British Steel has been saved in a rescue deal by a Chinese industrial giant safeguarding up to 4,000 jobs, it has been confirmed.
The sale to the Jingye Group will go through “as soon as reasonably practicable”, said the Official Receiver, which has been handling the insolvency of Britain’s second-biggest steel producer.
The Chinese firm said it plans to invest £1.2bn in British Steel over the next decade and would “preserve thousands of jobs”.
The completion of the sale depends on a number of issues, including gaining the necessary regulatory approvals.
The business will continue to trade as normal during the period between exchange and completion.
Sky News reported last month Jingye had contacted the government over a takeover of British Steel, which collapsed into liquidation in May.
It came after talks with the company behind Turkey’s military pension fund, Ataer, stalled.
The fate of more than 4,000 British Steel workers, and up to 20,000 additional jobs in its supply chain, rest on securing the company’s future, and that of its plants in Scunthorpe and northeast England.
Announcing the takeover, the Official Receiver said in a statement: “Support from employees, suppliers and customers since the liquidation has been a critical factor in achieving this outcome.”
Welcoming the move, Roy Rickhuss, general secretary of the steelworkers’ trade union Community, said: “Jingye’s interest rightly demonstrates that they believe that British Steel can have a sustainable future.”
He added: “Whatever government is in place in the coming weeks it is vital that all steps are taken to successfully conclude this process – everyone needs to remain focused on achieving that outcome to save our steel.
“Until a deal is completed, all viable options to securing the business should remain on the table.”
Gareth Stace, director general of the industry body UK Steel, said: “British Steel’s production facilities in Scunthorpe and elsewhere in the North East represent one third of the UK’s steel production and are a major strategic asset to our country; their loss would leave our manufacturing, construction and infrastructure capability in a considerably poorer state.
“While there remains much work still to be done, the announcement is a huge hurdle overcome on the way to delivering a sustainable future for this cornerstone of British industry.
“A commitment to long-term investment and production in the UK is absolutely essential and naturally must sit at the heart of any purchase that now goes ahead.
“Government support will be critical in helping to deliver this and its efforts and interventions already provided to date are to be much welcomed.”
The rescue of British Steel will be viewed as an important sign of the government’s commitment to steel manufacturing in the UK, which has slumped over recent decades.
The company, which was previously a subsidiary of the Indian conglomerate Tata, has flirted with insolvency on previous occasions as the economics of steel production in the UK have become less attractive.
British Steel fell into insolvency earlier this year after the government decided against providing a further financial bailout to the company under its then-owner, Greybull Capital, which had bought the firm for just £1.
The Jingye Group, which is headquartered in the country’s industrial heartland, also operates in the chemicals, hospitality and real estate sectors.
According to its website, Jingye employs more than 22,000 people and exports its steel products to dozens of countries.