The UK government has played down media suggestions that it is in favour of expropriating privately run steelmakers to sell all UK sites as one entity.
An online print report by the BBC on 3 September suggested the government was in favour of "merging all the UK's steelmakers", as it reportedly believes the sector is too fragmented.
The Labour Party government is currently effectively running three mill assets at present — British Steel in Scunthorpe, although the site is still officially owned by Chinese steelmaker Jingye Group; Sheffied Forgemasters, which was nationalised in July 2021 by the Conservative Party government; and Liberty Speciality Steel, where the official receiver was appointed in August.
Tata Steel, Marcegaglia and 7Steel, formerly Celsa, are privately owned, although the former has been pledged £700mn in public funding towards its decarbonisation.
The idea of expropriation raised eyebrows in the market, given the lack of cohesion and synergies between some of the sites, most of which at one point were owned by Tata Steel, formerly Corus and the original British Steel. Tata divested its longs business, including Speciality, to Liberty Steel in 2017 for £100mn, after selling its plate business to the Scottish government in 2016. The government then immediately sold the assets on to Liberty. Tata also sold its Scunthorpe site to Greybull Capital in 2016.
All of the assets were distressed and lossmaking at the time of the sales and have largely remained so since that time.
"Mergers are commercial decisions for individual companies, not the government," a government source said. "Labour has taken bold action to ensure steelmaking can thrive, including trade defence measures, lowering energy costs and protecting blast furnace production because we want to work with private companies to make steel here in the UK." A last-minute government intervention in June cost importers millions of pounds in duties, when UK business secretary Jonathan Reynolds overruled a decision by the Trade Remedies Authority on hot-dip galvanised quotas to support Tata Steel.
There are some clear synergies between British Steel and Speciality Steel, and potentially Forgemasters, some sources said. In May, Argus reported that the government had "no plans" to use its Steel (Special Measures) bill — passed to enable the state to fund British Steel — to step in at Speciality, which at that time was attempting to restructure its debt. As reported then, Speciality has two electric arc furnaces, T and N, that could be used to supply some of British Steel's rolling lines. It is widely believed in the market that British Steel's heavy-end is inefficient and too costly to run sustainably, given the high cost of carbon-intensive output in the UK.
Peter Gate — a former director at Tata, British Steel and Liberty — told Argus that "there needs to be cruel-to-be-kind, longer-term decision making and some significant money spent" on the related assets. Gate said there was a plausible plan in taking Stocksbridge — currently part of Speciality — under the umbrella of Forgemasters with some offtake and then joining Rotherham to Scunthorpe. Scunthorpe historically has supplied Liberty's Scottish plate assets with slab, and trade union Syndex has mooted the idea of a plate mill being commissioned at Tata Steel's Port Talbot site.
