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British Steel’s talks with the government to secure £300 million in green funding have stalled, according to The Mail on Sunday.
The Chinese-owned group would be “nowhere close” to reaching a deal for the money, an industry source said.
This support would be used to replace the company’s two blast furnaces with electrical steel production facilities and is seen as essential to securing its future.
Around 2,000 of the 4,500 jobs would be threatened by these plans. It comes as British Steel’s finances are under scrutiny.
The group, bought by the Chinese Jingye in 2020, delayed the publication of its 2021 accounts by more than a year.
At risk: British Steel, bought by China’s Jingye in 2020, delayed the publication of its 2021 accounts by more than a year
When they were finally published in January, auditors resigned because they had been unable to confirm the existence of £46m of stock.
Accountants also warned that the company had no formal commitment to receive additional funds from the Jingye owners, putting its ability to maintain trading operations at risk.
The unions would meet within a few weeks with the company – which is already three months late in publishing its 2022 accounts – and would question the bosses about its financial health.
Any state funding will depend on Jingye’s commitment to protecting jobs and investing at least £1 billion in the group by 2030, according to media reports. Ministers said in October 2022 that they were in negotiations with steelmakers to secure the future of the industry.
British Steel is the UK’s second largest producer and one of only two with traditional, but highly polluting, blast furnaces, with India’s Tata Steel set to receive a controversial £500 million government grant to move the Port Talbot site to electric.
But a source said there were fears the government was unwilling to reach a deal with British Steel so close to the next general election – given the backlash against Tata’s proposals, which could cost more than 2,400 jobs. across the UK.
British Steel said negotiations had not stalled but remained ongoing. A spokesperson said: “In April we hope to receive planning permission to build electric arc furnaces in Scunthorpe and Teesside, and we remain in discussions with the Government on the challenges we face.
“We are determined… and must reach an agreement quickly so we can achieve our ambitious targets, secure thousands of jobs and continue to make the steel Britain needs for generations to come.”
The Department of Trade and Business said: “We have proposed a generous support package for British Steel, including more than £300 million of investment so the company can reduce its emissions, help save jobs and create a positive future for steel production. »