For the second time this year, the British government is set to take control of a large, ailing steel business.
The move comes after a court approved on Thursday the liquidation of the unit, called Speciality Steel UK, which is part of Liberty Steel, a metals business started by the industrials entrepreneur Sanjeev Gupta. The government is expected to guarantee pay for the nearly 1,500 employees there, at least in the short term, while buyers are sought for the business.
“We remain committed to a bright and sustainable future for steel making and steel making jobs in the U.K.,” a government spokesman said Friday in an emailed statement.
The British government, which is led by the Labour Party, appears to be trying to hang on to what remains of the country’s steel industry to preserve domestic manufacturing as well as jobs.
In March, the government took control of the British Steel plant at Scunthorpe that was the last remaining mill producing so-called virgin steel using blast furnaces.
“Steel is fundamental to Britain’s industrial strength, to our security and to our identity as a primary global power,” Jonathan Reynolds, the business and trade secretary, told Parliament at the time.
The government is taking on obligations that may prove costly, however. Before it took control of the Scunthorpe site, British Steel said that the plant was losing £700,000, or about $940,000, a day.
Steel making in Britain has seen a steep decline as the country’s mills have struggled with high costs, low demand and competition from other producers.
About two-thirds of the British steel market is filled by imports from countries like India, China, Vietnam and Turkey, according to UK Steel, a trade group.
Despite a trade deal between Britain and the United States, 25 percent tariffs remain on British steel, putting further pressure on the industry. Last year, about 9 percent of British steel exports, or £370 million, were sent to the United States.
Speciality Steel has potentially viable operations, supplying the aerospace and oil industries among others. But analysts say it has recently operated at well below optimum levels with units idled and a portion of its workers on furlough.
“It’s fair to say that it’s importance has diminished in recent years,” said Colin Richardson, steel lead at Argus Media, a commodities research firm.
Liberty Steel, Speciality’s parent company, criticized the court’s decision, saying it had a plan to secure new investment. “Liquidation will now impose prolonged uncertainty and significant costs on U.K. taxpayers,” it said in a statement.
Mr. Gupta’s businesses have struggled since the collapse of its financial backer, Greensill Capital, in 2021.
Speciality Steel uses electric furnaces to melt scrap to make steel, producing lower carbon dioxide emissions than the blast furnaces at Scunthorpe.
For that reason, Mr. Richardson said, it may be easier to offload some operations. Electric furnaces are “the clear direction of travel,” he said.
Stanley Reed reports on energy, the environment and the Middle East for The Times from London. He has been a journalist for more than four decades.
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