The move comes after the Chinese-owner Jingye failed to strike a deal with Government to help fund investment in two new electric arc furnaces at the site.

British Steel reassured its customers that it would continue to supply steel sections, rail and special profiles despite uncertainty about the future of iron and steelmaking at Scunthorpe.

British Steel is understood to have been hoping for a £1bn Government cash injection to help fund a £2bn plan to decarbonise steel production at the site.

But it is understood to have been offered £500m in talks with Government, along the same lines as given to Tata at Port Talbot.

Now up to 2,700 jobs are at risk out of a workforce of 3,500.

Scunthorpe’s blast furnaces and steelmaking operations are no longer financially sustainable due to highly challenging market conditions, the imposition of tariffs, and higher environmental costs relating to the production of high-carbon steel.

The company had planned a major capital investment in two new electric arc furnaces, but following many months of negotiations, no agreement has been reached.

British Steel said that as a result, it was taking the difficult decision to consult with employees and to consider proposals to close the blast furnaces and steelmaking operations.

The company will begin formal consultation with its workforce and unions from today . The consultation will propose three options:

1. Closure of the blast furnaces, steelmaking operations and Scunthorpe Rod Mill by early June 2025
2. Closure of the blast furnaces and steelmaking operations in September 2025
3. Closure of the blast furnaces and steelmaking operations at a future point beyond September 2025

British Steel said it would continue to work with the UK Government to explore options for the future of the business.

British Steel CEO, Mr Zengwei An, said: “We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel.

“But we believe this is a necessary decision given the hugely challenging circumstances the business faces.

“We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time.”