The owner of British steelthe UK’s second-largest steel producer, is reportedly seeking an urgent package of financial support from the government.
Jingye Group, which bought the company out of insolvency just two years ago told ministers his two blast furnaces were unlikely to remain viable unless the Scunthorpe-headquartered company received financial aid, Sky News has reported.
The company employs approximately 4,000 people, while thousands more jobs depend on the company in its supply chain.
While the exact figure for how much the Chinese industry group is seeking is unknown, Sky insiders suggest the owners would need “hundreds of millions of pounds” to maintain operations.
The reported request presents a significant challenge for Jacob Rees-Mogg, the new Business Secretary, ahead of the Conservative Party Conference, which begins in Birmingham on Sunday.
An insider told Sky that if the government refuses Jingye’s request, thousands of people could lose their jobs.
The government declined to confirm the information on Saturday, but said it was “working at the pace of the business to understand the best way forward as it seeks to secure a more sustainable future”.
A spokesman for the Department for Business, Energy and Industrial Strategy said: ‘We recognize that businesses are feeling the impact of high global energy prices, particularly steel producers, it’ is why we announced the Energy Bill Relief Scheme to reduce costs.
“This is on top of the significant support we have provided to the steel sector as a whole to reduce energy costs, worth over £780m since 2013.”
British Steel said it was “investing hundreds of millions of pounds into our long-term future”, but added: “Like most other businesses, we face a significant challenge due to the economic downturn, the soaring inflation and exceptionally high energy and carbon prices.
“We welcome the UK government’s recent announcement to cut energy costs for businesses and remain in dialogue with officials to ensure we compete on a level playing field with our global competitors.”