The business secretary has reportedly opened formal talks with the owner of British Steel about a taxpayer bailout and job cuts.
As first reported by Mark Kleinman for Sky News, Jacob Rees-Mogg wrote to parent firm Jingye Group last week and agreed that British Steel would maintain its current operations and 4000-strong work force during the ongoing discussions.
It was reported earlier this month that the owners of Jingye had warned ministers that the company’s two blast furnaces were unlikely to be viable without state aid.
One insider revealed that Jingye was prepared to make thousands of people redundant if ministers rejected the request: something that could spell danger for the Scunthorpe based firm.
The Chinese group bought the second-largest steel producer out of insolvency in 2020.
While the precise scale of the support being sought by the Chinese group is unclear, reports indicate that somewhere in the region of £500m would be needed to keep the north Lincolnshire furnaces operational.
There is also uncertainty about whether any financial subsidy would come in the form of a loan or a grant.
The Department for Business, Energy and Industrial Strategy (BEIS) declined to comment to Sky News on the content of Mr Rees-Mogg’s letter, but a spokesman said: “We are working across the steel sector on achieving their sustainable and competitive long-term future.
“We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we announced the Energy Bill Relief Scheme to bring down costs.”
A British Steel spokesman said: “We’re pleased to confirm British Steel is entering into formal talks with the UK Government to help us overcome the global challenges we currently face.
The Government understands the significant impact the economic slowdown, rising inflation and exceptionally high energy and carbon prices are having on businesses like ours and we look forward to working together to build a sustainable future.”