Business Secretary Jonathan Reynolds has said it is “likely” that British Steel will be nationalised.
It comes after he appeared to row back on his claim that he would not bring a Chinese company into the steel sector again after the government had to urgently step in to save the British Steel plant in Scunthorpe.
Mr Reynolds, speaking to reporters in the Lincolnshire town, said that nationalisation was the “likely option at this stage”.
He added: “What we are now going to do, having secured both control of the site and the supply of raw materials, so the blast furnaces won’t close in a matter of days, is work on the future.
“We’ve got the ownership question, which is pressing.
“I was clear when I gave the speech in parliament – we know there is a limited lifespan of the blast furnaces, and we know that what we need for the future is a private sector partner to come in and work with us on that transformation and co-fund that transformation.”
Reynolds rows back
Mr Reynolds said he would look at Chinese firms “in a different way” following the race to save British Steel, but did not rule out their involvement completely.
The comments were at odds with his previous remarks to Sky News’ Sunday Morning With Trevor Phillips, when he said he would not “personally bring a Chinese company into our steel sector” again, describing steel as a “sensitive area” in the UK.
The government has taken over British Steel’s Scunthorpe plant, the last in the UK capable of producing virgin steel, after talks with its Chinese owners, Jingye, broke down.
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The company recently cancelled orders for supplies of the raw materials needed to keep the blast furnaces running, sparking a race against time to keep it operational.
Materials secured by the government arrived at the site on Tuesday, but questions remain about the long-term future of British Steel and whether it will be fully nationalised or the private sector will get involved.
Earlier on Tuesday, industry minister Sarah Jones said she is “not ruling out” the possibility of another Chinese partner.
She said having a pragmatic relationship with Beijing, the world’s second-biggest economy, is still important and stringent tests would apply “to a Chinese company as they would to any other company”.
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Asked for clarity on his position during a visit to the port of Immingham, where materials from two ships are being unloaded and transported to the plant, Mr Reynolds said: “I think we’ve got to recognise that steel is a sensitive sector.
“A lot of the issues in the global economy with steel come from production and dumping of steel products… so I think you would look at a Chinese firm in a different way.
“But I’m really keen to stress the action we’ve taken here was to step in because it was one specific company that I thought wasn’t acting in the UK’s national interest, and we had to take the action we did.”
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The materials that arrived on Tuesday, including coking coal and iron, are enough to keep the furnaces running for weeks, the Department for Business and Trade said.
They are needed because if the furnaces cool down too much, the molten iron solidifies and blocks the furnaces, making it extremely difficult and expensive to restart them.
Science correspondent
There’s no switch that easily turns a blast furnace on and off.
Temperatures inside can approach 2,000C and to protect the structure the interior is lined with ceramic insulation.
But the ceramic bricks expand and contract depending on the temperature, and any change needs to be done carefully over several weeks to stop them cracking.
Molten material inside the furnace also needs to be drained by drilling a hole through the wall of the furnace.
It’s a dangerous and expensive process, normally only ever done when there’s a major planned refurbishment.
That’s why the government wants to keep the furnaces at Scunthorpe burning.
The problem is, supplies for the furnaces are running low.
They need pellets of iron ore – the main raw material for making steel.
And they also need a processed form of coal called coke – the fuel that provides both the heat and the chemical reaction to purify the iron so it’s ready to make strong steel alloy.
Without a fresh supply of both the furnaces may have to be turned off in just a fortnight. And that would be a complex, costly nightmare the government wants to avoid.
‘Chinese ownership truly dreadful’
Opposition politicians have accused China of sabotage to increase reliance on its steel products, and want the country to be prevented from future dealings not only with steel but any UK national infrastructure.
Veteran Tory MP Sir Iain Duncan Smith said the government needs to define which industries are “strategic” – and prevent China from being allowed to invest in such sectors.
Liberal Democrats foreign affairs spokesperson Calum Miller said reverting to Chinese ownership would be like finding “your house ransacked and then leaving your doors unlocked”.
Reform UK leader Nigel Farage took the same position, saying the thought the government “could even contemplate another Chinese owner of British steel is truly dreadful”, and that he would not have China “in our nuclear program, anywhere near our telecoms or anything else”.
“They are not our friends,” he added.
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Number 10 said on Monday that it was not aware of any “sabotage” at the plant and there is no block on Chinese companies.
The Chinese embassy has urged the British government not to “politicise” the situation by “linking it to security issues”, saying it is “an objective fact that British steel companies have generally encountered difficulties in recent years”.
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Jingye reported losses of around £700k a day at Scunthorpe, which will now come at a cost to the taxpayer after emergency legislation on Saturday allowed the government to take it over.
During Tuesday morning’s interview round, Ms Jones said the government had offered Jingye money in return for investment and “we think that there is a model there that we could replicate with another private sector company”.
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But she said there “isn’t another private sector company there waiting in the wings” currently, and that it may be a “national solution” that is needed.
She said “all of the options” were expensive but that it would have cost more to the taxpayer to allow the site to shut.
A YouGov poll shows the majority of the public (61%) support the government’s decision to nationalise British Steel.
