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British Steel is preparing to idle one of its two blast furnaces as early as next week to preserve critical raw materials as crunch talks with UK ministers to stave off a collapse are set to continue for a second day.
The move would allow the Chinese-owned steelmaker to prolong production at the remaining furnace at its main site at Scunthorpe in Lincolnshire until the middle of next month, people familiar with the matter said.
Executives from British Steel’s owner Jingye Group met business secretary Jonathan Reynolds on Wednesday to discuss options to stave off a collapse of the lossmaking company.
Talks between the two sides are set to resume on Thursday afternoon, the people said.
The Chinese company last month rejected a £500mn taxpayer support package from ministers to help it move to greener forms of production.
The government has said all options, including nationalisation of the steelmaker, are on the table as it seeks to avert the loss of 3,500 jobs.
British Steel is also the UK’s last remaining producer of primary steel after Tata Steel closed its two furnaces last year.
Alun Davies, national officer at the Community steel union, said the priority for workers was to “see a deal done”.
British Steel and the Department for Business and Trade said in a joint statement that “both sides welcomed continued cooperation in talks to find a way forward”.
“The UK government thanked Jingye for their respect for the workforce during this process, and work continues at pace to find a resolution.”
UK officials have been examining options to purchase raw materials such as coking coal and other iron materials to keep the furnaces running after Jingye stopped orders of the critical inputs.
Idling would allow the furnace to be kept at a certain temperature, enabling it to be restarted within six weeks as opposed to a permanent closure where the furnace is allowed to cool completely.
Earlier on Wednesday the culture secretary Lisa Nandy told the BBC a “commercial solution” for British Steel is “achievable and within sight”.
Unite, the union, urged ministers to renationalise British Steel if the government fails to agree a deal with its Chinese owners. Sharon Graham, general secretary, said it would be an “economic catastrophe if the worst were to happen and government was to allow British Steel to collapse”.
“The government must also use its buying power to put UK steel at the heart of major UK infrastructure projects as part of a joined up industrial strategy that supports UK manufacturing,” she said.
The negotiations are occurring in the wake of tariffs imposed by US President Donald Trump of 25 per cent on steel and aluminium exports to America. Much of British Steel’s product is sold domestically.
British officials are examining whether the UK needs to retain domestic “primary” steelmaking capacity given the potential impact of Trump’s tariffs on supply chains, according to people familiar with the matter.
That would require the continued operation of blast furnaces in the medium-term. The alternative is less carbon-intensive electric arc furnaces that melt down recycled steel but cannot produce steel from scratch.
The government is expected to issue its verdict in the steel strategy that it has promised to publish by the end of Spring.
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