'Brexit issues' cause British Steel to seek state funds

Britain's second-largest steel production company is seeking emergency funds from the government, blaming uncertainties around?Brexit?that have brought a slump in orders from European customers.

The company, which employs 4,500 people, and about 20,000? indirectly via its supply chain, is in rescue talks with its lenders over a 75 million pound ($97 million) rescue package that may be at risk of collapse unless the government assists.

Its crisis comes just two weeks after the government provided it with an?emergency 120 million pound loan to cover a bill from the European Union for its carbon dioxide emissions.

According to Sky News, in recent days the steel maker has met its lenders and the government to discuss another loan.

The Guardian quoted the British Steel spokesperson as saying: "The uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.

"Last month the company agreed a short-term bridge facility with government to help it meet its EU emissions obligations, and discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues, whilst continuing with its investment plans."

The company is said to have suffered a slump in orders since the 2016 referendum and an escalating US-China trade war.

Sky News stated that insolvency experts have been placed on standby in case British Steel cannot secure the funds it needs.The BBC reported that nationalization, or a management buyout, are also being discussed as fall-back options.

The steelworks, located in Scunthorpe in the north-east of England, is one of the last two left in Britain along with Port Talbot in south Wales. It supplies steel for customers including the national rail network.

The Guardian reported sources close to British Steel that said ongoing uncertainty about future tariffs on steel exports had proved to be the "worst possible outcome".

It said British Steel's customers typically sign contracts in advance, and with the?new Brexit date of Oct 31 approaching, have turned to rival steel suppliers.

About 70 percent of British Steel's products are exported to either the European Union or Turkey and North Africa, markets affected by Britain's trading relationship with Europe.

A BBC report quoted the GMB general trade union, which called on the government to guarantee the future of the company and safeguard thousands of jobs.

"This government has a track record of sitting on its hands while UK manufacturing collapses," said Ross Murdoch, GMB national officer.

"Now is the time to take action – ministers must come out and guarantee the loan required to safeguard British Steel."