British Steel owner reportedly asking for urgent financial help from government

British Steel owner reportedly asking for urgent financial help from government

Jingye Group understood to have told ministers that its blast furnaces are unviable without huge cash injection

The British Steel works at Scunthorpe, Lincolnshire

The owner of British Steel, the UK’s second-biggest steel producer, is understood to be seeking an urgent package of financial support from the government.

Jingye Group, which bought the company out of insolvency just two years ago, has told ministers that its two blastfurnaces are unlikely to remain feasible unless the Scunthorpe-headquartered company is granted financial aid, Sky News has reported.

The company employs about 4,000 people, while thousands of additional jobs depend on the company in its supply chain.

While the exact figure for the amount sought by the Chinese industrial group is unknown, Sky insiders suggest that the owners would need “hundreds of millions of pounds” to keep operations running.

The reported request presents a significant challenge for Jacob Rees-Mogg, the new business secretary, ahead of the Conservative party conference, which starts on Sunday in Birmingham.

One insider told Sky that if the government declines Jingye’s request, thousands of people could lose their jobs.

The government on Saturday declined to confirm the reports but said it was “working at pace with the company to understand the best way forward as it seeks to secure a more sustainable future”.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we have announced the Energy Bill Relief Scheme to bring down costs.

“This is in addition to extensive support we have provided to the steel sector as a whole to help with energy costs, worth more than £780m since 2013.”

British Steel said it was “investing hundreds of millions of pounds in our long-term future”, but added: “Like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation and exceptionally high energy and carbon prices.

“We welcome the recent announcement by the UK government to reduce energy costs for businesses and remain in dialogue with officials to ensure we compete on a level playing field with our global competitors.”