British Steel plans to close its furnaces, putting up to 2,000 jobs at risk

British Steel has confirmed it plans to close its blast furnaces in Scunthorpe, putting up to 2,000 jobs at risk.

They will be replaced by two electric arc furnaces – one in Scunthorpe and the other on Teesside.

The company said its £1.25bn offer would make British Steel a “clean, green and sustainable company”.

But she said the plans were still “subject to appropriate support” from the UK Government.

The company, owned by China’s Jingyi Group, said the new ovens could enter service by late 2025.

CEO Shijun Cao said the company was unable to maintain its blast furnaces and meet its environmental obligations.

“We have engaged extensively with the public and private sectors to understand the feasibility of net-zero steel production through our existing blast furnace operations. However, comprehensive analysis shows that this is not viable,” he said.

Unions estimate the shift could ultimately lead to the loss of between 1,500 and 2,000 jobs, most of them in Scunthorpe.

British Steel said it was working with North Lincolnshire Council on a “masterplan” to attract new businesses and jobs to the site in Scunthorpe, parts of which would become vacant under the proposals.

The Department for Business and Trade said the proposals were part of a plan to put the UK steel industry on a greener and more sustainable footing for the future.

A government spokesman said the government had offered a “generous support package including more than £300 million of investment”.

Earlier this year, Tata, British Steel’s biggest rival, announced it would close its two blast furnaces in Port Talbot and replace them with electric arc furnaces, with an expected loss of up to 3,000 jobs. It will receive £500 million in government support.

British Steel said it was still in talks with the government about what support it could expect for its strategy.

“We need the UK to adopt the right policies and frameworks now to support our decarbonisation drive,” Shijun Cao said.

He said other countries’ governments had adopted such policies, and waiting for the same to happen in the UK could impact the company’s competitiveness and the UK’s ability to meet its carbon targets.

Government sources claim that blast furnace plants are neither economical – they lose £1m a day, they say – nor ‘green’, making them unsustainable for financial and environmental reasons.

The government has admitted that a plan to close blast furnaces at Scunthorpe and Port Talbot will leave the UK without the ability to manufacture “virgin steel”.

But she insisted that there were limited domestic situations where this type of steel was needed, and that the output from electric arc furnaces covered most of the UK’s needs.

Coke-fueled blast furnaces reach a higher temperature and can directly smelt iron ore to produce steel. But they emit more greenhouse gases and require more manpower.

Electric arc furnaces are mostly used to melt and reuse steel scrap. The end product is not the same grade of steel as that produced in blast furnaces, and is not suitable for all industrial uses, for example, engine manufacturing and construction.

However, because they operate at lower temperatures, arc furnaces can be powered by renewable energy sources. They can produce stainless steel and alloys.

Unions expressed concern about the immigration timeline and said they would study British Steel’s proposals in detail.

Roy Rickhouse, general secretary of the specialist trade union representing UK steelworkers, said he was “deeply concerned” by plans to switch to electric arc furnaces only, which he described as “dangerous and reckless”.

“The plans announced by British Steel, along with those of Tata Steel, will leave the UK unable to produce steel from raw materials and dangerously vulnerable to international markets,” he said.

Paul Nowak, general secretary of the Trades Union Congress, warned: “Workers will not stand by as Britain’s steel industry is dismantled in real time.”

Unions have already threatened industrial action over Tata’s plans.

“Conservatives are presenting a false choice,” he said. “Other countries have shown that it is possible to transition to carbon-neutral steel and protect good steelmaking jobs for the future. We can do the same here.”

Charlotte Brompton Childs of the GMB union said the closure would be a “death blow” to UK steel and “devastating” for the people of Scunthorpe.

The towers and chimneys of steelworks have been part of the Lincolnshire landscape for more than five decades, employing generations of local workers.

But the UK’s second-largest steelmaker collapsed in 2019 and was then bought by Jingyi, with promises to invest more than £1bn over 10 years.

A British Steel spokesman said the company was committed to “providing long-term, skilled and well-paid jobs for thousands of employees and many others in our supply chains”.

The company announced in February that it would close its coke oven, which is used to convert coal into fuel for blast furnaces. She said at the time that the UK steel industry was “uncompetitive” with some of the highest energy, carbon and labor costs in the world.