British Steel bailout could be tied to EAF conversion

Government officials from the United Kingdom reportedly are in the process of asking China-based Jingye Steel, owner of British Steel, to convert blast furnace-based production in the U.K. to electric arc furnace (EAF) technology.

U.K.-based news service Sky News says government officials from the U.K. are flying to China in February to “win support for British Steel bailout” that is contingent in part on the blast furnace-to-EAF conversion.

The U.K. government reportedly has prepared a plan that would keep British Steel operating thanks in part to British government funding that would entail reducing employment and installing more automated EAF equipment.

Sky News says “civil servants from the (U.K.) Department for Business and Trade are travelling to meet executives from Jingye Group amid protracted talks about a 300 million British pounds ($364 million) grant” to the steel producer.

The 300 million pounds assistance package could grow to 1 billion pounds ($1.21 billion), depending on which terms the two governments can reach agreement.

Jingye reportedly already has indicated it sees British Steel in its current blast furnace/basic oxygen furnace configuration as “uncompetitive” in the regional market, Sky News reports.

“Any taxpayer funding is to be linked to the replacement of blast furnaces at the company’s sites with ‘greener’ electric arc furnaces, while Jingye would be obliged to invest at least 1 billion pounds ($1.21 billion) in the business by 2030," Sky News reports.

Even if terms are reached between negotiators in China, Sky News says the U.K. parliament will have to consider the implications of making financial commitments to a China-owned company.

Jingye’s purchase of British Steel assets in 2020 was praised by former Prime Minister Boris Johnson as helping to assure the future of steel production in Great Britain.