Almost 25,000 jobs are at risk as the UK’s second-largest steel producer prepares to face bankruptcy within days, according to reports.
Sky News says that British Steel is “on the brink of collapse amid growing signs that an emergency government loan would fail to materialise”.
So what has happened and what next for the sector as a whole?
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What happened to British Steel?
Earlier this month, it emerged that British Steel was trying to secure a £75m state bailout in order to tackle “Brexit-related issues”. This requested sum was reduced to £30m after the company’s owner, Greybull Capital, and lenders agreed to front the rest.
Unless a deal is struck immediately, British Steel is expected to go into administration on Wednesday, potentially leading to 5,000 direct redundancies and further cuts to the 20,000-strong supply chain.
The news comes just a few weeks after the Government gave the company an emergency £120m loan to cover an EU bill for its carbon dioxide emissions.
Doesn’t this sound familiar?
“Steel is back in crisis,” says The Times - a reference to 2016, when the country’s then-largest steel manufacturer, Tata Steel, put its UK operations up for sale, setting its value at “almost zero”.
When Greybull subseqently purchased Tata’s Scunthorpe site for a nominal fee and rebranded it as British Steel, it was “supposed to herald a new era in an industry that has suffered from decades of closures and job cuts”, says the Financial Times.
Instead, three years on, British Steel is “becoming more like a reminder of some of the darkest days in the history of UK manufacturing”, says the newspaper.
There are also renewed doubts about the future ownership of Tata’s Port Talbot steelworks, after a merger with Germany’s Thyssenkrupp was abandoned recently over European Commission competition concerns.
What next?
The causes of the sector’s latest problems are largely different to those three years ago, but experts are asking how long the steel sector can continue. “The events of the past fortnight suggest that the industry’s days are numbered,” says The Times.
There are some common issues faced by both Tata and British Steel, adds Sky’s Ian King. These includes persistant weakness in sterling, the global rise in iron ore prices, higher energy costs and a vast overcapacity in the global steel industry, with much of the excess coming from China.
And King warns that things could get much worse in the case of a no-deal Brexit.
“It is hard to see how, ultimately, steelmaking in this country can survive such headwinds in the long run,” he concludes.
