British Steel has launched a consultation that may lead to the closure of its two blast furnaces at Scunthorpe, potentially affecting 2,700 workers out of its 3,500-strong workforce. The company cited difficult market conditions, tariffs, and rising environmental costs as reasons for the move, stating that the furnaces are “no longer financially sustainable.”
The steelmaker had reportedly sought £1 billion in government support to keep operations running but was offered £500 million instead. Business Secretary Jonathan Reynolds assured that the government remains committed to reaching a deal with British Steel’s owners to secure the company’s future.
UK Steel, the industry’s trade body, called the situation a “pivotal moment” for the struggling sector, warning of a deep economic impact. Gareth Stace, the group’s director general, described the announcement as a “gut punch” to UK steelmaking.
Unions also expressed strong concerns. The GMB union called it “devastating news” for Scunthorpe, urging the government to intervene. Unite general secretary Sharon Graham criticized British Steel, accusing it of using its workers as leverage in funding negotiations with the government.
Owned by Chinese firm Jingye since 2020, British Steel has invested over £1.2 billion into the company but claims to be losing £700,000 daily. Chief Executive Zengwei An described the potential closure as a “necessary decision” given the ongoing financial difficulties.
British Steel has outlined a £2 billion plan to transition entirely to electric arc furnace steelmaking, a shift that would require significant government support. The company had anticipated a 50/50 investment split with the government, but after rejecting the £500 million offer, discussions are ongoing.
British Steel has begun formal consultations with employees and unions over three potential timelines for closing its blast furnaces and steelmaking operations:
-
By early June 2025 (including the closure of the Scunthorpe Rod Mill)
-
By September 2025
-
At a later date beyond September 2025
The government, which has set aside £2.5 billion for steel industry support, insists that UK steelmaking has a “bright future” and plans to publish a new strategy for the sector soon. However, with British Steel continuing discussions on its next steps, uncertainty remains over the fate of its Scunthorpe operations and the thousands of jobs at stake.
