The UK hopes to find a private buyer for British Steel – FT

No decision has yet been made regarding the future of the steel company

The UK government hopes to find a private buyer for British Steel and is seeking to involve bankers in the sale process, according to the Financial Times.

The sale process, the publication notes, citing sources, will take place despite the fact that China’s Jingye Steel technically still owns the main site and assets in Scunthorpe.

It is expected that any potential buyer of British Steel will require large government subsidies, which could include a “dowry” payment to the new owner or a government guarantee against the risk of takeover.

Officials said the process of appointing advisors has not yet begun, and sources close to the situation say no decision has been made on the future of British Steel and the sale process is in its early stages.

The government took control of British Steel seven months ago and, according to a recent written statement to Parliament, has already spent £274 million to keep the company running.

UK Industry Minister Chris McDonald said in a statement that the government continues to work with Jingye to find a pragmatic and realistic solution for the future of British Steel. He said that the long-term aspirations for the company would require joint investment with the private sector to ensure modernization and decarbonization, protect taxpayers’ money, and preserve steel production in Scunthorpe.

British Steel declined to comment, and Jingye did not respond to requests for comment. A government spokesperson said negotiations with Jingye on the long-term future of the facility are ongoing.

It should be noted that Business Secretary Peter Kyle recently supported the transition to electric arc furnace steel production at British Steel, according to The Guardian. This raised questions about the future of the country’s last blast furnaces and previous government promises to preserve primary steel production.

The government is currently working on a new strategy for the steel industry, which is expected to be announced in December.

Steelmakers are cautious about these plans after the experience of Tata Steel, which cut 2,500 jobs in Port Talbot last year amid the transition to EAF. The plan will also require an agreement with Jingye to exit the project.

In April this year, the UK Parliament passed an emergency bill at an extraordinary meeting to give the government control over British Steel, granting it broad powers to manage the company’s personnel and operations, as well as to order raw materials to continue production in Scunthorpe.