British Steel is preparing to cut up to 2,000 jobs as part of a cost-cutting programme, according to a report, even as its Chinese owners seek major financial relief from the UK government.

The potential staff cuts, reported by the Sunday Times, are said to be a key part of plans to replace its coal-fired furnaces with electric arc furnace (EAF) technology to produce environmentally friendly steel.

The shift could unlock new funding for China’s Jingye Group, which has owned British Steel since 2020, including up to £300m of taxpayer funding, according to the report.

A British Steel spokesman said: “The company is committed to providing long-term, skilled, well-paid jobs for thousands of employees and many others in our supply chains.” But he added that it “continues to evaluate our options.”

The spokesman added: “As part of our journey towards net zero, it is prudent to evaluate different operational scenarios to help us achieve our ambitious goals.”

In response, the GMP union said: “It does not accept that mass job losses are the way to decarbonize the steel industry.”

He added in a statement to Agence France-Presse: “There are countless options available, and a fair transition for workers must be at the heart of any plan.”

The Sunday Times indicated that no final decision has been made regarding the potential loss of 2,000 jobs.

British Steel is incurring losses believed to amount to 30 million pounds ($36 million) per month, according to The Guardian.

It indicated that “the cuts will lead to the elimination of its workforce of 4,500 individuals at its factory headquartered in Scunthorpe in northeastern England.”

The UK government said: “Its commitment to the UK steel sector is clear,” noting “an increase in funding to facilitate the production of environmentally friendly steel by Tata Steel at its Port Talbot site in South Wales.”

A company spokesman added: “We continue to work closely with the industry, including British Steel, to secure a sustainable and competitive future for the UK steel industry.”

In February, it announced plans to cut up to 260 jobs in Britain after it was hit by rising energy costs.
British Steel also said it plans to close the coke ovens at its Scunthorpe plant to help the group build a green and sustainable future.

The UK government revealed in September that it would provide £500 million ($621 million) to fund a new electric arc furnace at Tata Steel’s Port Talbot site. However, layoffs of 3,000 employees still loom.

Labour, which is widely expected to win the next UK general election, said steel would play a key role in its clean energy plans in 2030.