The nationalization of British Steel is a “probable option,” says Business Secretary

Switch off the editor’s digest free of charge

Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.

Economic Minister Jonathan Reynolds informed the MPs that the nationalization of British Steel was a “probable option”, even when he introduced a legislation to save the company.

Reynolds said the decision to remind Parliament for an emergency on Saturday was not made lightly when he defended the government’s negotiations with Jingye, the Chinese owner of British Steel.

The draft law is a “proportional and necessary” step to maintain the primary steel production in Great Britain and to protect 3,500 jobs, although it did not want to keep the new strength to be “longer than necessary”.

The 10-page legislation enables Reynold’s extensive powers to take control of steel assets that are exposed to the risk of shutdown. Steel companies or managers who do not adhere to the command of the government can be brought into prison for two years, according to the draft.

The law will enable the government to instruct steel companies, maintain assets and to take over these assets if companies do not adhere to these instructions. It also provides for a remuneration system for costs created by a company.

Reynolds admitted that the emergency legislation was not a wand and that the search for a partner of the private sector remained the preferred option of the government. However, nationalization remained the likely option in the long term and found that the company’s market value was zero.

In the past few days it had become clear, said Reynolds during the debate, that the Chinese company intended to cancel and refuse additional orders for raw materials in order to remain the further operation of British Steel’s explosion stoves, the only two in Great Britain.

The government, he added, offered to pay the materials, but Jingye instead made a counter offer for the ministers to pay hundreds of millions of pounds without conditions.

The conservative MP Alex Burghart said the government had “a total of pork brumps” of the situation.

Andrew Griffith, Shadow Business Secretary, accused the government “Nine months of Dither and Delay” and a “botched nationalization of steel production with the British taxpayer on the hook”.

The emergency debate takes place after the talks with Jingye to keep the running. Jingye, who took over British Steel in 2020, has been talking about the support of taxpayers in discussions with the government for more than 18 months in order to switch to more environmentally friendly forms of steel production.

It rejected an offer of 500 million GBP from the ministers last month after warning that the operations were no longer “financially viable”. The company announced that it had lost more than £ 700,000 per month, some of which are due to higher tariffs and non -competitive energy costs.

Jingye was not immediately available for a comment on Saturday.

Industrial minister Sarah Jones previously said that the MPs were confronted between the approval of the law on the government or the end of primary steel production in Great Britain.

She said to Sky News: “If blast furnaces are closed in an unplanned way, they can never be opened again, the steel only extends into these stoves and nothing can be done.”

Maintaining the steel production of the UK has become a strategic priority for the government, which has set 2.5 billion GBP aside to support the sector. The closing of British Steels two blasting stoves would be the only G7 country to leave Great Britain without steel being newly made.

The government of Starrer is developing an industrial strategy to support important sectors and is particularly concerned about the threat of the 25 percent global tariff of US President Donald Trump for steel and aluminum imports.

Additional reporting by Chan Ho-Him in Hong Kong