In May 2019, British Steel entered receivership after failing to accumulate enough funding to secure its future. Since then, the government has been supporting operations.
Jingye, a Chinese industrial firm founded by a former Communist party official, is expected to be the steel production company´s saviour. A deal worth £70 million has been reported, with further funding available to provide up to £300 million in loans, indemnities and grants; this will support the plan to boost the plan´s production by 10 per cent.
Jingye began making steel in 2002 and says in a promotional video on their website that it “wants to go global”. The business currently has 23,500 employees and saw returns of approximately £10 billion in 2018.
The move has the potential to protect the future of up to 4,000 jobs at the Scunthorpe site, which is the area´s largest employer and is one of the last two blast furnace steelworks in the UK.
As well as the employees at the Scunthorpe and Teesside sites, an additional 20,000 jobs in the supply chain rely on the support of British Steel. A further 1,000 are situated in France and the Netherlands which are also included in the deal.
Staff were informed that the Official Receiver – a government employee managing the sale – is expecting to confirm the deal very soon. During communications, the special manager promised an update for Monday but informed staff that the signing of contracts would not mean that the sale is fully completed.
Sam Woodward, a special manager from accountancy EY who is assisting the Official Receiver, said: “As you are aware, Jingye has been undertaking accelerated due diligence for the last two weeks, and I am pleased to advise that it is progressing well.
Back in August, it appeared that British Steel was going to be bought by Turkey´s Ataer after they signed a preliminary agreement to purchase the business. However, terms weren´t able to be agreed leading to the offer´s dissolve.
The business´ previous owner, Greybull Capital, had purchased British Steel for just £1 in 2016. Since then, Greybull Capital abandoned the company in May after expressing fears that Brexit would kill demand.