China’s Jingye secures future of British Steel with £1.2bn pledge
British Steel’s Scunthorpe plant may be saved
Thousands of workers at British Steel were told that a takeover deal has been agreed with China’s Jingye Group amid concern over how many will be retained.
It is understood that the UK government will provide loan guarantees and other financial support to the £70m acquisition. Jingye has pledged £1.2 billion investment in the business.
Jingye chairman Li Ganpo, who is a former Communist Party official, was joined by several top Jingye executives in meetings last week with MPs, unions and accountancy firm EY, which sought a buyer.
The government kept the mills in production at Scunthorpe and Teesside at a reported cost of £1m a day since the company collapsed in May.
The deal involves the main steelworks in Scunthorpe along with the Teesside and Skinningrove steel rolling mills, a subsidiary businesses FN Steel, British Steel France and TSP Engineering. British Steel’s stake in the Redcar bulk terminal port is also included.
British Steel supports an additional 20,000 jobs in the supply chain.
While Jingye will keep the company in business and increase production from 2.5 million to 3m tonnes per year it is likely that it will not retain all of the 4,000 direct employees.
There is also concern about a “strategic” UK manufacturer passing into Chinese hands, and it is said to have antagonised US President Donald Trump.
He has accused China of flooding the market with cheap steel, prompting him to impose a 25% trade tariff on steel imports from China and the EU.
Jingye has 23,500 employees and as well as its main steel and iron making businesses, it is also involved in hotels, tourism and property.
The Turkish corporation Ataer Holding has also been keen to acquire British Steel and emerged as an early front-runner.