UK government prepares to line up bankers for British Steel sale

The UK government is preparing to appoint advisers to manage the potential sale of British Steel, seven months after taking control of the Scunthorpe plant amid fears the Chinese owner might abandon the site.

Ministers hope a private buyer can be found for the taxpayer-supported steelworks, which was losing around £700,000 a day before the government intervened, Caliber.Az reports, citing The Financial Times.

Emergency legislation passed in April allowed the state to assume management of the company, safeguarding the jobs of 3,500 workers.

The sales process, which is still in its early stages, could require significant government support, including a potential “dowry” or state-backed underwriting to attract a buyer, according to sources familiar with the situation.

Jingye Steel, which still technically owns the main site and assets, is expected to demand compensation for any loss of ownership, potentially exceeding £1 billion.

Since taking control, the UK government has invested £274 million in British Steel to cover salaries, raw materials, and unpaid supplier bills. Chris McDonald, minister for industry, said the long-term plan for the company would involve co-investment with the private sector to modernise the plant, support decarbonisation, and protect taxpayers’ money.

The decision to explore a sale comes amid challenging conditions for the steel industry, including a global oversupply, high energy prices in the UK, and tariffs imposed by the United States.

British Steel has had a turbulent history in recent years. The Scunthorpe plant was sold by Tata Steel to private equity group Greybull Capital for £1 in 2016, before going into administration in 2019.

Jingye purchased the company in 2020 for approximately £50 million and pledged £1.2 billion to revamp the business, including a shift towards low-emission electric arc furnaces.

A government spokesperson said: “We will ensure a bright and sustainable future for steelmaking and steel jobs in the UK and are continuing discussions with Jingye over the long-term future of the site.”

By Aghakazim Guliyev