British Steel to be sold to Chinese firm in deal that could save 4,000 jobs

https://www.theguardian.com/business/2019/nov/11/british-steel-rescue-deal-jingye-scunthorpe-jobs

Version 0 of 1.

Jingye Group agrees £50m buyout that prevents closure of Scunthorpe plant

British Steel is to be sold to the Chinese firm Jingye, the UK government has announced, in a deal that prevents the closure of the company’s Scunthorpe site and could safeguard 4,000 jobs.

Jingye and the government’s official receiver signed a sales contract on Monday, with a formal deal subject to regulatory approvals as well as consultations with employees over new job offers. The deal was worth about £50m, a person close to the talks said.

An announcement on the Insolvency Service’s website said Jingye’s new UK subsidiaries had agreed to “acquire the business and assets of British Steel Ltd”. As well as the main site in Scunthorpe, the contract also includes mills in Teesside and Skinningrove and subsidiaries in Workington, the Netherlands and France.

Jingye is planning to invest about £1.2bn in British Steel over the next decade, including upgrading, lowering emissions and improving energy efficiency.

In a statement, Jingye said it “anticipates making offers to as many employees across the business as possible”. A person with knowledge of Jingye’s plans said no guarantees could be given before the deal was formally closed.

British Steel collapsed into liquidation in May, with orders under pressure from intense global competition as well as difficulties caused by Brexit. The official receiver took over the running of the business from the investment firm Greybull Capital while a buyer was sought.

Jingye’s move for British Steel came after talks fell through between the official receiver and Ataer Holding, a subsidiary of the Turkish military pension fund Oyak.

Jingye’s chairman and founder, Li Ganpo, has spent the past week in Scunthorpe, home of British Steel’s steelworks, in talks with government officials, trade unions and local politicians.

The Chinese conglomerate, which also has hotel and retail interests, produces about 15m tonnes of steel a year in China and it plans to expand internationally. Jingye pledged to invest in “identifying new markets and products” for British Steel.

Li said: “We know that this is only the start of the hard work of revitalising British Steel. But we believe that this combination will create a powerful, profitable and sustainable business that will ensure the long-term future of thousands of jobs while producing the innovative high-quality steel products that the world needs.”

The formal sale process could take months more to complete, although it is understood to be much further advanced than talks with Ataer before they collapsed.

Steve Turner, the assistant general secretary of the Unite trade union, welcomed the end of anxiety for steelworkers and their families but cautioned that the union was seeking assurances on jobs.

He said: “There have been a series of false dawns in finding a buyer for British Steel and Unite will not be raising any false hopes without seeing detailed plans for the entire business and the ink is dry on the contracts.”

Labour’s Nic Dakin, the MP for Scunthorpe, said he had been impressed by Li’s knowledge of the steelmaking industry. He also welcomed Jingye’s pledge to invest.

“This is a highly skilled and able workforce that has kept this business going selling steel,” he said. “The new owner would be wise to treasure the workforce going forward.”

However, the government faced criticism for allowing the sale of one of the UK’s industrial assets – a major supplier to the British railways – to a Chinese company. China has repeatedly been accused of dumping cheap steel in order to dominate the global industry.

Andrew Adonis, the former Labour transport minister who sits in the House of Lords, said Conservative governments had resisted measures to tackle steel dumping, before allowing a Chinese firm to buy it for “a pittance”. An industry source suggested that a £50m price tag equated to little more than the working capital contained within the business.

Sam Gyimah, the former Conservative party MP who is now Liberal Democrat shadow business secretary, said the deal represented Britain “being overtaken by rising economic powers”.