£80m ‘game changer’ investment for steelworks

British Steel plans an £80m investment programme at its Scunthorpe plant in what is said to be a ‘game changer’ for the business and hailed by the CEO as an exciting drive towards a “sustainable future”.

The site, which is owned by China’s Jingye Group who acquired British Steel in 2020 and pledged to invest £1.2bn in the business, will receive a new billet caster worth £48m and see upgrades to existing equipment which are estimated to be worth £32m.

The investments also include a new water recycling plant which is designed to cut energy use at the manufacturer and follow news that the business was looking into the use of green hydrogen as a fuel source.

Xifeng Han, British Steel’s CEO, said: “This is an incredibly exciting time for our business with unprecedented levels of investment – fuelled by the drive of our employees – powering us towards a sustainable future.

“While we’re still in the early stages of our transformation, these projects are a major step forward for British Steel and our customers. Steel is vital to modern economies and investments like these will ensure we keep delivering the steel our customers and the world need while playing a central role in transitioning to a low-carbon, circular economy.”

Phil Knowles, British Steel’s commercial director for wire rod, said: “Our bespoke new facility will be a real game-changer” adding that the “investment will deliver world-leading capabilities” allowing for new market opportunities to be explored.

It’s expected the new equipment and mill layout will launch in 2023.

The news has been welcomed by trade unions, GMB called the investment “reassuring” after the business had “been in and out of different ownerships”, while Unite noted that they were “pleased the commitments given to the workforce are now materialising”.

The significant investment will act as a rallying cry for the UK steel industry which has faced numerous challenges since it was privatised in the 1980s, with employment and output falling as it struggles to compete with cut price competition from overseas.The industry now employs 32,000 people, a tenth of the number employed during the sector’s heydey of the 70s.

In particular the last 12 months have seen the man once referred to as the “Saviour of Steel”, Sanjeev Gupta and his Liberty Steel business face a number of challenges in the wake of the collapse of one of its largest funders Greensill Capital.

The trials and tribulations continued this year with the Serious Fraud Office (SFO) in April noting it had stepped up its investigation into Gupta’s Gupta Family Group Alliance (GFG) which owns Liberty Steel, while earlier this week the business signed a Standstill Agreement with Greensill Bank, its largest creditor, on the debt facilities relating to its European steel businesses.

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