The government is under mounting pressure to nationalise British Steel if crunch talks aimed at a rescue deal fail, as the chair of the influential business and trade select committee added his voice to those calling for the Scunthorpe steelworks to be taken into public ownership.
Jingye, the Chinese owner of the company, and the UK government were not able to reach a deal on Thursday to supply the Scunthorpe plant with crucial raw materials, with talks expected to restart on Friday.
On Thursday, ministers were thought to have offered to provide funding for the purchase of raw materials such as iron ore and coking coal for Scunthorpe’s blast furnaces.
That would provide a stopgap solution to ensure the furnaces could keep burning while discussions continued about the plant’s longer-term future. However, it is understood that the issue was not resolved at Thursday’s talks, despite workers worrying that time was running out to prevent the blast furnaces from closing.
A shipment of coking coal arrived on Thursday at the nearby port of Immingham, in Lincolnshire, but it has not yet been paid for, according to a person with knowledge of operations.
Jingye, which promised a “new chapter” in UK steelmaking when it rescued British Steel in 2020, said last month that the site’s two blast furnaces were no longer financially sustainable, raising fears for the future of 2,700 workers.
Jingye has already rejected an offer of £500m to fund a conversion to electric arc furnaces, dampening hopes that the company, which is founded and chaired by a former Communist party official, will agree to take part in a long-term solution.
Liam Byrne, who chairs the select committee scrutinising the Department for Business and Trade, said he was in favour of taking the plant into state hands.
He said: “As the global trade war escalates, now is not the time to lose critical sovereign capability like primary steel-making. The owners clearly don’t have a long-term interest in modernising the business for the future, so ministers might as well bite the bullet and warn Jingye they are now in last chance saloon.
“The government has been very generous in its offer but the clock is ticking down as the coke on hand runs out and the consultation on redundancy runs down. If the owners don’t respond, ministers should have a plan to nationalise ready to go, backed by the new firepower of the national wealth fund.”
Iron pellets have also been stuck in port at Immingham, on the Humber estuary, amid uncertainty over whether Jingye will pay for them. Orders for more coking coal need to be made quickly because they take three weeks to arrive on average, meaning the furnaces could run out of fuel in the meantime. Once furnaces are turned off, they are prohibitively expensive to start up again.
A source familiar with the talks said Jingye had been reluctant to accept the offer without understanding what conditions might be attached.
Unite, Britain’s largest trade union, has also called for the government to nationalise British Steel, an option that the prime minister, Keir Starmer, has said remains “on the table”.
However, ministers prefer a solution that keeps the company in private hands, which is likely to require some form of financial support.
