Unlock the Editor’s Digest totally free
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
British Metal was compelled to shut considered one of its two blast furnaces at Scunthorpe final 12 months after utilizing the incorrect sort of coal, within the newest signal of the disaster enveloping the Chinese language-owned group’s UK operations.
The debacle triggered preliminary fears amongst some authorities officers that British Metal could be making an attempt to sabotage its personal lossmaking plant, however ministers have been reassured that the shutdown was right down to a administration blunder.
The disclosure got here because it emerged that British Metal has deserted plans to revive steelmaking to Teesside, as a part of a government-backed restructuring of the corporate’s operations to maneuver to greener types of manufacturing.
Preliminary plans put ahead by the corporate, which is owned by China’s Jingye, had envisaged constructing one electrical arc furnace at Scunthorpe and one at Teesside, however folks accustomed to the state of affairs confirmed the goal was now to construct two on the Lincolnshire website.
Lord Ben Houchen, Conservative mayor of Tees Valley, claimed the Labour authorities had been against the concept and favoured as a substitute the focus of latest British Metal electrical arc furnaces at its current Scunthorpe plant.
“It’s disappointing,” Houchen informed the Monetary Occasions. “Clearly there was collusion by the Labour authorities and unions for it to not come to Teesside.”
Allies of Jonathan Reynolds, enterprise secretary, mentioned the longer term construction of the enterprise was a industrial determination for British Metal, however famous that Teesside was proving to be a lovely location for inward funding.
The corporate’s determination to drop plans to construct one “inexperienced” furnace on Teesside and one other at its essential works in Scunthorpe was first reported by the Sunday Occasions.
The issues with British Metal’s “Queen Anne” furnace in Scunthorpe arose final 12 months after the corporate started to import coke after closing the coke ovens that feed its two furnaces in 2023.
Engineers mistakenly sourced coke that was a mixture of each “low-quality and low-condition”, and which led to the furnace turning into inactive, in line with a number of folks accustomed to the state of affairs.
The shutdown triggered preliminary considerations in authorities that British Metal may need tried to break its personal plant to justify the closure of its lossmaking UK operations, in line with folks briefed on the difficulty.
However one authorities insider mentioned Reynolds believed it was right down to “incompetence and cost-cutting” reasonably than any malign intention. The engineers misunderstood the complexities of the corporate’s demanding blast furnaces, mentioned a second particular person accustomed to the state of affairs.
Talks between the federal government and the corporate on the dimensions of the help package deal for the restructuring of its operations stay ongoing. British Metal’s newest accounts, filed final 12 months, confirmed that Jingye had injected £100mn of fairness into the enterprise in October 2023.
British Metal has made clear it’s searching for greater than the £500mn that was agreed for Tata Metal’s plant at Port Talbot in Wales to construct one electrical arc furnace. The federal government has mentioned it would make investments £3bn, including the £500mn for Tata, into Britain’s metal trade over the approaching decade.
Union representatives mentioned their precedence was to maintain the blast furnaces open for so long as attainable. Electrical arc furnaces are much less carbon-intensive but additionally make use of fewer folks and the transition to greener types of steelmaking might doubtlessly put as many as half of the 4,500-strong workforce in danger.
Alasdair McDiarmid, assistant basic secretary of the Neighborhood union, whose members embrace steelworkers, mentioned it was “crucial that two blast furnaces are retained at Scunthorpe to facilitate the transition to new applied sciences on website”.
“It is a precedence for us as a union and is on the coronary heart of the proposals we’ve offered to Jingye, and we at the moment are awaiting the corporate’s response.”
British Metal declined to touch upon the the reason why the Queen Anne furnace went down however mentioned each of its furnaces had been now working. It was persevering with to buy “uncooked supplies to help iron and metal making”.
The corporate, it added, remained in “ongoing discussions with the federal government about our decarbonisation plans and the longer term operations of our UK enterprise”. Though progress was persevering with, “no closing selections have been made,” it mentioned.
