Relief at news of potential agreement to save British Steel

News that the outlines of a deal have been drawn up to rescue British Steel has been welcomed by business leaders.

China’s Jingye Group has agreed in principle to buy the manufacturer for a total of £70m, with the UK Government to help with loan guarantees and other financial backing. The deal still needs to be ratified by the UK Government.

A Government spokesman confirmed: “The Official Receiver and Special Managers from EY can confirm a sales contract has been entered into with Jingye Steel (UK) and Jingye Steel (UK) Holding, to acquire the business and assets of British Steel, including the steelworks at Scunthorpe, UK mills and shares of FN Steel BV, British Steel France Rail SAS and TSP Engineering.

“The sale also includes the shares owned by BSL in Redcar Bulk Terminal Limited.

“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.”

Reacting to the news, Henri Murison, director of the Northern Powerhouse Partnership said: “The prospect of a rescue deal for British Steel is very welcome news potentially safeguarding around 3,000 in Scunthorpe and another 800 on Teesside as well as 20,000 jobs in the supply chain.

“British Steel is a vitally important asset to the Northern Powerhouse and the UK’s global trading ambitions. It is time to return to putting the Northern Powerhouse on the One Belt, One Road of deeper cooperation with China and this acquisition demonstrates that potential buyers do believe British Steel, along with its highly dedicated and skilled workforce, can have a sustainable future.”

CBI regional director for Yorkshire and The Humber, Beckie Hart, said: “This welcome news is relief for thousands of workers up and down the east coast that the long-mooted deal has been agreed in principle.

“We must wait and see all the details but today is a day to welcome this news, with a key site and many jobs saved.

“The Government can and must keep a watching brief on this and make sure that all the support needed as available. British Steel is the heartbeat of the region and we must fight tooth and nail to keep it running.”

Dr Jonathan Owens, logistics expert from the University of Salford Business School, said: “Assuming there are no unforeseen problems with purchase, it will be interesting to understand what Jingye’s medium and long term recovery plans are for the plant.

“One strategic viewpoint could be to develop capacity for subsidised raw material into the UK market, which may be likely in the long-term not to be subject to high EU tariffs and, it can get enhanced leverage in the UK economy too.

“This investment should not be short term and seen as a benchmarking and knowledge stripping exercise though.

“Scunthorpe was initially the first to develop and apply technology that allows production of high grade steel with better reliability. In the past it has successfully fended of cheaper imports from China.

“Whilst other steel mills around the world have applied similar technologies, Scunthorpe is still considered ‘word class’ and the most experienced plant utilising this technology, and it still supplies Network rail for the UK’s railway track infrastructure today.”