. Discussions are ongoing, but all options, including nationalization, remain on the table.