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UK Closes In On £300 Million Climate Package for British Steel

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UK Closes In On £300 Million Climate Package for British Steel

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  • Funds would be tied to green transition: person familiar
  • British government is trying to decarbonize steel industry

The UK government is close to agreeing a £300 million ($372 million) package to help British Steel cut its carbon emissions and prevent thousands of job losses.

The funds would be for the Chinese-owned steelmaker to transition from the current blast furnaces at its site in Scunthorpe, northern England, to a more environmentally-friendly electric arc furnace, according to a person familiar with the matter who requested anonymity discussing plans that aren’t finalized. 

Chancellor of the Exchequer Jeremy Hunt is due to make a final decision in the coming days, they said. News of the aid package was first reported by Sky News.

While the government’s package is contingent on the move to cleaner technology, it’s also likely to help preserve jobs for the 4,000 workers at British Steel, which is owned by China’s Jingye Group. 

“The government recognizes the vital role that steel plays within the UK economy, supporting local jobs and economic growth and is committed to securing a sustainable and competitive future for the UK steel sector,” the Department for Business, Energy and Industrial Strategy said in a statement. “While we cannot comment on ongoing negotiations, the business secretary considers the success of the steel sector a priority and continues to work closely with industry to achieve this.”

See related article: UK Carbon-Credit Technology Pioneer Changeblock Completes Merger with Canadian ESG Capital Markets Firm Carbon12

The company has been seeking an urgent package of financial support after being hit by high energy and carbon prices. Business Secretary Grant Shapps and Levelling Up Secretary Michael Gove have been urging Hunt to intervene, warning that the company’s demise could create significant decommissioning liabilities and undermine domestic steel production.

The move comes just over a week after the struggles of the UK steel industry were laid bare by Liberty Steel’s decision to cut production in Britain and idle some sites, as soaring energy costs threatened hundreds of jobs across the group.

Europe’s steelmakers have been battered by a slump in demand last year on concerns the region could drop into recession, forcing many plants to idle production. High energy prices added to their woes by increasing costs and curbing consumption from key customers like manufacturers and construction firms.

Source: Bloomberg

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