The government claimed that taking British Steel into public control would preserve “a vital national capability” and jobs.
In recent years, uncertainty has plagued the future of the steelworks, which support numerous other businesses in north Lincolnshire and employ about 2,700 people in Scunthorpe.
Although British Steel was still owned by China’s Jingye Group, the UK government had taken over its activities in Scunthorpe last year, which limited the government’s authority to determine its future course of action.
Nationalization keeps the blast furnaces operating while buying the government time and granting it the authority and freedom to determine the plant’s future. In the end, the government is unlikely to want to continue running a company that costs it more than a million pounds per day.
The Scunthorpe steelworks were costing the government almost £1.3 million per day, according to a report published in March by the National Audit Office. The nationalization followed the passage of legislation by Parliament on Wednesday that permitted the government to take public ownership of the steel industry in situations where it satisfied a public interest test.
Jingye, which earlier said it was losing £700,000 per day, is requesting compensation for nationalization. Jingye has not responded to the announcement made on Thursday, according to the BBC.
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