Chinese firms seeking to invest in the UK’s critical industries will now face a “high trust bar,” Business Secretary Jonathan Reynolds said Sunday, following the UK government’s takeover of British Steel’s Scunthorpe blast furnaces from its Chinese owner, The Associated Press reported.
Speaking a day after Parliament was urgently recalled to pass legislation giving him direct control of the site, Reynolds accused the Jingye Group of not negotiating “in good faith” with the government over the future of the loss-making Scunthorpe works, Britain’s last remaining factory capable of producing steel from scratch.
It was clear on Thursday that Jingye would not accept any financial offer from the government, Reynolds reportedly said, adding that it was the company’s intention to close the blast furnaces “come what may” while keeping the more profitable steel mill operations and supplying them from China.
“I personally wouldn’t bring a Chinese company into our steel sector,” Reynolds said in an interview with Sky News on Sunday, adding, “I think steel is a very sensitive area.”
“There is now a high trust bar to bringing Chinese investment into the U.K.,” he added.
On Saturday, the UK government passed a bill granting emergency powers that allow Reynolds to take control of British Steel’s board, maintain worker pay for its 3,000 employees, and order the raw materials needed to keep the blast furnaces running.
Jingye’s recent decision to cancel orders for iron pellets — a critical input for the blast furnaces — had raised alarm across party lines. Without fresh supplies of pellets and coking coal, the furnaces would be forced to shut down, a process that could be irreversible due to the high cost and complexity of restarting cooled furnaces, the report suggests.
According to the report, that shutdown would leave the UK without the capacity to produce virgin steel, relying entirely on recycled steel made in electric arc furnaces, which, while greener, are limited in their industrial applications.
Lawmakers warned this would severely impact sectors such as defense, rail, and construction and create a strategic dependency on foreign steel — particularly troubling given growing global supply chain concerns.
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