British Steel Merger Plan Threatens UK Blast Furnaces and Jobs

The future of British Steel and the UK steel industry is in jeopardy as government officials consider a merger proposal involving British Steel and part of Speciality Steel UK, a division of Sanjeev Gupta’s metals empire recently placed into government-led insolvency. Should the plan proceed, both of the last remaining blast furnaces at British Steel’s Scunthorpe site could be decommissioned, leaving the UK as the only G7 nation without primary steelmaking capacity.

The proposed merger, which has the support of Jon Bolton, co-chairman of the Steel Council, would see British Steel integrated with Speciality Steel UK’s electric arc furnace operations in Rotherham. Industry sources indicate that the Rotherham furnace, if substantially refurbished, could supply semi-finished steel for British Steel’s downstream needs. This restructuring aims to reduce steep financial losses currently estimated at over £1 million per day at the Scunthorpe facilities.

Doubts persist within the sector regarding whether Rotherham’s output can meet the technical and volume requirements of British Steel’s traditional product lines. The companies collectively employ 4,000 people in the UK, with approximately 2,700 in Scunthorpe alone. The government currently controls day-to-day operations at the site, having intervened through emergency legislation that prevents British Steel’s Chinese owners Jingye from halting blast furnace production by restricting raw materials purchase.

This year, ministers enacted the rare step of recalling parliament on a Saturday to pass special measures. Despite this intervention, Jingye has submitted a compensation claim exceeding £1 billion to the government in exchange for relinquishing its British Steel holdings. Negotiations reportedly include government consideration of Chinese diplomatic infrastructure incentives to lower state liabilities.

Speciality Steel UK, part of Liberty Steel Group under Gupta’s GFG Alliance, remains under the official receiver’s control after a winding-up order. Its 1,500-strong UK workforce faces uncertainty as the government prioritises the sale of SSUK as an entire entity; refurbishment costs for its electric arc furnace remain a sticking point. The plan to use Rotherham steel for British Steel’s downstream factories bears precedent from previous ownership arrangements under Tata Steel’s long products division, though market and technical headwinds remain.

Labour representatives and union officials have voiced alarm at the prospect of ending primary steelmaking at Scunthorpe, warning of severe consequences for local employment, national security, and industrial sovereignty. The assistant general secretary of Community, Alasdair McDiarmid, has argued that closing Britain’s last blast furnaces is unacceptable without a sustainable, long-term investment plan for the industry.

Compounding these concerns, a significant order for steel for the £8 billion Net Zero Teesside energy plant has been placed with a Chinese supplier rather than British Steel, despite assurances that half the project’s procurement spend would benefit British companies. The move has drawn criticism from local officials and renewed debate over the ability of UK steelmakers to compete on major infrastructure contracts with state support on the line.