British Steel’s talks with the Government for £300million of green funding have stalled, The Mail on Sunday understands.
The Chinese-owned group is understood to be ‘nowhere near’ striking an agreement for the cash, an industry source said.
The support would be used to replace the company’s two blast furnaces with electric steelmaking facilities and is seen as critical to securing its future.
Around 2,000 of 4,500 jobs would be put at risk by the plans. It comes as British Steel’s finances have come under scrutiny.
The group, which was taken over by Chinese firm Jingye in 2020, delayed publishing its 2021 accounts for more than a year.
At risk: British Steel, which was taken over by Chinese firm Jingye in 2020, delayed publishing its 2021 accounts for more than a year
When they were finally released in January, the auditors resigned as it had been unable to confirm the existence of £46million of stock.
The accountants also warned that the company did not have formal commitments to receive additional funds from owners Jingye, which put its ability to keep trading at risk.
Unions are understood to be meeting the company – which is already three months late in publishing its 2022 accounts –within weeks and intend to question bosses about its financial health.
Any state funding will depend on Jingye committing to protect jobs and investing at least £1billion in the group by 2030, according to media reports. Ministers said in October 2022 they were in negotiations with steelmakers to secure the industry’s future.
British Steel is the UK’s second-largest producer and one of only two with traditional, but highly polluting, blast furnaces along with Indian-owned Tata Steel, which is set to receive a controversial £500 million government grant to switch the Port Talbot site to electric.
But a source said there were concerns that the Government may not want to reach an agreement with British Steel so close to the next General Election – given the backlash against Tata’s proposals, which could come at a cost of more than 2,400 jobs across the UK.
British Steel said the talks had not stalled but remained ongoing. A spokesman said: ‘In April we hope to receive planning permission to build Electric Arc Furnaces in Scunthorpe and Teesside, and we remain in talks with the Government about the challenges we face.
‘We are committed… and need to reach an agreement quickly so we can achieve our ambitious goals, secure thousands of jobs and keep making the steel Britain needs for generations to come.’
The Department for Business and Trade said: ‘We have offered a generous support package to British Steel, including more than £300million of investment for the company to cut emissions, help safeguard jobs and create a positive future for steel production.’
