British Steel to be saved by Chinese firm Jingye in £70m deal

Chinese company Jingye Group has entered into a sales contract to acquire British Steel, safeguarding 4,000 jobs and 20,000 in the supply chain.

It is understood the Chinese firm will pay roughly £70 million for British Steel but will also be able to tap into a £300 million taxpayer-funded support package to aid the deal.

The British Steel company went into compulsory liquidation in May. The company was taken over by the Official Receiver, assisted by consultancy EY, who spent three months seeking a buyer.

On the new contract, the official receiver commented: “Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals. The parties are working together to conclude a sale as soon as reasonably practicable.

"The business will continue to trade as normal during the period between exchange and completion. Support from employees, suppliers and customers since the liquidation has been a critical factor in achieving this outcome."

Turkey’s Ataer Holding, the investment arm of Oyak was previously announced as the preferred bidder for British Steel in August. However last month the Government failed to make a deal. Ataer was given a 10-week period in which the Government would not hold talks with other potential buyers.

That period of exclusivity ended in October, after which other potential buyers including Jingye Group came forward.

Commenting on today’s announcement, Gareth Stace, UK Steel director general said: “Today’s announcement is positive news for British Steel and its workers. British Steel’s production facilities in Scunthorpe and elsewhere in the North East represent one third of the UK’s steel production and are a major strategic asset to our country; their loss would leave our manufacturing, construction and infrastructure capability in a considerably poorer state.

“While there remains much work still to be done, today’s announcement is a huge hurdle overcome on the way to delivering a sustainable future for this cornerstone of British industry. A commitment to long-term investment and production in the UK is absolutely essential and naturally must sit at the heart of any purchase that now goes ahead. Government support will be critical in helping to deliver this and its efforts and interventions already provided to date are to be much welcomed.

“However, we must not lose sight of the longer term picture for the whole steel sector just as we see light at the end of this particular tunnel. It is vital we move on from the current reactive approach, to one in which a shared, long-term strategic vision sits front and centre. Today we have launched an ambitious new manifesto for the UK steel sector that does just that. We urge politicians of every stripe to take note and take action.

“The UK steel sector has a potentially bright future, underpinned by increasing UK and global demand for our products, but government must recognise the need to address the business environment in the UK which currently undermines our competitiveness; not least the chronic uncertainty around Brexit. The steel industry is ready to invest in its future in the UK, all it requires is a partnership with government to help deliver a level playing field that can unlock its potential.”

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