Collapse of British Steel: 25,000 jobs threatened by liquidation of assets | News from the United Kingdom

British Steel was sentenced to forced liquidation after talks with the government failed to secure a bailout, threatening jobs for about 5,000 employees, with an additional 20,000 jobs in the chain d & # 39; supply.

The steelmaker had asked for an emergency loan of $ 38 million to the British government following the decline in sales in Europe due to Brexit uncertainty and the unfortunate decision to sell surplus carbon credits more. early this year.

Just three weeks ago, the government made a $ 150 million loan to the company.

"The government can only act within the framework of the law, which requires that any financial support given to a steel company be commercial," said Secretary of Business Greg Clark in a statement sent to Al Jazeera.

"I was informed that it would be illegal to provide a guarantee or loan under the terms of any proposal from the company or any other party."

The company's 5,000 employees work mainly in a giant factory located in the northern city of Scunthorpe, and another 20,000 jobs depend on its supply chain.

"It's a terrible news for metalworkers and their families, as well as for all those who are connected to the community and the region," Nic Dakin, MP for Scunthorpe, told the BBC.

"What is really important is that steps be taken to keep steel production in Scunthorpe and other affected areas, because that is essential for our future as an independent, modern economy.

"It is necessary for the government to participate publicly in the future of this industry, which is what the government should do, let's take one step at a time," he said.

Unions urged the government to reach an agreement after the besieged manufacturer asked for a loan of $ 95 million last week.

The loan was refused and steelmakers, Greybull Capital, agreed to pay part of the money themselves, reducing the loan request to $ 38 million.

"This will be an extremely worrying time for the thousands of dedicated British Steel workers, those in the supply chain and the local communities," Clark said.

"In the coming days and weeks, I will be working with the official escrow and a British Steel support group of management, unions, supply chain companies and local communities. local authorities, in order to relentlessly pursue all possible measures to ensure the future of operations at the Scunthorpe, Skinningrove and Teesside sites. "

Brexit blamed

The company, whose assets are now the subject of a forced liquidation, blamed Brexit's uncertainty for a lightening order book.

Three weeks ago, the government agreed to provide a loan of $ 150 million so that the company could make its payments under an environmental program of the European Union and avoid a fine. $ 630 million from European regulators.

As part of this program, companies are awarded a number of "carbon credits" based on their target emissions.

If they do well and emit less carbon, as British Steel did from 2013 to 2018, they can sell their remaining credits to companies emitting more carbon into the atmosphere. British Steel sold its remaining credits while Britain was planning to leave the EU in late March.

Then, the Brexit was delayed by six months and the manufacturer had to face a huge deficit of credits and a heavy fine.

On Tuesday, pro-Brexit politicians in the House of Commons urged their colleagues to adopt Theresa May's withdrawal agreement with the EU when she returned to Parliament to give businesses some certainty.

The steelmaker told the Guardian last week that his orders in Europe were dry. In the event of a Brexit "without agreement", WTO tariffs on steel would be 20% – an important deterrent for European buyers.

According to the Financial Times, about 70% of British Steel's products are exported to the EU or to Turkey and North Africa.

But the problems of British Steel go back even further. Formerly a part of Tata Steel's European activities, a division's sales agreement collapsed in 2015, potential buyers citing China's dumping of steelmaking into world markets, causing unpredictable price fluctuations like a major reason to abandon the purchase.

In 2016, Greybull Capital, a private investment company, bought Tata's steel division for a symbolic amount of £ 1 (US $ 1.27 at current rate) and renamed it British Steel, thus saving thousands of jobs.

Now, Greybull himself is facing an additional review. In the two years since the acquisition, Greybull has charged British Steel more than $ 20 million a year in interest on its own loans, the Financial Times reported.

British Steel, which has just acquired steel, has also invested $ 50 million in a French steel mill.