1 October 2024, 13:28 | Updated: 1 October 2024, 13:45
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The mayor of the Tees Valley region has warned that British Steel could close within weeks, leaving thousands of steelworker jobs on the line.
Ben Houchen told LBC that the closure of the Scunthorpe works would mean “the end of steelmaking in the UK for the first time since the Industrial Revolution,” following the shuttering of the final blast furnace in Port Talbot on Monday.
British Steel, a Chinese-owned company that posted a pre-tax loss of over £400 million in its most recent financial results, is expected in some quarters to close its two blast furnaces at some point soon, although this has not been confirmed publicly.
It has said that it will build a greener electric arc furnace instead. An electric arc furnace requires fewer workers, so will mean job losses.
Previously British Steel had planned to keep the blast furnaces open until the electric arc furnace was up and running. But it was reported in August that the company may close the furnaces before Christmas. British Steel said in response that no decisions had been made at that time.
Houchen said on Tuesday that the situation with British Steel was “really going to kick off before the Budget,” adding that “over the coming weeks we are going to see, from all the things I’m hearing… the closure of British Steel.”
A British Steel spokesperson said: “We are in ongoing discussions with the Government about our decarbonisation plans and the future operations of our UK business. While progress continues, no final decisions have been made.”
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He added: “It’s amazing that this is coming out of my mouth.”
Houchen, the Conservative mayor of the region since 2017, said: “I am imploring the government to not do that, look at a just transition to green steel.”
He said that the problem would affect both the local area and the UK’s own security.
Houchen added: “We need to be able to make sure we save those jobs in those communities.
“From a national security point of view, we have to have a steel industry, for defence given where we are in this world.
“It’s going to be a big, big problem.”
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Houchen pointed to the Redcar furnace, the last remnants of the Teesside steelworks, which closed in 2015, as a recent example of the major problems caused by closing local industrial sites.
“Communities are going to be devastated,” he said. “If we thought what happened in Redcar was bad, you haven’t seen anything yet if British Steel goes bust in the coming weeks.”
The government has pledged £2.5 billion to help the British steel industry transition to more environmentally sustainable production methods, on top of £500 million given to Tata Steel, the owners of the Port Talbot site. Jingye itself is said to have asked for £600 million for British Steel.
Houchen welcomed this but said work needed to be done more urgently.
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He said: “A steel plant isn’t here in 24 hours, it’s going to take two years to build. The government has to provide funding to protect those thousands of jobs while that new plant is being built.”
Houchen said the closure would result in more imports “from places like India and China… it’s going to make the steel industry even more difficult to rebuild.”
Jonathan Reynolds, the Business Secretary, said in January when in opposition that steelmaking was a “sovereign capability”.
He said he was “therefore concerned about the impact that the government’s plans could have on national security” adding that he “believes that steel production can have a bright future in the UK”.
It comes after the last blast furnace at Port Talbot in south Wales in the world shut down on Monday, leaving it unable to make its own virgin steel.
Nearly 2,000 jobs were lost at Tata Steel UK’s Port Talbot plant as blast furnace number four ceased production.
The ironworks will enter a transition phase until 2027 when steelmaking will resume through a £1.25 billion electric arc furnace.
The new furnace uses electric current to melt scrap steel or iron to produce steel, whereas blast furnaces use coke, a carbon-intensive fuel made from coal to produce steel.