British Steel is set to announce a rescue deal with China’s Jingye Group, potentially safeguarding up to 4,000 jobs in the UK. Jingye has reportedly offered £70m, in addition to the promise it can access up to £300m in loans, indemnities and grants to back its plan to boost production at the plant by 10 per cent.
Jingye Group emerged as the leading contender to buy the steelmaker out of liquidation after talks stalled between government officials and Ataer Holdings, a subsidiary of Turkey’s military pension fund with ties to the country’s autocratic government. Reportedly, staff at company’s Scunthorpe facility have been told in an email that contracts between British Steel and Jingye have been exchanged. Nic Dakin, the Labour MP for Scunthorpe, said: “The workforce at British Steel have done an outstanding job continuing to make and sell steel through this difficult few months. It looks as if we’re coming to a point where a new owner may well be determined and that would be very good news for the business and the communities that are around it.”
A spokesperson for steelworkers’ union Community said: “If this [the sale] is confirmed, then we welcome this positive step towards securing British Steel under new ownership. The fact that there has been ongoing interest from both Ataer and now Jingye, rightly demonstrates that potential buyers believe that British Steel can have a sustainable future. Any new owner would not just be acquiring a steel business, they would be taking on a dedicated and skilled workforce, who even through the uncertainty of recent months have been breaking production records to give the business a chance.”
High energy costs, fierce Chinese competition, global overproduction and a lack of investment and state support have all been blamed for the challenges facing the company and its competitors in the UK. British Steel was forced into compulsory liquidation in May and since then the company has been kept running by the government. Employing 4,000 people at its Scunthorpe and Teesside sites, British Steel supports an additional 20,000 jobs in the supply chain.
Jingye was founded 30 years ago by Li Ganpo, a former Communist party official who built the group from scratch in a corner of the Hebei province that is famed for the role it played in the establishment of the People’s Republic of China. The company employs 23,500 people and had annual revenues of about £10bn in 2018.
