UK Chancellor Jeremy Hunt is set to approve a £300 million ($371m) tax payer-funded aid package to British Steel, to be handed to the steelmaker in instalments during the next few years, Sky News reports.
The funding would be “directly linked” to a project to replace British Steel’s blast furnaces at its Scunthorpe site with a greener electric arc furnace, the news agency cites one person close to the situation as saying.
Jingye Group, British Steel’s Chinese owner, would also be obliged to invest at least £1 billion in the business by 2030 and make commitments relating to job retention.
When contacted by Kallanish, the Department for Business, Energy and Industrial Strategy (BEIS), which speaks for the UK government on matters relating to steel, declined to comment on the British Steel case.
It did however say: “The Government recognises the vital role that steel plays within the UK economy, supporting local jobs and economic growth and is committed to securing a sustainable and competitive future for the UK steel sector … The Business Secretary considers the success of the steel sector a priority and continues to work closely with industry to achieve this.”
British Steel did not respond to request for comment before deadline on Friday.
British Steel chief executive Xifeng Han said earlier this month that Jingye has invested £330m in capital projects during the first three years of ownership and “continues to invest unprecedented sums of money in British Steel” (see Kallanish passim).
“Jingye is committed to our long-term future but we also require the UK Government to provide the necessary support, policies and frameworks to back our drive to become a clean, green and sustainable company,” he added. “We’re continuing formal talks with the government about decarbonisation, along with the global challenges we currently face. The government understands the significant impact the economic slowdown, rising inflation and exceptionally high energy and carbon prices are having on businesses like ours, particularly during such a key period in our transformation.”
The firm’s new £54m billet caster is scheduled to be commissioned this spring. Last year it secured funding from the UK government for a feasibility study into switching from natural gas to green hydrogen as a fuel source for re-heating furnaces.
British Steel has pledged to deliver net zero steel by 2050 and significantly reduce its CO2 intensity by 2030 and 2035. It launched its Low-Carbon Roadmap in October 2021, which besides the use of hydrogen entails increasing the amount of scrap used in the integrated steelmaking route, using hot-briquetted iron, and assessing carbon capture and storage, and EAF steelmaking.
Adam Smith Poland