UK steps in to wrest control of British Steel away from China

Scunthorpe — Britain expressed confidence on Monday that it could secure enough raw materials to keep the blast furnaces at its last maker of virgin steel burning, after the government seized operational control from its Chinese owners.

Ministers said British Steel’s owners, China’s Jingye Group, had wanted to shut the furnaces at the Scunthorpe plant after they rejected a government funding proposal, which would have forced Britain to import steel instead.

The government recalled parliament at the weekend — the first Saturday recall since the 1982 Falklands War — to give it powers to direct the company’s board and workforce, and to order raw materials.

By Monday morning it had approved the appointment of an interim CEO and chief commercial officer — both long-term employees of the plant — and said it had established that enough raw materials were in the country.

“We need to make sure we get it into the blast furnaces,” treasury department minister James Murray said.

A number of businesses, including India’s Tata and local distributor Rainham Steel, had also offered managerial support and raw materials, the government said.

The dispute risks straining ties between London and Beijing, which Prime Minister Keir Starmer’s Labour government had sought to improve, at a time when nations around the world are trying to deepen trading co-operation after the US tariff shock.

Jingye has not commented, but China called for fair treatment of its companies and resolution through consultation.

“The facts on the ground are very clear that if we hadn’t taken the action that we did on Saturday, then the blast furnaces would be closing,” Murray said, calling steel production a national security matter.

The furnaces in the northeastern city of Scunthorpe need to be constantly fuelled and are losing £700,000 a day.

Their output is used in the rail network, construction and automotive industry. Without the plant, Britain would be reliant on imports at a time of trade wars and geopolitical instability.

The intervention at a site which employs 3,500 people and more in the supply chain prompted Britain’s business minister, Jonathan Reynolds, to say on Sunday that China was no longer welcome in Britain’s steel sector.

British Steel has not commented on the dispute but did announce on Monday the appointment of Allan Bell as interim CEO and Lisa Coulson as chief commercial officer to ensure “consistent and professional leadership” at the plant.

The company was already struggling in an over-supplied global market before the rise in energy costs of recent years. US tariffs of 25% on all steel imports, taking effect in March, delivered another blow.

The Community union representing workers at the plant welcomed the government intervention, as did industry trade body UK Steel.

Closure of the furnaces would leave Britain as the only G7 wealthy nation unable to produce so-called virgin steel from iron ore, coking coal and other inputs. The government says nationalisation of the plant is now a likely option.

China’s foreign ministry urged Britain on Monday to treat its firms fairly without politicising trade matters so as to protect the confidence of Chinese investors.

“Both sides should discuss and solve the difficulties encountered by the current operation of British Steel on the basis of the principle of mutual benefit,” ministry spokesperson Lin Jian said.

Reuters