Race To Keep British Steel Furnaces On As China Issues Trade Warning

China has accused the UK of “politicising trade cooperation” after the government passed an emergency law to take over the running of British Steel’s Scunthorpe site.

The foreign ministry in Beijing said the move to seize control of the plant from Jingye, a Chinese company, could discourage Chinese investment in the UK.

Efforts are under way to secure the vital raw materials needed to fuel the plant’s central blast furnaces. The UK government has said its owners intended to shut them down against its wishes.

As of Monday morning, officials were still trying to obtain the coking coal and iron ore needed to power the plant – materials which ministers have previously accused Jingye of selling off.

An emergency law rushed through Parliament on Saturday gave the government control of the Lincolnshire site to prevent Jingye from closing the furnaces.

Sourcing and transporting the raw materials to the Scunthorpe plant quickly is critical because blast furnaces can sustain permanent damage if their temperature drops too low, while restarting a furnace is also costly and complex.

Dozens of businesses including steel producers Tata and Rainham Steel have offered help and to supply their raw materials, the government has said.

Civil servants and British Steel officials are trying to secure one such shipment of materials which is being stored 30 miles east of Scunthorpe at Immingham Docks.

On Monday, the government appointed two long-standing British Steel employees to run the plant on an interim basis. Temporary chief executive Allan Ball said “securing the raw materials we need to continue blast furnace operations” was among their top priorities.

Treasury minister James Murray said the government was confident it was doing everything possible to secure the necessary raw materials but refused to be drawn further on the plant’s future while commercially sensitive talks aimed at obtaining those supplies were continuing.

“We know the coal is in the UK, we know the raw materials are in the country. We need to make sure we get it into the blast furnaces,” he told BBC Breakfast.

Pressed on Chinese involvement in key UK industries, Murray told BBC Radio 4’s Today programme that Jingye had “clearly behaved irresponsibly”.

The minister said there needed to be a “high level of scrutiny” for any foreign investment in critical infrastructure, but that the actions of one firm did not “speak to all companies who are based in China”.

Unions have expressed confidence that the government would be able to source the materials needed to keep the furnaces operational.

Roy Rickhuss, general secretary of the Community Union, which represents the majority of steelworkers, said the blast furnaces are “in a far better position” than before the government stepped in.

Speaking on BBC Radio 4’s Today programme, Mr Rickhuss said he was certain the plant would remain running and that the furnaces were “secure”.

Charlotte Brumpton-Childs, from the GMB Union, told BBC Breakfast that she had spoken to British Steel on Sunday night and had been reassured the raw materials would be secured by the government.

The Scunthorpe plant employs 2,700 people and is the last site in the UK that can produce virgin steel, a high-grade product which is needed for large construction projects.

Without the plant, the UK would be the only member of the G7 group of leading economies without the ability to make virgin steel – which the government believes is a risk to the country’s economic security.

The site produces the majority of rail tracks used by Network Rail. The company said it does not expect “any impact on the continued delivery of reliable rail services” as it built up a stockpile of steel in anticipation of the plant’s possible closure.

The virgin steel made there is also critical for large-scale infrastructure developments, such as building nuclear power plants like the ongoing Hinkley Point C project in Somerset.

On Saturday, the government fast-tracked legislation which gave it control of the plant after talks with Jingye to save it appeared to break down.

The company said in March it was losing £700,000 a day at the site, which it called “no longer financially sustainable”, and began a consultation on its closure.

On Sunday, Business Secretary Jonathan Reynolds refused to confirm whether the government could obtain the materials in time.

“I’m not going to get into that,” he told the BBC’s Sunday with Laura Kuenssberg programme, but said the takeover gave the “opportunity” to obtain the materials needed.

Reynolds added it “became clear” during negotiations that Jingye was intent on closing down the blast furnaces no matter the financial support offered.

The government said Jingye refused an offer of £500m in financial support to help keep the furnaces running, and demanded more than twice as much money, with few guarantees it would keep the plant open.

“It might not be sabotage, it might be neglect,” Reynolds said of the company’s actions.
Following the government passing the emergency legislation,  China’s foreign ministry urged the UK government to hold further talks with Jingye. According to AFP news agency, spokesman Lin Jian said: “It is hoped that the British government will… avoid politicising trade cooperation or linking it to security issues, so as not to impact the confidence of Chinese enterprises in going to the UK for normal investment.”

The Conservatives have criticised the government for not stepping in sooner to save the plant. Tory shadow business secretary Andrew Griffith said the party had supported the emergency law because “it’s the least worst option on the table”.

Source: BBC