Negotiations to secure the future of the last virgin steel plant in the UK, located in Scunthorpe, are ongoing with no resolution in sight, according to sources speaking to the BBC. British Steel has been sounding alarms that the raw materials necessary for steel production in two blast furnaces at the plant could soon run out. A crucial offer was made by the government to purchase the coking coal essential for the operation of the blast furnaces. A virtual meeting was held on Thursday between government officials and Jingye, the Chinese owner of the plant to discuss the situation.
Despite the ongoing negotiations, a source close to the talks revealed that the key issues at stake have not been settled yet. There is a possibility that the discussions might extend into Friday as negotiations continue. Trade unions representing the plant workers voiced their lack of updates on the progress of the negotiations. If the necessary raw materials are not secured in a timely manner, production at the plant could come to a halt within weeks, as indicated by government sources. The Department of Business and Trade declined to provide any comments on the matter.
Coking coal serves as a vital source of fuel in the blast furnace process for producing virgin steel, which is derived from iron ore rather than recycled steel. Jingye has expressed concerns that the furnaces are no longer sustainable from a financial standpoint. The government has kept the option of nationalizing British Steel, which employs 2,700 individuals, on the table. Prime Minister Sir Keir Starmer emphasized that all possibilities are being considered to address the increasing demand for steel. The GMB union’s national officer, Andy Prendergast, raised concerns over Jingye not accepting the government’s offer to cover the costs of coking coal, stating that time is of the essence as the blast furnaces face a looming shutdown.
If the Scunthorpe factory were to close down, the UK would be the sole major G7 economy without the capacity to produce virgin steel. On the other hand, recycled steel, made from scrap, is more energy-efficient and has a lower carbon footprint. Some industry analysts argue that there is insufficient recycled steel to meet global demand. Calls have been made for British Steel to be nationalized by Reform UK until a suitable buyer is identified, while the Green Party advocates for nationalization and a shift towards environmentally friendly steel production. Meanwhile, the Conservatives and Liberal Democrats believe that exploring alternative options should take precedence
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