Liam Halligan: This energy crisis means serious questions now loom over the entire industry

Sanjeev Gupta is injecting 50 million pounds of fresh funding into his UK steel plants, we learnt over the weekend, ending months of uncertainty for thousands of workers.

Gupta has been struggling to raise new finance for his global metals and energy empire, GFG Alliance, since its main lender, Greensill Capital – the one advised by David Cameron – collapsed into administration in March.

News of this cash injection will be welcomed by the 3,000 workers at Gupta’s Liberty Steel plants in the UK. Over recent weeks, production at the two main plants – in Rotherham and Stocksbridge – had all but stopped. This new money, we’re told, will directly secure around 650 jobs at Rotherham.

For years, a combination of fierce international competition and high domestic costs has seen UK steel plants struggle to be competitive in a global market.

Now, the end of the Brexit transition period, the pandemic, and an increased focus on steel de-carbonisation, mean the government’s strategy towards the sector – which still employs over 30,000 UK workers – is coming into sharp focus.

In 2019, the UK produced 7 million tonnes of steel. China produced 996 million tonnes – 142 times more. Eight EU nations manufacture more steel than Britain – and steelmaking overheads here are significantly higher here than other countries, not least the cost of energy.

And energy, of course, is on the minds of steelmakers – and manufacturers in general – who tend to be heavy users. And, unlike for households, there is no energy price cap for firms.

Energy Secretary Kwasi Kwarteng is coming under huge pressure not only to bailout energy companies, but introduce a price cap for commercial energy users, not least manufacturers.

The Treasury is now denying such conversations are taking place.

The UK steel industry, despite its unmatched heritage, and our highly-skilled steelmaking workforce, has been in turmoil for years, with company owners struggling to raise finance.

Despite this latest cash injection, this energy crisis means a serious question now looms over the entire industry.