UK markets closed

British Steel workers await their fate after deadline passes for bids

Tom Belger
Finance and policy reporter
The Scunthorpe steelworks. Photo: Christopher Furlong/Getty Images

Thousands of workers at British Steel are waiting to hear their fate after the deadline expired for bids to buy the firm in liquidation on Sunday.

Up to nine potential buyers are reported to have shown significant interest in the UK’s second largest steel producer since it collapsed in May, but the deadline may be extended to encourage more firm offers.

State-owned Network Rail confirmed it had made an indicative offer for the “railway-critical” parts of the firm, which it relies on for 100,000 tonnes of rails a year.

But the break-up of the firm would be controversial, with union leaders warning a buyer must be found for the whole of the business.

Steve Turner, assistant general secretary of the Unite union, called steelmaking a “foundation industry,” saying the government could not build the UK’s manufacturing sector without British Steel.

READ MORE: Could the UK still nationalise the steel industry?

“British Steel is a vital business that sustains so many communities and thousands of jobs. If no responsible buyer for the whole of it comes forward then the govt and new PM must step in and bring it under public ownership,” he tweeted.

The compulsory liquidation of British Steel left 5,000 employees in limbo and put an estimated 20,000 more roles in the supply chain at risk.

Staff have been kept on and the firm is continuing to trade, with the government stepping in to provide funds to keep production going in Scunthorpe and Teesside.

The British Steel flag. Photo: Anna Gowthorpe/PA via AP

READ MORE: 25,000 jobs at risk as British Steel battles for survival

Sources in finance and industry told Reuters as many as nine possible buyers had been identified, but none were willing to buy the whole firm because of the huge capital investment needed to make it viable.

Reuters also reports that India's JSW Group, former owner Greybull, Sanjeev Gupta's GFG Alliance, private equity firm Endless, a Ukrainian and two Chinese steelmakers were among the potential buyers.

Many Asian and European steel firms are said to have rejected efforts by the UK government’s official receiver and its advisors EY to see if they would submit offers.

British Steel was bought by Greybull Capital from Tata Steel for £1 three years ago.

Gareth Stace, director general of trade body UK Steel, told BBC Radio 4’s Today programme: "I don't think we will be hearing anything in the first half of the week,"

"The Official Receiver has extended the deadline for further bids this week, that is what we understand. If there is a bit of a delay, I'd see that as a positive."

He also said Brexit was a "massive uncertainty" hanging over the UK steel industry, with a no-deal Brexit potentially hitting it with 25% tariffs to export to the EU.

READ MORE: British firms stockpile £6.6bn in goods in run-up to Brexit