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Chinese firm to save British Steel



Chinese firm Jingye Group has stepped in to save British Steel from liquidation with an agreement in principle totaling £70 million.

British Steel went into liquidation in May 2019 - a buyout would save 4,000 direct jobs and 20,000 indirect jobs
(Image via Steve Morgan)

If the purchase goes through it could potentially save 4,000 jobs at British Steel’s plants in Scunthorpe and Teesside, plus an additional 20,000 jobs in the UK supply chain and 1,000 in France and the Netherlands.

British Steel went into liquidation in May, and has been kept afloat by the government through the Official Receiver. An increase in cheap steel from China has been blamed for causing the UK steel industry to struggle in recent years, with Donald Trump’s 25% trade tariff on steel imports exacerbating the problems.

Other companies in talks to purchase the firm include Turkey’s Ataer Holdings - a subsidiary of the country’s military pension fund with ties to the government - and Liberty House, owned by steel magnate Sanjeev Gupta. 

Though Gupta’s offer has yet to be ruled out, it’s thought that Jingye Group are the frontrunners, with the sale expected to be approved by the government imminently. The government is expected to help with the purchase through loan guarantees and other financial support.

It’s been reported that Jingye aim to increase production in the Scunthorpe site from 2.5 million tonnes per year to over 3 million tonnes per year, securing jobs for a significant period of time.

"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,” said Gareth Stace, director general of the industry lobby group UK Steel.

"A purchase by Jingye of British Steel would certainly complement what they do there in China.

"But actually British Steel makes rail, high-quality rail and heavy sections, ie girders, which Jingye doesn't make. [So it] not only increases the amount of different products that Jingye could make but also, much more importantly, secures a foothold in the UK."

Expanding production to achieve Jingye’s goals will require further investment in the plants of up to £500 million to refurbish blast furnaces and coke overs.

"If this is confirmed, then we welcome this positive step towards securing British Steel under new ownership,” said a statement from trade union Community.

"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."

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Chinese firm to save British Steel - Time to read 3 min
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