British Steel reveals losses have increased eightfold

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British Steel has announced an eightfold increase in pre-tax losses in 2022 as concerns mount over the future of the Chinese-owned company.

The steelmaker, owned by China Jingye, posted losses of £408m on turnover of £1.7bn in the 12 months to December 2022, according to new accounts filed at Companies House. A year earlier it lost £49.5m on turnover of £1.5bn.

The UK government has been in long-running talks with the company to help finance its transition from conventional steelmaking to greener and less labour-intensive electric arc furnaces. Ministers are eyeing a deal similar to the one they struck with Tata Steel last week, which secured £500m of state aid for Britain’s biggest steelmaker.

But with no deal in sight, a person close to the situation said the government expected Jingye to announce the closure of the two blast furnaces in Scunthorpe this month – putting more than half of its 4,500-strong workforce at risk.

The company previously warned it was losing more than £1m a day. Its latest accounts include a £202.9m impairment charge which it said reflected a “deteriorating outlook for blast furnace operations” at Scunthorpe.

The losses continued into 2023 and 2024, the company added, warning that if they continued, additional financial support from parent China would be needed. The accounts show Jingye injected £100m of equity into the business last October.

British Steel is a key rail supplier in the UK. The company has considered importing semi-finished steel from abroad to continue supplying its rail customers while the electric arc furnaces are built, a process that could take three years. Such a move would, however, require the approval of rail authorities to ensure adequate safety standards are met and is likely to be rejected by ministers, according to industry and Whitehall figures.

Labor said it would provide £2.5bn, on top of the £500m for Tata, to help the steel industry switch to greener forms of production and meet the UK’s climate-zero targets for 2050, but the prospect of thousands of job losses looms large. an early test of the government’s industrial strategy. The deal with Tata will keep steel production in Wales via the electric arc route, but will still result in more than 2,500 workers being made redundant.

If British Steel closes its two blast furnaces, it will leave the UK without the ability to produce steel from raw materials using iron ore and coal for the first time since the Industrial Revolution.

British Steel said discussions were “ongoing” with the government about potential support for its decarbonisation program and future business operations. “While we have invested more than £1 billion to maintain our aging blast furnaces, this is not financially or environmentally sustainable in the long term,” he said.