British Steel is to consult on the proposed closure of two Scunthorpe blast furnaces and its steelmaking operation, putting about 2,700 jobs at risk out of a workforce of 3,500.
The company said that since 2020, the main shareholder of British Steel, Jingye, has invested more than £1.2bn to maintain operations at the Lincolnshire plant amid “ongoing production instability” and significant financial losses of around £700,000 a day.
It has now decided that the blast furnaces and steelmaking operations are no longer financially sustainable because of the imposition of tariffs and higher environmental costs relating to the production of high-carbon steel.
The company said it had sought support from the UK government for a major capital investment in two new electric arc furnaces. However, following many months of negotiations, no agreement had been reached, it added.
British Steel said it would begin formal consultation with its workforce and unions from today (27 March 2025). The consultation will propose three options:
- Closure of the blast furnaces, steelmaking operations and Scunthorpe rod mill by early June 2025
- Closure of the blast furnaces and steelmaking operations in September 2025
- Closure of the blast furnaces and steelmaking operations at a future point beyond September 2025
British Steel CEO, Zengwei An, said: “We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel.
“But we believe this is a necessary decision given the hugely challenging circumstances the business faces.
“We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time.”
The director general of trade group UK Steel, Gareth Stace, said British Steel’s announcement was a “pivotal moment” for the sector and the steel industry was “officially in a crisis”.
Community union general secretary Roy Rickhuss called it “a dark day” and urged Jingye and the government “to resume negotiations before it is too late”.
He warned: “We are now on the cusp of becoming the only G7 country without domestic primary steelmaking capacity; it is no exaggeration to say that our national security is gravely threatened.”
The GMB union called it “devastating news for the people of Scunthorpe”, while Unite general secretary Sharon Graham said the potential job losses were “a disgrace”.
She said: “British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns.”
Graham added: “In discussions with Unite, the government has clearly moved and has made an offer to invest heavily in British Steel (Jingye). This offer comes with long-term job guarantees, anything less would be a complete misuse of taxpayers’ money. British Steel now needs to make the necessary commitments.
“British Steel must now withdraw its job threats and work with the government and Unite on a sustainable way forward which is in the best interests of the workers, their communities and the wider economy.
“The UK has the opportunity of becoming a leader in green steel and British Steel should be at the forefront of that transformation.”
Prior to the general election, Unite was responsible for ensuring Labour committed to create a £2.5 billion steel fund to support the transformation of the UK steel industry to net zero and the production of green steel. That commitment has been honoured since it entered government and it is currently consulting on its steel plan.
UK safeguards to ensure cheaper Chinese steel doesn’t flood the UK market, expire in 2026. This has added to British Steel’s fears over the future production of steel in the country.
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