Did Sturgeon agree to buy steel from China?
SNP in u-turn amid questions over £10bn Chinese deal
Nicola Sturgeon signing the deal: ‘no investment has been agreed‘
The Scottish government last night admitted it had agreed a deal with two Chinese companies worth up to £10 billion amid claims that it would force Scotland to use steel produced in China.
SinoFortone Group and China Railway No 3 Engineering Group – the largest construction company in the world – signed a memorandum of understanding with the Scottish government “to undertake infrastructure projects”.
The MoU was agreed at Bute House on 21 March and reported in the Chinese press – two days before election purdah – but the Scottish media was not informed. The Scottish government claimed initially that it could not release the document because of election purdah, but last night it made a u-turn and agreed to release it.
Critics have pointed out that it was signed at a time when the British steel industry plunged into crisis. Scotland has been accused of buying overseas steel for the new Forth Crossing.
One source told Daily Business that when agreeing to back investments in the UK the Chinese insist that its plants provide the steel.
The UK government has just issued new instructions for the public sector to use British steel if its bid is competitive.
There was further anger that the SNP-supporting business leader Sir Brian Souter was party to the deal, but nothing was made public about this in Scotland.
Last night, the SNP said: “The Memorandum of Understanding is an agreement to have preliminary talks about potential opportunities for investment.
“It does not relate to any specific projects or any specific amount of investment. No investment has been agreed.”
According to the Chinese press, Luo Renjian, a researcher at the Institute of Transport Research at the National Development and Reform Commission, said that the agreement would enable Scotland to operate high-speed trains traveling at a speed of over 300 kilometres per hour.
It may also see significant investment in clean affordable housing and energy.
But any contracts that follow from the agreement are likely to mean Scotland importing China-built rolling stock and other equipment and materials.
Peter Zhang, the managing director of SinoFortone Group, Sir Richard Heygate, senior adviser for China Railway No 3 Engineering Group, and Chinese Consul General Pan Xinchun joined Ms Sturgeon at Bute House during the agreement’s signing ceremony.
Ms Sturgeon was quoted in China Daily saying: “We have been cooperating and engaging with China since 2007 and I further progressed Scotland’s business credentials during my trip last year, and this Memorandum of Understanding will strengthen our economic links with China in a number of areas.
“We have high hopes for Scotland’s economy and it is in a strong position, but if we can drive further growth by looking beyond our shores and building relationships with firms across the world then we will seek to make that happen.
Mr Zhang said: “We are delighted to act as a bridge between Chinese infrastructure expertise and finance with Scotland.”
What do we know about SinoFortone?
SinoFortone receives a lot of its funding from the Chinese state. It has pledged significant investment in the UK, including £3.2 billion in a major amusement park in Ebbsfleet in the southeast of England.
It is also providing £2 billion to back two biomass plants and associated food production centres in Wales: one on the site of a former aluminium plant in Anglesey and the second in Port Talbot.
A spokeswoman for the Scottish government said: “The memorandum of understanding signed with SinoFortone relates to exploring investment opportunities in Scotland.
“No investment has been confirmed – any investment in any specific project would of course be confirmed publicly in the normal way.”
But Scottish Liberal Democrat leader Willie Rennie said it was “extraordinary that a deal of such magnitude has been kept private by the SNP.
“We need to know what the SNP have signed up to. What have they given in return for this investment?”
Jackie Baillie, speaking for Scottish Labour, said: “This stinks. This secret deal needs to be published now. Voters deserve the facts on deals the SNP government have signed on their behalf and it is unacceptable to refuse to tell people what is in this deal.
“It simply isn’t good enough to blame the purdah election period. The SNP signed this deal before that but kept it quiet – people deserve to know why.”
Scottish Conservative chief whip John Lamont asked: “Why did the SNP keep this under wraps, and why was parliament not informed?
“It appears as if the SNP simply tried to hide this away until after the election. It’s not good enough – Nicola Sturgeon must now set out exactly why this has only come to light now.”