SEATTLE (Scrap Monster): Business Secretary Grant Shapps has told British Steel's Chinese owner that proposals to make hundreds of workers redundant are "unhelpful" amid negotiations over a £300m taxpayer support package.
Sky News understands that Mr Shapps wrote to Li Huiming, Jingye Group's chief executive, this week prior to the public disclosure of its plans to axe 800 jobs at the UK's second-biggest steel producer.
British Steel confirmed for the first time on Thursday that it was "reluctantly having to consider cost-cutting" but did not specify the number of jobs that were at risk.
Nusrat Ghani, the business minister, told MPs that talks between the government and British Steel were ongoing, even though the conditions attached to the taxpayer aid include a six-month moratorium on redundancies and a guarantee to preserve an unspecified proportion of the company's workforce for the next decade.
A Whitehall source said that although the discussions were continuing, the job cuts cast an "unhelpful" shadow over them.
"The timing of this is deeply unwelcome," the source added.
In its statement, British Steel said Jingye had invested £330m in capital projects since taking ownership of the business in 2020.
"Jingye is committed to our long-term future but decarbonisation is a major challenge for our business and, like most companies, we're facing significant challenges because of the economic slowdown, rising inflation and exceptionally high energy prices," it said.
"For example, last year our energy bill rose by £120m while we've also faced an increase of over £70m in our annual carbon costs."
It said that steelmaking in Britain was "uncompetitive" in an international context.
"Unfortunately, like many other businesses we are reluctantly having to consider cost cutting in light of the global recession and increased costs.
"We have discussed this in preliminary talks with the Trade Unions in which we shared the challenges we face.
"We look forward to working closely with them to ensure a long-term safe and sustainable future for the company, thousands of employees and many more in people in our supply chain."
The proposed job cuts would focus principally on the Scunthorpe plant in north Lincolnshire where British Steel is based, and would involve the closure of coke ovens, although Scunthorpe's two blast furnaces and other mills within the Chinese-owned group would continue to operate.
Last week, Sky News revealed that British Steel and larger rival Tata Steel would be required to guarantee thousands of jobs until 2033 in return for £600m of government support to help decarbonise the industry.