(Bloomberg) — UK Members of Parliament passed a bill that would give ministers control over Jingye Group’s British Steel, as Keir Starmer’s Labour government fights to preserve Britain’s last virgin steelmaker.
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The emergency legislation was passed by acclamation on Saturday in the House of Commons, without the need to count votes. It’s now being read in the House of Lords — which traditionally sees itself as an amending chamber rather than a blocking one — and so is likely to become law by the end of the day.
Neither Jingye nor British Steel responded to emailed requests for comment on Saturday. On Friday, the UK unit declined to comment about Parliament’s recall.
The bill will hand Business Secretary Jonathan Reynolds extensive powers to direct British Steel’s staff and operations and order raw materials to keep production going in Scunthorpe, the site of the UK’s last remaining blast furnaces that make steel from primary materials.
Prime Minister Keir Starmer’s Labour government on Friday ordered Saturday’s recall of parliamentarians from their Easter recess amid concerns Jingye was preparing to shutter the unprofitable furnaces, putting thousands of jobs at risk and leave the birthplace of the industrial revolution as the only Group of Seven nation without primary steel-making operations.
Jingye last month rejected a £500 million ($650 million) UK government rescue package. Opening the debate on Saturday, Reynolds told lawmakers that despite the government negotiating “tirelessly” with the Chinese firm, including making a “generous offer” to help keep the plant operational, the company had wanted an “excessive” amount.
“Over the last few days, it became clear that the intention of Jingye was to refuse to purchase sufficient raw materials to keep the blast furnaces running,” he said. “In fact, their intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably and unilaterally closed down primary steel making at British Steel.”
Under the terms of the bill – which extends to all steel production in England and Wales, not just British Steel — any employee who fails to comply with the business secretary’s directions could face fines or as long as two years in prison. The legislation also provides for compensation for costs incurred by companies in complying with government orders.
Reynolds’ department said in a statement that the legislation would mean that “anyone employed at the plant who takes steps to keep it running, against the orders of the Chinese ownership, can be reinstated if sacked for doing so.”
The move is the latest instance of the UK government falling out with a Chinese company over investments in critical national infrastructure. In 2022, the then-Conservative government announced it was buying out China General Nuclear Power Corp.’s investment in the Sizewell C nuclear plant in Suffolk, while the UK also in recent years excluded Huawei Technologies Co. from supplying next-generation technology to Britain’s 5G wireless networks.
Funding to keep the Scunthorpe plant running will come from an existing government pot for the steel industry totaling £2.5 billion, according to the Department for Business and Trade. Reynolds said he didn’t want to keep the new powers that would result from passing the bill “longer than necessary,” though he also added that the full nationalization of British Steel is an option that remains “on the table.”
Nevertheless, Labour rejected proposals from the Conservatives and Liberal Democrats to add a sunset clause laying out when the business secretary’s new powers would end. Summing up for the government at the end of the Commons debate, Industry Minister Sarah Jones said that risked reducing the government’s leverage in negotiations with Jingye. She promised, however, that the government would “repeal this legislation as quickly as we can” and that Reynolds would update Parliament about its implementation every four working weeks.
Britain’s steel industry had been struggling even before the announcement of US President Donald Trump’s 25% tariffs on imports of the alloy, with furnaces at Port Talbot shuttering last year. The closing of British Steel’s UK operations would jeopardize thousands of jobs in Scunthorpe and Teesside, also in northern England. The company employs around 3,500 people in total.
Trade unions have warned that Jingye has canceled orders for iron ore, coking coal and other raw materials needed to make steel, raising concerns the Scunthorpe plant could effectively close within days.
Fuel shortages pose major operational and financial risks for steel mills, because blast furnaces need to be kept running continuously in order to stop molten metal from cooling and solidifying inside the furnace. Such events can severely damage the interior lining of a furnace and knock plants offline for months, and the cost of repairs can be sizable.
Recalls of Parliament from recess are rare events, with the last one taking place in August 2021 for a debate on the situation in Afghanistan. Saturday marked the 35th time it’s happened since 1948.
–With assistance from Subrat Patnaik.
(Updates with terms of bill in eighth paragraph.)
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