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The UK government has admitted that nationalizing British Steel is one option if its efforts to save the Chinese-owned company fail in the coming months.
But officials insist that taking the company into public ownership – either as a permanent or temporary relocation – is the least preferred path by ministers as they try to strike a deal with owner Jingye to keep it.
Nationalization is “one of several options we have considered,” said one government official. “But there is no progress at this stage.”
The Financial Times revealed last month that ministers were ready spend up to £2 billion from its “green steel” war chest. try to persuade a Chinese company not to close its UK business.
However, the company is losing an estimated £1 million a day and is also losing struggling with difficult decisions whether they will replace their historic, highly polluting blast furnaces with new, cleaner technology.
Five years ago, British Steel fell into insolvency after its applications for a government bailout were rejected and an official receiver was appointed to find a buyer for the group.
The then Conservative government agreed to reimburse the receiver during this period, which meant a partial nationalization costing taxpayers £600m before Jingye emerged as the new owner.
British Steel operates the last two remaining blast furnaces in the UK after Tata Steel closed his remainingin Port Talbot in South Wales, in September.
Last year, British Steel announced plans to close two blast furnaces in Scunthorpe, Lincolnshire, while investing £1.25 billion in building two cleaner electric arc furnaces in Scunthorpe and on Teesside.
But by September, Jingye was preparing to abandon the electric arc furnaces and advance the closure of the blast furnaces instead.
That prompted urgent attempts by ministers convince the Chinese company to continue operating in exchange for more money.
One option discussed would be for the government to provide generous subsidies to British Steel to keep the blast furnaces open until the electric arc furnaces are completed.
However, officials acknowledge that if Jingye leaves and no private buyer comes forward, the state may have to step in to keep him, either permanently or temporarily.
Unions Unite and GMB would support nationalisation.
A government official told The Guardian that it was just one of several options: “We would be remiss not to look at it. But it is the least attractive option.”
The business department said: “We have no plans to nationalize British Steel.” It added: “We are working across government in partnership with unions and business to ensure a transition to green steel that suits the workforce, is a good investment for the taxpayer and safeguards the future of Britain’s steel industry.”
British Steel said it was in “ongoing discussions” with the government about its decarbonisation plans, adding that “no final decisions have been made”.
The unions are scheduled to meet Li Huiming, Jingye’s chief executive, on Friday to discuss the progress of negotiations.
