Leading Chinese steelmaker Jingye Group has announced it has exchanged contracts and reached an agreement to acquire certain assets of British Steel.
The agreement – reportedly worth £70m – will see the two businesses combine to create a world class steelmaking group with global scale and ambition.
British Steel collapsed into liquidation in May, threatening 5,000 staff directly – 700 of which work at Teesside’s Lackenby and Skinningrove sites – and around 20,000 more in the supply chain.
Jingye Group chairman Li Ganpo said: “We are delighted to have reached this agreement.
“As a young company with large ambitions we have long admired British Steel and appreciate its illustrious heritage.
“We share with the thousands of British Steel workers a passion for this industry and we are determined that together we can transform this business.”
Jingye plans to invest £1.2 billion in the business over the next decade in upgrading the plants and machinery, improving the new company’s environmental performance and boosting energy efficiency to place the operations on a more competitive and sustainable footing.
Jingye will further help to ensure a long-term sustainable future for British Steel and its employees by investing in identifying new markets and products. Jingye anticipates making offers to as many employees across the business as possible.
Under the terms of the agreement, Jingye would acquire certain assets of British Steel from the Official Receiver, subject to regulatory approvals and certain employee consultation procedures.
This would include the steelworks at Scunthorpe and UK mills at Teesside Beam Mill and Skinningrove, and the subsidiary businesses FN Steel, British Steel France and TSP Engineering.
It is anticipated that the shares owned by British Steel Limited in Redcar Bulk Terminal Limited would also be included in the sale.
The company will now engage with the union representatives and employees ahead of completion of the sale, at which point the Official Receiver, EY, would hand over the running of British Steel to Jingye.
Jingye is committed to preserving UK jobs and investing in a workforce that can help to strengthen British Steel’s UK operations, and has already started the process of engaging positively with the unions and employees.
Mr Li added: “This is the beginning of a long journey. We know that this is only the start of the hard work of revitalizing British Steel.
“But we believe that this combination will create a powerful, profitable and sustainable business that will ensure the long-term future of thousands of jobs while producing the innovative high-quality steel products that the world needs.”
Jingye Group was formed in 1988 and focuses on the production of steel bar, plate and coil products.
It operates 18 blast furnaces, producing 15 million tonnes of steel annually and exports to 80 countries around the world.
Based in Hubei province in China, Jingye had total sales of RMB 90.1 billion and employs 23,500 people. It also has operations in chemicals, hotels, real estate, and trade.