Unions are concerned about the future of UK steelmaking after British Steel announced intentions to dismantle its Scunthorpe coking ovens and lay off up to 260 people.
The Chinese-owned corporation attributed the increase to “extraordinary” energy costs and environmental demands.
The country’s main steelworkers union warned that the changes might have a “catastrophic impact” on steel production in the UK.
Coking ovens transform coal into coke, which burns at greater temperatures than steel furnaces.
The closure of the ovens at British Steel’s Scunthorpe headquarters, which means the company will have to import coke, has been interpreted as a warning indication for the UK steel industry’s health and future.
British Steel’s decision was hailed as “very sad” by the government; however, discussions with the sector about funding support were underway.
British Steel, owned by the Chinese company Jingye, employs roughly 4,200 people in the United Kingdom.
Steel production necessitates a significant amount of energy, and as prices have climbed in recent months, so have the costs of producing the metal.
According to the business, its energy prices and carbon-offsetting expenses soared by £190 million last year, and “decisive action” was required.
It stated that its coke ovens were “nearing the end of their useful life” and that shutting them down would “bring environmental benefits such as reductions in emissions to air and water.”
‘Come on honest,’ Alun Davies, national officer of the Community Trade Union, said, “We will not tolerate redundancies,” and “nothing is off the table” when it comes to keeping our members’ jobs.”
The decision by British Steel to close the coke ovens could have a devastating impact on jobs and steel production in Scunthorpe and across the UK, “He issued a warning.
Mr. Davies said that closing the ovens would leave the firm “reliant on unreliable imported coke,” putting “our sovereign power to make steel in the UK at risk.”
The steelworkers’ union, Unite, accused Jingye of breaking investment promises and stated the UK government had “no genuine plan for the industry.”
Sharon Graham, the general secretary, indicated that she has not seen “any financial foundation for the closure of the coking ovens.”
Yet, British Steel CEO Xifeng Han remarked that the UK steel industry is “uncompetitive” compared to other overseas markets.
“Our energy, carbon, and labor costs are among the highest in the world, and these are variables we have no control over,” he said.
Mr. Han stated that the goal was to “streamline” the company while keeping “the period of uncertainty for our workforce as short as possible.”
He stated that the company was going through the most significant shift in its 130-year history “to ensure we can manufacture the steel Britain requires.”
The government and others in the industry have been discussing a £300 million rescue package with the owners of British Steel.
The government stated that it would continue to work with British Steel to find a “solution for the business and the larger sector, which is essential to the UK economy.”
Jingye has invested £330 million since purchasing British Steel in 2020. Mr. Han stated that the owners were “committed” to the company in the long run, but warned that the transition to greener forms of energy to produce steel would be a “significant challenge.”
According to union sources, government proposals to the firm were rejected because they came with too many strings attached, including ten-year job guarantees.
They also contend that the proposals are insufficient to pay the estimated £2 billion cost of transitioning from blast furnaces to more energy-efficient electric arc furnaces.
Labour’s Shadow Business Secretary, Jonathan Reynolds, stated that workers required “a government on their side to secure the bright future our steel sector could have.”
British Steel intends to lay off 800 staff
According to the BBC, British Steel is considering cutting off 800 workers at its Scunthorpe plant.
The corporation has begun making preparations, but the paperwork must be finished before a consultation on layoffs can take place.
According to a source, a representative of Jingye, the Chinese company that controls British Steel, suggested that talks over a £300 million government aid package needed to be more satisfactory.
British Steel did not respond to requests for comment.
The corporation employs roughly 4,500 people in the United Kingdom.
According to the BBC, one alternative is to close the coking ovens at the company’s Scunthorpe operation. But, 300 jobs may be jeopardized as a result of this.
Hundreds of jobs would be reevaluated, resulting in the loss of up to 800 workers.
British Steel has been struggling as a result of rising energy costs, generating concerns about the closure of several of its factories.
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The Chancellor announced last month that he was “poised” to authorize a £300 million aid package for the struggling steelmaker to aid in decarbonization efforts as long as Jingye guaranteed jobs and invested money.
The company’s choice to lay off 800 workers may have made it more difficult for the government to support it.
According to a source, during a meeting with senior union leaders on Wednesday, a Jingye official stated that discussions about the decarbonization plan needed to be more satisfactory.