UK steel on a knife edge after Scunthorpe coking ovens closure

Kemi Badenoch faces her first crisis as Business Secretary after hundreds of job losses at a steel plant in the Red Wall.

The Chinese owner of British Steel said it will cut 260 jobs by closing coking ovens in Scunthorpe as high energy costs batter the industry.

Jingye Group, which bought the firm in 2020, did not have a time frame but it is thought the closure could come before the end of the year.

Feeling the heat: Business secretary Kemi Badenoch and the steelworks in Scunthorpe

Unions warned it could have a ‘catastrophic impact’ and leave the UK relying on imports of coke needed to run blast furnaces that are used to make steel.

They said the British steel industry was ‘on a knife edge’.

It is a major headache for Badenoch, who became Business Secretary earlier this month and days ago said ‘nothing is ever a given’ when asked if the UK needed a steel industry.

And it will worry Downing Street as Scunthorpe is among the many ‘Red Wall’ seats that voted Tory in the 2019 election.

The move came despite reports civil servants are planning to fly to China this week for talks about a £300million government bailout.

If a deal is agreed, it would take the total state support for British Steel to more than £1billion.

British Steel boss Xifeng Han, said the UK steel sector was ‘uncompetitive’ compared to global rivals and the firm faced ‘significant challenges’ from economic slowdown, inflation and ‘exceptionally high energy prices’.

The group’s energy bill rose by £120million last year and its annual carbon costs increased by £70million, which were ‘some of the highest across the world’, said Han.

Jingye is thought to be drawing up plans to cut 800 staff at the firm, which is likely to inflame accusations it is not sticking to promises made when it bought the firm, such as committing to major investment.

Alun Davies, of the Community Trade Union representing steelworkers, said: ‘British Steel’s plan to close the coke ovens could have a catastrophic impact on jobs and steel production at Scunthorpe and the UK as a whole.’

He said the closure would leave British Steel ‘depending on unreliable imported coke’ and ‘risk our sovereign capability to produce steel in the UK’. The ovens bake coal to make coke, a fuel used to create steel. 

A by-product is used to make steel in train tracks, raising fears the rail industry could be affected.

Scunthorpe MP Holly Mumby-Croft said she was ‘deeply disappointed’ Jingye announced cuts despite ongoing bailout talks.

She added: ‘This is not a way to behave. It sends entirely the wrong message and breaches the spirit of negotiations with the Government. 

Jingye’s actions lead to questions over their commitment to our steelworks and their commitment to the community that they are a part of here in Scunthorpe.’

A government spokesman said: ‘We stand ready to support employees impacted by British Steel’s decision and will continue to work with the company to try and find a decarbonised, sustainable and competitive solution.’