Chinese firm set to rescue British Steel

Thousands of jobs in the UK and Europe to be saved as Chinese firm bails out the British Steel group.

Chinese firm set to rescue British Steel
The British Steel group, which has been in receivership for six months, is set to be bought by the Chinese company Jingye in a £70 million deal.The move, which could save up to 4,000 jobs in the UK, plus another 1,000 in subsidiaries in France and the Netherlands, comes a month after negotiations with Ataer – an arm of the Turkish military's pension fund – foundered.

A deal in principle

It is understood that the deal has been agreed in principle and that the UK government has agreed to provide financial support, including loan guarantees.Gareth Stace, director-general of the industry lobby group UK Steel, told BBC Radio 4's Today programme on Monday that the business being bought was a "significant asset to our country", making up a third of national steel production, mostly at its plant in Scunthorpe.He adds, "Jingye are looking to make significant investment, are in for the longer term and therefore it isn't about keeping this site going for a year or two or a couple of years. To me, what I understand about the company, it's about looking to the future, so we're not going to be back in here in three years, five years, in 10 years' time."

Investing in the UK

Jingye, which currently has more than 23,000 employees and is involved in the tourism industry and real estate as well as steel and iron making, is believed to be mainly interested in British Steel's specialism in railway track and girder manufacturer - products the Chinese firm currently does not make.The deal would also give Jingye, which already exports to about 80 countries, a foothold in Europe. The company is reported to want to increase production in the UK, involving a refurbishment of blast furnaces and other plant at an estimated cost of up to £300 million.

Saving a skilled workforce

A spokesman for the Community trade union says, "If this is confirmed, then we welcome this positive step towards securing British Steel under new ownership. The fact that there has been ongoing interest from both Ataer and now Jingye, rightly demonstrates that potential buyers believe that British Steel can have a sustainable future."Any new owner would not just be acquiring a steel business, they would be taking on a dedicated and skilled workforce, who even through the uncertainty of recent months have been breaking production records to give the business a chance. In the meantime, everyone needs to remain focused on securing a viable deal to save our steel."Mr Stace told the BBC that he believes the steel industry in the UK can now compete globally and that Steel UK would be publishing a manifesto with ideas for change. "But the problem we have is we have a uncompetitive business landscape in the UK. Government can change that," he adds.

Read more news and views, from David Sapsted.

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