Energy-intensive UK companies to receive government support

The UK government is ready to help more than 300 energy-intensive companies deal with crippling electricity costs as ministers try to stem a wave of job losses in the steel sector.

Kemi Badenoch, the business secretary, will announce measures to support employers in sectors such as steel, metals, paper and chemicals, which are among those most exposed to high electricity costs.

The package comes on top of a subsidy offer for the UK’s two largest steel companies to prevent them from shutting down their blast furnaces.

The new measures, expected as early as Thursday, are intended to reduce the price differentials Britain’s heavy industry pays for its electricity compared to its European rivals.

The government will hold a consultation on three main measures: reducing network charges; cost savings associated with maintaining generation capacity; and whether to increase exemptions from costs arising from renewable energy obligations from 85 percent to 100 percent.

The announcement was made on Wednesday as British Steel said it would close coking plants at its main site in eastern England with the loss of up to 260 jobs.

The company, owned by China’s Jingye Group, said it needed “decisive action” to deal with “unprecedented increases in operating costs, rising inflation and the need to improve environmental performance.”

The government has been in talks with British Steel and Tata Steel UK for months over an aid package totaling £600m.

Both steelmakers have warned they will struggle to meet the cost of the upgrade. The offer is subject to further investments by both companies and a job guarantee until 2030.

British Steel said its energy bill was down £120m last year. It’s unclear whether the government’s latest announcement will prevent the closures.

British Steel’s decision would mean that the company would have to import coke for its two Scunthorpe blast furnaces. Coke ovens are used to process coal into coke, which is then burned into steel in blast furnaces. Indian company Tata Steel operates the UK’s remaining two blast furnaces at its Port Talbot site in Wales.

British Steel Chief Executive Xifeng Han said the company has “taken action to reduce costs within our control; However, UK steelmaking remains uncompetitive compared to other international steelmakers.”

“Our energy, carbon and labor costs are among the highest in the world, factors that we cannot directly influence,” he added.

The decision was blasted by unions, who warned the closure of the coke ovens could have “a catastrophic impact on jobs and steel production in Scunthorpe and the UK as a whole”.

British Steel, which bought Jingye in 2020, has previously warned of even bigger job cuts, with another 600 to 900 jobs at all UK operations at risk.

Jonathan Reynolds, Labour’s shadow business secretary, described the potential job losses announced on Wednesday as “more worrying news for our steelworkers who desperately need government on their side to ensure the bright future of our steel sector”.

The government said it was “very disappointing that British Steel has decided to take this step for its employees while our negotiations with the sector are ongoing,” adding that it “stands ready to support the employees affected.” [the] Decision”.