U.K. sets high trust bar for Chinese investment amid steel industry crisis

In the United Kingdom, significant changes are taking place in the steel production landscape due to a crisis at British Steel, the last factory producing steel from raw materials. Recently, the country's business secretary, Jonathan Reynolds, announced that Chinese firms will now face a stringent 'high trust bar' for investments in key sectors, following his assumption of control over British Steel. The situation escalated after the Jingye Group, a Chinese company that took ownership of British Steel in 2020, engaged in what Reynolds described as a lack of good faith negotiations over the future of the steelworks located in Scunthorpe. The government became particularly alarmed when Jingye unveiled plans to close two vital blast furnaces while aiming to maintain the more profitable aspects of the steel operation by sourcing from China, thus indicating their intention to abandon the local production of primary steel. Faced with these developments, Prime Minister Keir Starmer intervened by calling lawmakers back to Parliament to support a legislative effort aimed at preventing the closure of the blast furnaces. This legislation has now been enacted, empowering Reynolds to direct British Steel's operations to ensure the ongoing payment for its workforce of approximately 3,000 individuals and secure necessary raw materials. The urgency of the situation was underscored by Jingye's recent withdrawal of orders for essential iron pellets required for the furnaces. The looming closure of the blast furnaces poses a significant threat, as their cooldown makes them extremely expensive and difficult to restart, jeopardizing the U.K.'s ability to produce steel from scratch—a once crucial industry. The historical context is stark, given that in the late 19th century, the U.K. was a global leader in steel production. The potential collapse of its primary steel manufacturing capabilities would leave the nation as the only member of the Group of Seven industrial nations without the ability to produce virgin steel locally, raising serious concerns about national dependence on foreign steel supplies. Sectors such as construction, defense, and rail could face dire consequences due to the loss of domestic steel production capacity, outlining a crucial vulnerability that has provoked bipartisan concern among lawmakers. In his public communications, Reynolds refrained from explicitly blaming Jingye for any deliberate malfeasance on behalf of the Chinese Communist Party; however, he acknowledged the necessity of setting a high bar for future Chinese investment. His comments reflect growing apprehension regarding foreign influence in critical sectors like steel. Despite this, he did not provide specific assurances regarding the acquisition of raw materials, indicating the unpredictable nature of the situation. Reynolds emphasized that without prompt action, steel production in the U.K. would be irrevocably lost, highlighting the importance of governmental intervention at this juncture.