British Steel in talks with Government about challenges created by Brexit
BRITISH Steel is in talks with the Government about possible support to help it cope with the challenges of Brexit, the company has confirmed.
The steel giant, which owns the Scunthorpe steelworks in Lincolnshire, said the Government has been “extremely responsive” in talks so far.
Sky News reported that the UK’s second-biggest steel producer is seeking an urgent £100m Government loan after the failure to pass a Brexit deal left it frozen out of an EU-wide carbon trading scheme.
According to Sky News, British Steel is understood to face a cash-flow shortfall as a consequence of the European Union’s decision not to allocate UK-based companies their usual permits under its carbon emissions trading system.
Under the scheme, industrial polluters can use their allocation to pay for their previous year’s emissions.
Responding to this report, a British Steel spokesman said: “Our successful turnaround is continuing.
“We’re pleased with the significant progress we have made over the past three years and the support we have enjoyed from our workforce, customers, suppliers and investors.
“We are now also examining a number of growth opportunities.”
The statement added: “Brexit is presenting a range of challenges to every British company and we are not immune.
“We are discussing the impact of Brexit on our business with ministers and officials from the Department for Business, Energy and Industrial Strategy and they have been extremely responsive and supportive to date.”
A Business, Energy and Industrial Strategy Department spokesperson said: “As the business department, we are in regular conversation with a wide range of sectors and companies.”
British Steel, which was created when Greybull Capital bought Tata Steel’s Long Products Europe business in 2016, employs around 3,000 people in Scunthorpe.
Sign up to our daily newsletter
In its second annual trading update, published in July last year, British Steel revealed that £50m would be invested at its Scunthorpe rod mill.
The company also confirmed that £40m had been committed to other capital expenditure in 2019 to maintain and improve its asset base.
British Steel’s annual turnover last year was £1.4 billion, which was an improvement on the £1.2 billion recorded in 2017.
Speaking in July last year, British Steel executive chairman Roland Junck said: “Our transformation remains firmly on track and continues apace with unprecedented levels of investment going into the business.
“This strength is why a number of leading financial institutions continue to provide us with additional financing to support our investment and growth plans.
“This is not only enabling us to improve our plant, products and services - as demonstrated with our rod mill investment - it’s allowing us to expand our portfolio by making strategic acquisitions.”
The executive chairman added: “Our order book is strong and we’ve the capacity and capability to play a significant role in major infrastructure projects, such as HS2 and the Heathrow expansion.”
Last month, British Steel revealed that its Scunthorpe headquarters had been named on a shortlist of 18 potential sites for a Heathrow logistics hub. As Heathrow builds its third runway, the airport is looking to open four hubs across the UK to spread the economic benefits of the expansion.
Gerald Reichmann, British Steel’s chief financial officer and deputy CEO, said: “The creation of a Heathrow logistics hub at our Scunthorpe site would help drive economic regeneration throughout Yorkshire and the Humber so we’re delighted with this news.” British Steel was formed in June 2016 by Greybull Capital.
It produces more than 2.8 million tonnes of steel every year. From this, the company manufactures more than 1,450 different specifications of steel which is rolled into wire rod , sections, special profiles , rail , bloom and slab.
The company employs 5,000 people, 400 of whom are in France. The company’s facilities include Scunthorpe integrated steelworks, Teesside Beam Mill in Lackenby, the Redcar Bulk Terminal and an engineering business in Workington.
It also has associated distribution facilities in the UK and Ireland and international sales offices in the US, Singapore, France, Spain and Germany.