British Steel’s Chinese owner ‘broke promises’ to back ailing industry

British Steel’s Chinese owner has been criticized for ‘broken promises’ amid reports it is seeking £300m in government money.

Jingye bailed out Scunthorpe-based British Steel in early 2020, months after it collapsed and fell into government hands. The takeover by the Chinese conglomerate was controversial. But it was sealed with Jingye’s insistence that the money plow into the group.

It is now believed to be considering closing one of the site’s two blast furnaces within weeks if it does not receive state aid. There are only four blast furnaces left in the whole of the UK. Experts fear that if British Steel – which employs 4,000 people – closes one furnace, the other could follow later this year.

Scunthorpe makes much of the UK’s railway rails and steel for construction. When Jingye made a bid for British Steel, it seemed to indicate that it had a blank check to keep the steel mill running.

In a presentation to The Mail on Sunday, the Chinese group said: ‘Need money? No problem. Jingye is here to invest.’ It added that it would ‘revive the glory of British Steel’ and ‘impress the world’.

Sir Iain Duncan Smith, former Conservative leader and founder of the Inter-Parliamentary Alliance for China, said: ‘There is clearly a trail of broken promises here.

When Jingye was bizarrely cleared to take over British Steel, it clearly made a lot of sweeping promises to gain control. Before the government approves any sort of intervention, there should be a full investigation as to why a commitment made just three years ago seems to have come to nothing.”

Rising energy prices have put pressure on costs, forcing steel companies to look for short-term cash.

Company Secretary Grant Shapps and Leveling Up Secretary Michael Gove have both urged Chancellor Jeremy Hunt to ensure the two blast furnaces at the site continue to operate, according to reports.

But Paul McBean, from the Community Steel Union, said government aid negotiations had been underway since August.

He told the Yorkshire Post that British Steel’s ‘very impatient’ Chinese owners were not used to ‘our sluggish government’ and ‘will not be waiting much longer’. It is widely reported that British Steel is asking for £300 million. It’s unclear what Jingye’s next move will be, as it also vowed to ‘never sell’ British Steel.

Jingye pledged to invest £1.2bn to revive the company when the acquisition closes in March 2020, but did not say how long this would take. British Steel said it had spent £330 million on major investments so far and needed help to switch to green energy.

Tata Steel, which operates the UK’s other two blast furnaces, also wants money to switch to electric or hydrogen-based plants. The industry says France and Germany will receive state aid to make the transition on top of other subsidies.

The price of carbon credits — certificates that companies buy to enable them to emit greenhouse gases — has also skyrocketed. That has placed an additional burden on an industry that has been heavily dependent on fossil fuels at a time when it faces skyrocketing energy prices.

The UK steel industry employs 34,500 people. The ministers have said they are committed to a “sustainable and competitive” future for the country.

A British Steel spokesman said Jingye had made ‘significant’ investments in the company, adding: ‘Jingye is committed to our long-term future, but we also demand that the UK government provides the necessary support, policies and frameworks to our commitment to be a clean, green and sustainable company. We do not ask for government support. We are asking for support to support our transition to net zero in line with the UK Government’s targets.”