The government is lining up bankers to conduct a review of options for Britain’s embattled steel industry amid calls for ministers to orchestrate mergers between some of the sector’s biggest players.
Sky News has learnt that Evercore, the independent investment bank which now employs George Osborne, the former chancellor, was expected to be appointed in the coming weeks to oversee a strategic review of the sector.
If its appointment is confirmed, Evercore will report its findings to Peter Kyle, the business secretary, and UK Government Investments (UKGI), the Whitehall agency which manages taxpayers’ interests in a range of companies, including the Post Office and Channel 4.
The talks with Evercore come as the steel industry contends with the impact of President Trump’s tariff war and the prospect of retaliatory measures from the European Union.
The move to recruit bankers for a key review of Britain’s struggling steel sector also comes during a period when the government has significant financial exposure to all of the country’s three largest steel producers.
Last year, ministers agreed to provide £500m in grant funding to Tata Steel, the Indian company, to install an electric arc furnace at its Port Talbot steelworks in Wales.
The new facility is expected to be operational in 2027, but has been bitterly opposed by trade unions infuriated that the new funding was effectively used to drive through thousands of redundancies at the plant.
‘Disappointing’ no steel tariff deal done before Trump in town, industry says
UK to miss deadline to agree steel and aluminium tariffs
Jingye and Whitehall officials hold talks over British Steel future
In April, the then business secretary, Jonathan Reynolds, moved to seize control of British Steel after its Chinese owner, Jingye Group, threatened to close the UK’s last-remaining blast furnaces at its site in Scunthorpe.
The move sparked a diplomatic row with Beijing, with Jingye considering various legal options in an attempt to secure compensation for its shares in the company.
Last month, ministers disclosed that the cost of taking control of British Steel had risen to £235m, in addition to a £600m bill for preserving its future in 2019 and 2020 when the company fell into insolvency under its previous owner.
The government’s move prevented the immediate loss of more than 3,000 jobs, although there remain questions about the company’s viability as a standalone entity.
Some advisers believe that a combination of British Steel with other industry players, including Sheffield Forgemasters, which is also in government control, will be a necessary step to preserving steelmaking capacity in the UK.
People familiar with the plans said that a newspaper report this month suggesting that bankers were being recruited by the government to sell British Steel was “wrong”.
“The UK government doesn’t own British Steel; it’s hard to sell an asset you do own,” they said.
Nevertheless, it remains conceivable that the government will at some stage be able to determine the future ownership of the industry’s second-largest company, amid recent suggestions that Beijing could be willing to cede Jingye’s claim to the company in return for Sir Keir Starmer’s approval of a controversial new Chinese embassy in Central London.
“We continue to work with Jingye to find a pragmatic, realistic solution for the future of British Steel,” Chris McDonald, the industry minister, said in a statement to parliament this month.
“Our long-term aspiration for the company will require co-investment with the private sector to enable modernisation and decarbonisation, safeguard taxpayers’ money and retain steelmaking in Scunthorpe.”
Keep up with all the latest news from the UK and around the world by following Sky News
Britain’s third-largest steelmaker, Speciality Steels UK (SSUK), is also effectively in government hands, having been placed into compulsory liquidation during the summer.
The business was part of Liberty Steel, which is owned by GFG, the metals empire of businessman Sanjeev Gupta.
In August, a judge declared SSUK as “hopelessly insolvent”, with a special manager now overseeing an auction of the business, which employs about 1,500 people.
A spokesperson for the Department for Business and Trade (DBT) said: “This government sees a bright and sustainable future for steelmaking in the UK, and we’ll set out our long-term vision for the sector in our upcoming Steel Strategy.”
Sources said that that strategy was likely to be published either next month or early in the new year.
