Monday, the new business secretary, Grant Shapps, will attempt to persuade Jingye Group leaders not to proceed with actions that could result in the loss of thousands of industrial jobs.
The new business minister, Grant Shapps, will meet with the owners of Britain’s second-largest steel manufacturer next week amid diminishing hopes that a government aid package can avoid the loss of thousands of jobs.
Mr. Shapps will speak with Jingye Group executives on Monday to persuade the Chinese company not to close one of the two blast furnaces at the British Steel facility in Scunthorpe.
Since Rishi Sunak became prime minister, Jingye, which assumed possession of an insolvent British Steel in 2020, has been increasingly pessimistic that the government will agree to provide large taxpayer assistance, according to insiders.
According to one source, British Steel has begun placing orders for the necessary equipment to permanently close one of Scunthorpe’s blast furnaces.
According to the source, such a move might result in as many as 2,000 layoffs at the corporation, dealing another blow to Britain’s industrial production capacity.
Mr. Sunak is anticipated to adopt a more pessimistic stance towards demands for government funding to bolster faltering enterprises than his brief predecessor in Downing Street, Liz Truss.
Last month, Jacob Rees-Mogg, whose tenure as business secretary under Ms. Truss lasted only weeks, began formal discussions with Jingye over the provision of hundreds of millions of pounds in funds to help British Steel decarbonize.
Whitehall stipulated as a prerequisite for the negotiations that Jingye would not eliminate positions at British Steel while discussions were ongoing.
Tata Steel, the largest participant in the UK steel industry, has also asked the government for financial assistance.
A Whitehall insider told last month that discussions were underway with the steel industry, particularly British Steel and Tata, to ensure the industry’s long-term viability.
British Steel employs approximately 4,000 people, with thousands more relying on the company’s supply network.
The Department of Business, Energy, and Industrial Strategy (BEIS) declined to comment on Saturday, while a British Steel spokeswoman stated, “We are continuing formal discussions with the UK Government to assist us in overcoming the worldwide issues we are now facing.
“The government recognizes the tremendous impact that the economic slowdown, increasing inflation, and unusually high energy and carbon prices have on enterprises like ours, and we look forward to working with them to achieve a sustainable future.”
Energy consumers in the industrial sector have complained for months that rising prices threaten their capacity to maintain operations.
Given the magnitude of the possible job losses that could arise from a refusal to provide taxpayer aid, Jingye’s request for financial assistance poses a political challenge for ministers.
An agreement to grant major taxpayer support to a Chinese-owned enterprise will infuriate Tory critics of Beijing.
After years of international trade disputes over dumping, China’s prominence in global steel production would make any subsidies considerably more problematic.
In May 2019, the Official Receiver was appointed to assume control of the company following the breakdown of discussions for a £30 million emergency government loan.
British Steel was founded in 2016 after India’s Tata Steel sold its business to the investment firm Greybull Capital for £1.
As part of the agreement that gave Jingye ownership of British Steel, the Chinese company stated that it will invest £1.2 billion over the next decade to modernize the company.
The then-prime minister, Boris Johnson, heralded the completion of Jingye’s acquisition of the company in the spring of 2020 as ensuring the future of steel production in Britain’s industrial heartlands.
