Ministers poised to nationalise second steel firm
The government is poised to take the UK’s third-largest steelworks into public ownership, after months of talks to find a buyer broke down.
Business secretary Jonathan Reynolds said on Monday that ministers would seek to use recently ratified legislation to nationalise Speciality Steel UK (SSUK) from failure, a matter of weeks on from a similar move to take ownership of Scunthorpe’s British Steel.
The future of the South Yorkshire steelmaker – which employs nearly 1,500 people and used to be owned by metal magnate Sanjeev Gupta – had for months been the subject of fraught negotiations, with ministers battling to find a private sector buyer.
The government took control of SSUK a year ago, after creditors issued Gupta a winding up order bid to recoup for hundreds of millions of pounds they were owed by the controversial tycoon. The government initially tried to sound out corporate interest in the steelmaker, which boasts four sites across the north including in Rotherham and Stocksbridge. Talks were most advanced with Blastr, a small Norwegian firm that at one stage entered exclusive negotiations with Whitehall officials over taking on ownership of SSUK.
But talks ground to a halt in June, after the two parties failed to reach an agreement having extended the exclusivity period. Officials judged the proposal would not be able to “provide the long-term stability, certainty and value for money”, the government said on Monday.
Reynolds hailed the move to step in and nationalise the steel plants, pointing to 1,300 workers employed at the sites and its status as a vital piece of national infrastructure. “We do not intervene in private companies lightly,” he said. “But nor can we simply stand aside and allow the future of this company and over 1,300 jobs to be decided by default.”
But a Blastr Green Steel spokeswoman said: “We are disappointed by the government’s decision today concerning Speciality Steel UK, and we were not informed in advance. Over the course of several months, we have advanced our plans for a private sector solution to acquire SSUK – and were today on site in South Yorkshire with investors and strategic partners. We have a fully-funded proposal – at no cost to the British taxpayer – that is ready to complete within 12 weeks.”
Ministers launch string of steel measures
The intervention is the latest in a string of moves from ministers to bolster Britain’s domestic steel industry, despite all major producers operating at yawning losses. In July, Keir Starmer’s government nationalised British Steel after seizing the UK’s largest steelmaker from its Chinese owners the previous year.
The group’s Scunthorpe plant is the country’s only remaining producer of virgin steel, prompting fears that Britain would lose all primary steelmaking capacity without taxpayer intervention.
In July, the government sought to further safeguard domestic production by erecting steep new tariffs on foreign-made steel. As well as hiking the duty on imported steel to some 50 per cent, it also slashed tariff-free quotas by more than half as part of the same package.
Together, the moves have been welcomed by steel industry figures, say they are vital if Britain is to become less reliant on imports for the alloy. But several industry chiefs have also warned that together the measures will push costs for the UK’s already ailing manufacturing industry.
Since the government’s receiver took control of Speciality Steel last August, the taxpayer has been funding the wages of nearly 1,500 people to the tune of £3.5m a month, on top of funding the running costs of the plants.
“SSUK is already well on its way to returning to full operations and retaking its place at the heart of critical UK supply chains,” said Gareth Stace, director general of UK Steel. “It is crucial that the custodian of this key strategic asset is the right owner and investor, with the expertise and long-term ambition that the dedicated workforce deserve.”