British Steel suffers blow as Chinese firm reveals £400m loss

Fears over the future of British Steel are growing after the Chinese-owned company revealed losses had soared to more than £400m.

In the latest blow to the UK steel industry, the company said losses had increased eightfold in 2022, from £49.5m to £408.4m.

The figures come as the company, Britain’s second-biggest steelmaker, struggles to secure a taxpayer-funded rescue deal.

Rival Tata Steel last week announced the loss of nearly 3,000 jobs as the sector struggles to move towards green steel production.

British Steel is seeking state funding to replace its Scunthorpe blast furnaces with electric arc furnaces.

A similar deal was signed last week between the Labour Party and Tata Steel, which owns Britain’s largest steelworks in Port Talbot, south Wales.

The government has agreed to pay £500m for the electric arc furnace, and Tata Steel will invest a further £750m, in an effort to achieve net zero carbon emissions.

But the deal, first approved by the Conservatives, will see at least 2,800 workers lose their jobs.

Talks between ministers and British Steel, owned by Chinese firm Jingye, are continuing.

There are fears that Jingye will reveal the closure of the two Scunthorpe blast furnaces this month, although it said yesterday that no decision had been taken.

The closure would put more than half of its 4,500 workers at risk of redundancy and leave the UK without the ability to produce steel from scratch for the first time since the Industrial Revolution.

A British Steel spokesman said: ‘While we have invested over £1bn to maintain our ageing blast furnaces, this is not sustainable either financially or environmentally.

‘We are in ongoing discussions with the Government to explore potential support for our decarbonisation programme and the future operations of our business.’

British Steel is currently losing more than £1m a day. Its losses include a £202.9m impairment charge, which it says reflects a “deteriorating outlook for blast furnace operations” at Scunthorpe.

The company said losses continued into 2023 and 2024 and it may require further financial support from Jingye.

Its parent company reportedly provided it with £100m in capital in October last year, but its commitment to provide further support is not legally binding.

Around 33,700 people work in the UK steel sector, which produces more than 5 million tonnes of steel a year but faces competition from cheap imports, particularly from China.