£70m British Steel rescue package agreed with Chinese company

British Steel is to announce a rescue deal with China’s Jingye Group, which should save up to 4,000 jobs.

Jingye Group has agreed in principle to buy the troubled manufacturer for a total of £70m, with the UK Government to help with loan guarantees and other financial backing.

British Steel has been kept operating by the Government since May when the company went into liquidation.

It employs 4,000 people at its Scunthorpe and Teesside sites, ans supports an additional 20,000 jobs in the supply chain.

The BBC has reported that while Jingye Group has promised to increase production, it has also warned costs may need to be cut.

British Steel’s previous owners, Greybull Capital, withdrew after saying Brexit fears had badly affected forward order books.

British Steel had been in negotiations with Ataer, which is a subsidiary of Turkey’s state military retirement scheme Oyak.

Hopes for a deal were raised after Ataer signed a preliminary agreement to buy the company in August. But last month the Official Receiver said the parties had failed to agree terms.

Jingye has 23,500 employees. In addition to its main steel and iron making businesses, it is involved in hotels, tourism and property.

According to its website, Jingye Group ranked 217th among the top 500 enterprises in China in 2019. The firm sells its products nationwide and exports to more than 80 countries and regions.