The company, which saw its bills for energy and carbon increase by £190m last year, said decisive action is required because of the unprecedented rise in operating costs, surging inflation and the need to improve environmental performance.
The proposals could lead to the loss of up to 260 roles at the company’s Scunthorpe site.
British Steel CEO Xifeng Han said: “Steel is vital to modern economies and with demand expected to grow over the coming decades, British Steel has a crucial role to play in ensuring the UK has its own supply of high-quality steel. To make sure we can deliver the steel Britain requires, we’re undergoing the biggest transformation in our 130-year history.
“To support the journey to net zero, our owners, Jingye, have invested £330m in capital projects during their first 3 years of ownership and they continue to invest unprecedented sums of money in British Steel.
"Jingye is committed to our long-term future but decarbonisation is a major challenge for our business and, like most companies, we’re facing significant challenges because of the economic slowdown, rising inflation and exceptionally high energy prices. For example, last year our energy bill rose by £120 million while we’ve also faced an increase of over £70 million in our annual carbon costs.
“We have taken action to reduce costs within our control; however, steelmaking in the UK remains uncompetitive when compared to other international steelmakers. Our energy costs, carbon costs and labour costs are some of the highest across the world, which are factors that we cannot influence directly.
"For the reasons outlined, we entered into talks with the UK Government in summer 2022 and are extremely grateful for its support. It’s important we have the correct policies and frameworks in place to back our drive to become a clean, green and successful company and we’re continuing to discuss this with the government. We are committed to working together and to making the home-made steel Britain needs for generations to come.
“To build a secure future for British Steel, and protect skilled and well-paid careers for thousands of employees and many more in our supply chain, we are – like many other businesses – proposing to streamline our business. We’re disappointed at having to make such proposals but are confident they will support a successful transformation.
“The trade unions are aware of our proposal to close the coke ovens and we look forward to working closely with them to ensure a long-term safe and sustainable future for the company, thousands of employees and many more people in our supply chain. We also continue to look at other potential cost-saving measures across the business and will announce any further proposed changes in due course.
“We appreciate this may be an unsettling period for our people and we will give them our full support. We haven’t set any deadlines but aim to keep the period of uncertainty for our colleagues as short as we can. We’ll ensure this process is handled in a sensitive manner.”
The company’s coke ovens, situated at British Steel’s integrated steelmaking site in Scunthorpe, are reaching the end of their operational life and their closure would bring environmental benefits including reductions in emissions to air and water.
Underpinning British Steel’s drive towards a clean future is its Low-Carbon Roadmap, which it unveiled in October 2021 and the company is already undertaking several projects to improve its environmental performance.
Xifeng Han said: “Embracing new technology and ways of working will help our drive to reduce emissions and support clean growth, and we are already taking steps to improve our environmental performance. For example, we have increased the amount of scrap used in the integrated steelmaking route. In addition, we’ve started a project to add ore-based metallics to the blast furnace to displace iron ore and we manufacture a range of products with significant environmental benefits including high-strength structural steel and Zinoco® rail.”
British Steel was bought by Jingye in March 2020 and since then its new owner has invested heavily in the business. Major ongoing projects include the installations of a £54m billet caster and a £26m mast service centre, both of which are scheduled to come online this year. A near £50m upgrade to its wire rod mill continues and is set to be completed next year.
Other investments include £30m on new unloaders for British Steel’s port facility, £14.6m for improvements in energy operations, £9m for a new rail stocking facility and £12m to upgrade IT systems. All developments will improve British Steel’s product quality, range and service.
