China's Jingye Group, the company behind the rescue of failed manufacturer British Steel, is set to complete the takeover in the next week, saving 3,000 jobs and securing the future of a major industrial asset in the UK.
Jingye Group headquarters Credit: British Steel
Jingye said that it had agreed to complete the purchase of the UK's second-largest steelmaking business from the official receiver, who has used taxpayer funding to keep the business afloat, on March 9.
The news is set to come as a release from the Lincolnshire town of Scunthorpe which is home to the plant and where thousands of workers have awaited news since the company collapsed in May last year.
The new ownership will preserve 3,200 jobs at the site, all subject to the acceptance of offers of employment issues on Monday this week. Around 400 people, however, will lose their jobs under a turnaround programme created by Jingye, which plans to invest £1.2-billion (€1.38-billion) to modernise the company's facilities and improve its environmental credentials.
The news is the final push in the long process of finding an investor willing to take on an industrial concern that, at its lowest ebb, was said to be losing millions a week.
The purchase covers British Steel's sites in the UK and the Netherlands, but does not include a factory in France which is still awaiting state approval.
The government in Paris is viewing the Hayange facility as a strategic national asset due to its role in supplying tracks for the country's railway system and some officials have misgivings over Jingye's plans.
To alleviate these concerns, Jingye has agreed to complete the acquisition in stages, and said it was still very interested in buying the French steel mill.
Jingye CEO Li Huiming said: “We are delighted to have reached this agreement and look forward to completing the initial transaction over the coming days so we can begin a new chapter in British steelmaking.”
The Chinese conglomerate signed an outline agreement to purchase British Steel in November for over £50-million (€57.3-million) after the the official receivers talks with a bidder from Turkey fell through due to a refusal by some suppliers to cut prices.
The Hebei-based group will take control of sites in Scunthorpe and Teesside, as well as subsidiaries TSP Engineering and Netherlands-based FN Steel. Not included is a 50% stake in Redcar Bulk Terminal, which is being sold separately. About 100 jobs will transfer to Barrett Steel following the sale of four distribution centres.
Gareth Stace, director-general of the lobby group UK Steel, urged government action for the wider industry.
“That means taking action on the highest industrial energy prices in Europe, reforming business rates, and ensuring that British steelmakers benefit from the billions of pounds worth of government infrastructure investments, such as HS2,” he said.
British Steel was formed in 2016 after being sold by India’s Tata for £1 to the investment firm Greybull Capital. It entered insolvency less than three years later after failing to obtain an emergency government loan.
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