Britain is set to spend £1.5billion to prevent the closure of the country's two last remaining steel blast furnaces, it has been revealed.
British Steel's Scunthorpe furnaces were on the verge of closing last year, with Jingye, the Chinese group that owns British Steel, losing upwards of £700,000 per day due to challenging market conditions, tariffs, and high environmental costs.
The financial losses meant Jingye was considering shutting the furnaces down for good, until the Department for Business and Trade (DBT) quickly intervened.
The National Audit Office (NAO) said £377million was spent in order to prevent job losses and a significant impact on industry.
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But, with operations costs at a whopping £1.3million per day, the NAO have estimated total costs of the project, which has no set budget, repayment schedule, or end date, could reach £1.5billion.
In addition to the £377million to keep British Steel operating, £15million was spent on advisers and £359million to the company for operating activities.
Spending is expected to exceed £615million by June, and could reach £1.5billion by 2028, if spending continues at its current rate.
Gareth Davies, head of the NAO, said: "DBT was able to act quickly to save British Steel’s Scunthorpe furnaces from closure, avoiding heavy job losses and serious impacts on major UK infrastructure and construction projects.
Britain is set to spend £1.5billion to prevent the closure of the country's last two remaining steel blast furnaces, it has been revealed
|PA
"However, the trade-off is the significant cost of maintaining operations, and uncertainty over how long this will continue.
"DBT should learn from this experience to be better prepared for future interventions."
It comes just days after Labour ministers were said to have proposed a compensation package worth tens of millions of pounds to Jingye as part of efforts to resolve the ongoing dispute.
Sources familiar with the discussions said the proposed settlement is understood to be below £100million.
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Had the furnaces shut down, it could have cost 2,700 people their jobs
|PA
Jingye and DBT were in talks about moving to electric arc furnaces between 2022 and 2025, but had not reached an agreement.
By March of last year, operating losses meant Jingye announced it was considering closing down the blast furnaces.
Had the furnaces shut down, it could have cost thousands their jobs in Scunthorpe and affected other customers, such as Network Rail.
Emergency legislation was passed to allow the DBT to instruct British Steel to continue operating the furnaces.
The £377million, which was spent between April 2025 and January 2026, was classified as a loan.
There is no repayment schedule in place, and it is not clear whether British Steel will be able to repay the loan at all.
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