British Steel is set to abandon its plans for steelmaking on Teesside, dealing a significant economic blow to northeast England. The Chinese-owned manufacturer had initially proposed constructing a ‘green steel’ furnace in the region alongside another at its Scunthorpe facility in Lincolnshire as part of a major organisational restructure.
The revised strategy now positions both electric arc furnaces at the Scunthorpe site, with Labour ministers currently reviewing these proposals. This development presents a particular setback for Teesside’s Conservative mayor, Lord Ben Houchen, whose constituency had secured commitments for a steelworks during negotiations with the previous Conservative government.
The company has been seeking taxpayer funding to transition from its carbon-intensive furnaces to more environmentally sustainable electric alternatives, as part of a £1.25 billion rescue package. The Scunthorpe operation continues to haemorrhage approximately £1 million daily, largely due to escalating energy costs that have rendered traditional steelmaking unprofitable.
Lord Houchen expressed concerns about national security implications, noting that concentrating production in Scunthorpe could create vulnerabilities during the transition period. He emphasised that any gap in domestic production could lead to an influx of cheaper steel imports from China, India, and South America, potentially devastating the UK’s steel industry.
The situation has seen some positive developments, with Jingye Group, British Steel’s Chinese parent company, injecting an additional £260 million into the business. This investment brings Jingye’s total financial commitment since acquiring British Steel in 2020 to over £1 billion.
The government maintains its commitment to preserving steel manufacturing in Britain, with a spokesperson stating they are collaborating with trade unions and businesses to ensure a sustainable transition to green steel production that benefits the workforce while protecting taxpayer interests.
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