The request for £600m in taxpayer cash is part of a £1.3bn turnaround plan to make greener steel.
This should still see an electric arc furnace constructed in Scunthorpe, though sources said they feared a plant would not be up and running for at least five years, resulting in the loss of thousands of jobs.
Unions said they had not been consulted about these proposals. Charlotte Brumpton-Childs, GMB national officer, said: “Early closure of the blast furnaces at Scunthorpe would be devastating for the community and workforce. Unions have been assured throughout the process that the blast furnace operations would continue throughout the construction of an electric arc furnace.
“British Steel and the Government must engage with workers immediately to safeguard jobs and livelihoods.”
British Steel was bought by China’s Jingye Group in March 2020 after it collapsed into bankruptcy. Its headquarters are based at the 2,000-acre Scunthorpe site in Lincolnshire, along with its main iron and steelmaking operations.
Its four blast furnaces produce about three million tonnes of steel a year – about half the UK total. The company employs about 4,500 people in the UK.
It also has rolling mills in Teesside and Skinningrove in the UK and in Alblasserdam in the Netherlands.
Steel’s role in almost every section of the manufacturing sector means a country’s ability to make its own – or not – has huge strategic implications.
British Steel’s output is widely used in the UK construction and rail industries, for example, and is also vital in energy, ranging from the many nuclear reactors now in planning to the thousands of wind turbines needed for the energy transition.
Labour has been in talks with China’s Jingye about securing a rescue deal in recent weeks. The company currently operates two blast furnaces and employs roughly 4,500 people in the UK.
As part of the rescue deal, Jingye pledged to invest £1.2bn over 10 years to modernise its sites and boost energy efficiency.
British Steel is one of only two makers of strategically important steel in the UK, alongside Tata Steel at Port Talbot in Wales. Tata is also in talks with the government over a similar bailout.