The government has offered to buy the crucial coking coal needed to keep British Steel’s plant in Scunthorpe operational, according to BBC sources.
British Steel had warned for several days that the raw materials required to keep its two blast furnaces running were running out. Sources confirmed that the government had put the offer in writing to Jingye, the Chinese company that owns British Steel. Jingye will decide whether to accept the offer.
Government officials have also indicated that the materials must be paid for within two days, or production at the plant could stop within weeks and may not be able to restart. The Department of Business and Trade declined to comment on the situation.
Jingye has stated that the furnaces at the plant are “no longer financially sustainable.”
Discussions between British Steel executives and government representatives are set to continue on Thursday. Unions have expressed concern, stating that the situation is at a “cliff-edge.”
While the government has not ruled out nationalizing British Steel, which employs 2,700 workers, it has stated that all options are still on the table.
The coking coal needed for steel production has to be imported, and it can take up to 45 days for it to arrive once ordered. The plant also requires iron ore, which arrives more quickly than coal.
The government’s offer to purchase the raw materials is intended to buy time while discussions about the plant’s future continue.
Business Secretary Jonathan Reynolds met with the CEOs of Jingye and British Steel on Wednesday. In a joint statement, both sides expressed a commitment to continued cooperation. The UK government thanked Jingye for their respect towards the workforce during this process, and work continues to find a solution.
Ministers are thought to prefer a commercial solution that would secure the long-term future of the plant. However, due to the urgent need for new raw materials, discussions about the plant’s future are now largely on hold.
The immediate concern is determining who will pay for the shipments of iron ore and coking coal. One option being discussed is for the government to directly purchase the materials using taxpayer funds.
It is understood that the easiest legal approach would involve a deal with Jingye, allowing the company to continue running the plant, with the government covering the cost of the raw materials.
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