The future of hundreds of steel jobs on Teesside is hanging in the balance as top-level talks take place to support the Chinese owners of British Steel.
Steel bosses have confirmed that the Government is discussing a package of measures with the Jingye Corporation to offset wildly veering international markets and soaring energy prices.
A British Steel spokesman said: “We’re pleased to confirm British Steel is entering into formal talks with the UK Government to help us overcome the global challenges we currently face.
"The Government understands the significant impact the economic slowdown, rising inflation and exceptionally high energy and carbon prices are having on businesses like ours and we look forward to working together to build a sustainable future.”
Read more: Green light for British Steel's £26m Skinningrove plans
The Scunthorpe Steelworks is the UK headquarters and the main blast furnace production site.
The Lackenby Beam Mill on Teesside employs around 400, manufacturing large steel sections for the construction industry, including The Shard in London and the new World Trade Centre in New York.
The Skinningrove Steelworks makes special profiles, including sections and crane rail. Work is already underway on a £26million upgrade here, to include product milling, machining and warehousing operations.
Jacob Rees-Mogg, Secretary of State for Business, Energy and Industrial Strategy, is understood to have responded quickly to Jingye's plea to keep these sites going, opening the way for a wider package of support across the sector - a difficult balancing act as the Government restructures itself on a seemingly daily basis.
A BEIS spokesperson said: “We are working across the steel sector on achieving their sustainable and competitive long-term future.
“We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we announced the Energy Bill Relief Scheme to bring down costs. This is in addition to extensive support we have provided to the steel sector as a whole to help with energy costs, worth more than £780m since 2013.”
Tata would also be involved in those wider talks, where the Government would ask for agreements on maintaining current operations and job numbers while the talks are underway.
There are a number of challenges facing the steel industry globally, including demand slowing and persistent excess production capacity, which lowers prices and makes it difficult for UK steel companies to compete fairly.
The Government says it is committed to working with British Steel and the industry by supporting its transition to a more sustainable and decarbonised future, including reducing the burden of energy costs, ensuring fair public procurement and tackling unfair trade.
Since 2013 over £780 million has been provided to the steel industry to help with electricity costs. In addition there is the £289 million Industrial Energy Transformation Fund to help businesses with high energy use cut their bills and emissions.
There has also been £16 million in funding for the Middlesbrough-based Materials Processing Institute to deliver a R&D programme to help improve efficiencies, reduce emissions and boost competitiveness, and up to £66 million as part of the Industrial Strategy Challenge Fund, to help key foundation industries such as steel reduce energy and resource use.
Chris McDonald, Chief Executive of the MPI recently told us: “The competitive environment for steel in Europe is difficult, with mills idled due to a fall in demand and higher energy costs from the War in Ukraine.
“The situation in the UK though is always much more difficult due to higher costs than our European competitors and now the relatively weaker pound, which makes raw materials more expensive. Add to this the need to invest soon in new zero carbon technology and the outlook for UK steel production is very tough.
"The UK’s steel industry is already small, only about the same size as that of Belgium. Without further support we risk the UK becoming the only modern industrial economy unable to meet its needs for steel – something that seems particularly risky to me in these uncertain times.”
When Jingye formally completed the £70m acquisition of British Steel’s UK and Netherlands assets from the Official Receiver, the deal included the Teesside Beam Mill and Skinningrove plant.
Jingye pledged to invest £1.2 billion into the company, with initiatives including the development of an Electric Arc Furnace in Teesside set to guarantee around 800 jobs in the Tees Valley.
The Group was founded in 1990, and its headquarters are located in Shijiazhuang, China.
As a leading steelmaker, Jingye's affiliates also include Jingye Steel, Ulanhot Steel, Yunnan Jingye Steel and Guangdong Jingye Steel.
It employs 31,000 people and in 2020, the group recorded a turnover of 224.4 billion Chinese Yuan, contributed tax of 3.9 billion Chinese Yuan and was ranked 166th on China's 2020 list of top 500 enterprises.
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