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British audience Steel has warned that the company faces “material uncertainty” and requires “further funds in the future” if it will survive, in an estimate issued just days after its Chinese owner rejected an offer of financial support from the United Kingdom.
The business, which last week announced plans to close its explosion ovens and job breaks, made a loss ahead of £ 231.2m during 2023 after being hit by difficult trade conditions, including steel prices and high energy costs, accounts recently presented to House Show companies.
Although this was lower than a year ago, which included a single depreciation fee, losses continued by 2024, according to accounts.
The registration also reveals that the British Steel – which owns the last two ovens of the UK explosion on its main site at Scunthorpe in Lincolnshire – is largely funded through debt objects provided by units controlled by Jingye, its Chinese parent.
British Steel had £ 735.7m of outstanding debt in late December 2023, from £ 630.2m last year, accounts say.
Auditor MHA warned that the company needs further “further funds in the future by the company and its latest parent group on the date of approval of these financial statements”.
Although Jingye had shown his “intention to support the company”, the auditor said there was no “legally binding agreement” to ensure that the Chinese group would provide further funds.
The UK holding enterprise of Jaringye had also not issued audited financial statements for 2022 and 2023, she added.
“These issues indicate the existence of material uncertainty that can throw considerable doubts about the company’s ability to continue as a constant concern,” MHA said.
British Steel told workers last week that it would start consultations on job losses, endangering between 2,000 and 2,700 jobs in Scunthorpe. Business employs about 3,500 people in the UK on three sites.
The decision came after Jingye rejected an offer of £ 500m from the UK ministers to help him build two less electric ovens with carbon intensity. The Chinese group had been looking for about £ 1 billion in support for the project, which he estimated could cost about £ 2 billion.
Trade unions have warned that British Steel operations can end raw materials for ovens in June, unless an agreement can be reached with ministers.
British Steel on Monday said “constant financial losses … were deteriorating from market conditions and now tariffs” had left it with “no other option”, but to propose the closure of its explosion furnaces. The company remained “open to further dialogue” with the government, she added.
The government is considering all options, including nationalization, Energy Minister Sarah Jones told the Municipal House last week.
The government has considered the creation of steel as important strategic for the United Kingdom, and last year it set aside £ 2.5 billion to protect the future of the industry.
Business Secretary Jonathan Reynolds said last week that the government will “continue to work tirelessly to reach an agreement with the company owners to secure its future and protect taxpayers’ money.”
A senior political figure said the government was thinking of using the act of civil emergencies to capture the control of the plant if Jingye tried to unilaterally close the explosion ovens.
