Thousands of jobs at risk as British Steel threatens closure

British Steel is launching a consultation that could see the closure of its two blast furnaces at Scunthorpe, putting up to 2,700 jobs at risk out of a workforce of 3,500.

The company said the blast furnaces were "no longer financially sustainable" due to tough market conditions, the imposition of tariffs and higher environmental costs.

The BBC understands British Steel was expecting a £1bn injection of government money to keep the business going, but was offered £500m.

Business Secretary Jonathan Reynolds said the government would "continue working tirelessly to reach an agreement with the company's owners to secure its future".

Trade group UK Steel said the consultation was a "pivotal moment" for the sector and the steel industry was "officially in a crisis".

"This gut punch to UK steelmaking will have a profound impact, felt throughout the British economy," said UK Steel director general Gareth Stace.

The GMB union called it "devastating news for the people of Scunthorpe" and called on the government to do "everything possible" to secure the site's future.

Unite union general secretary Sharon Graham said the potential job losses were "a disgrace" and called for the government to work with it on a "sustainable way forward".

"British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns."

British Steel has been owned by Chinese firm Jingye since 2020 and the Scunthorpe site currently employs around 3,500 people.

Since 2020, Jingye says it has invested more than £1.2bn into British Steel to maintain operations and claims it suffered financial losses of around £700,000 a day.

British Steel chief executive Zengwei An said the consultations on the closure were "a necessary decision given the hugely challenging circumstances the business faces".

The company has put forward a £2bn business plan, which was set out on Wednesday by the company's chief commercial officer Allan Bell speaking to the Business & Trade Select Committee.

''We have concluded that the only viable option for British Steel moving forward to decarbonise is to move to 100% electric arc furnace steelmaking," he said.

"This is a £2bn project we estimate so it is not a project that the private sector is going to be able to implement without government support.''

The BBC understands that there was an expectation the government would meet this investment on a 50/50 basis.

But what the government offered was £500m. This offer was rejected by British Steel during the past week.

The BBC understands that at a meeting on Thursday morning between British Steel and the GMB and Community trade unions this £1bn figure was discussed. The government has a £2.5bn steel fund.

British Steel said it would "continue to work with the UK government to explore options for the future of the business".

The company is starting a formal consultation with its workforce and unions over three options:

Business and Trade Secretary Jonathan Reynolds said: "I know this will be a deeply worrying time for staff and, while this is British Steel's decision, we will continue working tirelessly to reach an agreement with the company's owners to secure its future and protect taxpayers' money.

"We've been clear there's a bright future for steelmaking in the UK. We've committed up to £2.5bn to rebuild the sector and will soon publish a Plan for Steel setting out how we can achieve a sustainable future for the workforce, industry and local communities."