Chinese group Jingye on verge of rescuing British Steel
Chinese industrial conglomerate Jingye is weighing up rescuing British Steel potentially ending months of uncertainty about the fate of the UK's second-largest steelmaker.
The announcement from Jingye is anticipated to be made later today. The iron and steel producer is expected to buy the beleaguered steel company in a deal that is set to include the promise of substantial investment, according to reports in the Financial Times. If it goes ahead, the acquisition will secure thousands of UK jobs.
However, the acquisition of one of the UK's largest steelworks by a Chinese company will be controversial, especially given the long-running dispute over China's practice of dumping low-priced products in the EU.
Nonetheless, the options for British Steel are limited following the company's collapse into insolvency earlier this year.
The Financial Times reported those close to the discussion as having said they expect the UK government to offer a guarantee to cover environmental risk and potential support for new technologies. This summer, the UK government created a £250-million fund for hydrogen technologies, which improve the efficiency and lessen the environmental impact of steel making.
The Chinese company, which produces some 15 million tonnes of steel every year, has said it plans to increase British Steel’s production from the current 2.5 million tonnes a year to over 3 million. It also says it wants to upgrade existing equipment to save energy and improve efficiency, increase the use of scrap steel and reduce the plant’s carbon footprint. However, Jingye executives who visited the UK last month have warned that costs will have to be cut.
The UK's second-largest steel company, after Tata, British Steel produces one third of all steel in the country. The company makes long steel products such as girders and rails as well as wire rod used in bridges.
Gareth Stace, director of UK Steel, said: “A significant amount of investment is needed in the heavy end, steel making part and that is where costs could be reduced. That could be done through reducing the cost of what you make through investment,” he said.
He rejected criticisms of the sale of British Steel to a Chinese buyer. “What this company needs now is someone willing to invest for the long term. If Jingye is going to do that, then that surely should be welcome,” he said.
British Steel was formed in 2016 after Tata sold its European long-products arm to investment fund Greybull Capital for £1.
Back to Homepage
Back to Metals & Mining