By David Langstane
The Labour Government’s consideration of nationalising British Steel could have significant implications for the INEOS Grangemouth refinery, particularly as both industries face challenges tied to global market pressures and sustainability transitions.
British Steel, owned by China’s Jingye Group, is on the brink of collapse, with its Scunthorpe blast furnaces incurring staggering daily losses of £700,000. The government has proposed emergency legislation to assume control of the steelmaker, aiming to prevent its shutdown and preserve 3,500 jobs. This move could mark the largest nationalisation effort since the 2008 financial crisis. Labour leaders, including Chancellor Rachel Reeves, have emphasized the strategic importance of steel manufacturing for national security and economic stability, signaling that full state ownership remains a viable option.
Meanwhile, INEOS’s Grangemouth refinery faces its own existential crisis. PetroINEOS plans to decommission the site by mid-2025 due to sustained losses and competition from more modern facilities abroad. The closure will result in 400 job losses and shift operations toward fuel imports or potential investments in biofuels and hydrogen production.
The potential nationalisation of British Steel raises questions about whether similar measures could be extended to other critical industrial sites like Grangemouth. Both sectors are foundational to the UK’s industrial economy and share common challenges: outdated infrastructure, rising energy costs, and pressure to transition toward greener technologies. Labour’s intervention in steel could set a precedent for broader state involvement in industries deemed vital for economic resilience and environmental goals.
However, Grangemouth’s situation differs in key ways. Unlike British Steel, which produces virgin steel essential for construction and defense, it could be argued that Grangemouth’s oil refining operations are less central to national security. Moreover, the refinery’s owners have already outlined plans for post-closure redevelopment, including biofuels and hydrogen projects. This suggests that government intervention may focus more on facilitating these transitions rather than outright nationalisation.
The Labour Government’s steel strategy is said to underscore Labour’s commitment to industrial renewal amid global challenges like U.S. tariffs and competition from overseas producers. If successful, this approach could bolster domestic manufacturing. For Grangemouth, the implications may hinge on how policymakers balance immediate job losses against long-term investments in sustainable energy solutions.
However, this sudden intervention in the British Steel disaster would seem to contradict key aspects of Labour’s drive to Net Zero which have resulted in decisions which restrain economic growth. A key example being the curtailment of oil and gas development. Critics argue that any move towards deindustrialisation with the burden of crippling energy costs is likely to fail in commercial terms. With such economic handcuffs, it’s difficult to see a wholly successful outcome for the economy, unless it’s underpinned by Labour’s habit of passing on heavy losses to the tax payer rather than creating an environment that allows business to compete on its own merits.
Ultimately, Labour’s actions regarding British Steel could signal a broader shift toward state-led industrial policy—a move that may resonate across other struggling sectors like oil refining. As decisions unfold in Westminster and Holyrood, the future of both industries will likely shape the UK’s path toward economic recovery and environmental sustainability.
