Written by: Keith Tully
Published: 11th November 2019
A potential rescue deal worth £70 million could be set to save British Steel and the jobs of thousands of people who work for the company.
Reports suggest that a Chinese industrial operation called the Jingye Group is poised to acquire what is the UK’s second largest steelmaker.
Around 4,000 people are employed directly by British Steel and a further 20,000 are estimated to rely on the company at least for part for their income or their business activities.
British Steel entered liquidation in May of this year but now looks set to be acquired by the Jingye Group via a deal struck with the Official Receiver.
The bulk of the steelmaker’s workforce are based at a huge production facility in Scunthorpe, which could see its output increase in the coming months with the backing of its new owners.
Steelmakers in the UK have been struggling to make profits and to stay in business in recent years, with insolvency having become unavoidable for British Steel after a tough start to 2019.
After its collapse into liquidation, there were suggestions that the government might provide enough financial support to rescue the company but that didn’t happen.
No buyout deal was possible over the summer but British Steel’s operations were maintained with government backing.
A deal in principle is now understood to have been reached between the Official Receiver and the Jingye Group, with a sale worth £70 million expected to be completed soon.
Gareth Stace, director general of the lobby group UK Steel, has welcomed the prospect of seeing British Steel bought out of liquidation.
Mr Stace told BBC Radio 4 that the company represents a “significant asset to our country” and noted that it accounts for roughly a third of all steel production that takes place each year across the country.
However, he went on to say that the British Steel plant in Scunthorpe is badly in need of “very significant investment” and requires an owner that makes good decisions for the company’s long-term future rather than just for the next few years.
“To me… 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,” he said.