The British government moved swiftly on Saturday to take control of operations at the country’s last large crude steel producing facility, in what appeared to be a major step toward nationalizing the plant.
In an unusual and dramatic move, the government had summoned lawmakers back from vacation on Saturday to approve the government’s emergency legislation.
The government said it was acting to prevent the owners of the British Steel complex in Scunthorpe, a Chinese company called Jingye, from taking steps unilaterally to close the blast furnaces, potentially costing 2,700 jobs.
“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 on Saturday in introducing the legislation.
Despite the interest in preserving steel making now, it has long been in decline in Britain. Crude steel output has fallen by about 50 percent over the last decade, according to UK Steel, a trade group.
The industry in Britain struggles with high energy costs as well as competition, mainly from China, which now makes more than half of all global steel.
The 25 percent tariffs that President Trump recently imposed on steel imported into the United States have added a further hurdle.
In this difficult environment, the government of Prime Minister Keir Starmer now risks being stuck with supporting a business whose owners say is losing 700,000 pounds a day or around $915,000.
The government insists that it is not nationalizing British Steel, but it is asserting control over the board and management and, it seems, taking responsibility for the running costs.
In a sign of the increasingly bitter tone of the dispute, the government said Friday that employees who are fired for “defying the orders of the Chinese owners” would be able to be reinstated.
The government says it wants to find a partner to invest in a greener steel-making process, but critics say these moves are tantamount to nationalization.
“This is a botched nationalization plan,” warned Andrew Griffith, the business spokesman for the opposition Conservative Party.
A variety of motivations appear to be behind Mr. Starmer’s approach.
He was wary of letting a large plant close at the cost of thousands of jobs of his trade union supporters.
Last year Tata Steel, the large India-based company, closed much of what was Britain’s other large steel mill at Port Talbot in Wales, leading to heavy job losses.
“We’ve had big concerns about that and a lot of anger,” said Alasdair McDiarmid, assistant general secretary of the Community Union, which represents many steel workers.
In a world of growing economic nationalism, Mr. Starmer seems to have accepted the argument that it is important for a country to retain some domestic ability to make what is known as virgin steel.
The British Steel plant in Scunthorpe, in northeast England, has Britain’s last two operating blast furnaces, huge chambers that produce molten metal using iron ore and coke, a derivative of coal. Other mills then finish the crude steel into products like railroad ties and beams for the construction industry.
Pressure to keep Scunthorpe open appears to have increased in the wake of the Trump administration’s signals that it was less committed to European security than previous U.S. administrations. President Trump’s tariffs were apparently also part of that calculation.
“Given global economic instability, it is crucial that manufacturing is protected at home,” the government said on Friday.
Mr. Reynolds said he made what he called “a generous” offer of aid to Jingye, which proposed to shift production at Scunthorpe to electric furnaces that would make steel by melting scrap metal.
Blast furnaces like those at Scunthorpe make high quality steel but are also spew emissions, and many European steel firms are considering converting to other technologies.
Mr. Reynolds told lawmakers that Jingye wanted what he called an “excessive amount” of government support. The costs of converting to electric furnaces were estimated at £2 billion or more.
He also said that in recent days Jingye appeared to be trying to starve the blast furnaces of raw materials like coke to force a shut down. “The company would, therefore, have irrevocably and unilaterally closed down primary steel making, he said.
A spokesman for British Steel declined to comment. The company said in a news release last month that it had invested £1.2 billion in British Steel since taking it over in 2020. “Despite this, the blast furnaces and steel making operations are no longer financially sustainable,” it said.
Eshe Nelson contributed reporting.
