British Steel supplier warns of ‘irrecoverable’ hit from collapse

A major subcontractor to British Steel, Hargreaves Services, on Wednesday warned the collapse of the Scunthorpe-based steelmaker may hammer its profits.

Hargreaves Services, which has handled materials for the firm since 2011, warned of possible charges tied to redundancy costs after British Steel went into liquidation.

The division supplying the firm employs about 170 people. Hargreaves' staff move raw materials like iron ore to Scunthorpe and takes away the steel for storage.

British Steel, which employs 4,000 people and is owned by Greybull Capital, started insolvency proceedings after government bail-out talks failed.

Hargreaves has trade debt exposure worth about £4.5 million, which may be “irrecoverable” and it could take further write-down. It warned of £11 million wiped off sales and £1.3 million off profits.

Hargreaves shares fell 15% to 250p.

Former City minister Lord Myners attacked Greybull, saying the Government should try to recoup fees paid to the firm while it ran British Steel.

“I don’t see why the Government should be putting money in to support Greybull,” he told the BBC. “The right action now, I’m afraid, is to put British Steel into administration.”