Jingye Group emerge as new favourite to buy British Steel
Reports say that Chinese firm Jingye Group is the new frontrunner to acquire British Steel, after a deal with Turkey’s Ataer failed to materialise in October.
British Steel was put into compulsory liquidation in May after failed rescue talks with the government. Its insolvency has put around 5,000 jobs at risk at the firm’s Scunthorpe site and left 20,000 more in the supply chain vulnerable.
The government has kept the stricken firm running since May, covering the interim period before a sale is finalised.
Ataer, a subsidiary of Turkey’s state military pension fund, had seen a preliminary offer accepted earlier in the year and already has interests in steel, owning a 50 per cent stake of Turkey’s largest steel producer, Erdemir.
However, the preliminary offer did not culminate in a sale by late October after both parties failed to agree terms, so British Steel was made available to other bidders, with Jingye capitalising.
The Chinese group employs 23,500 people and is active in the hospitality, chemical and property sectors as well as having its own stakes in steelmaking. It had been part of the original bidding process but returned to the table after British Steel was made available for fresh bids.
Jingye is understood to be looking to reach an agreement in principle by the weekend, but the Official Receiver has thus far declined to comment on the latest developments.
Andrew Percy, MP for the nearby Brigg and Goole constituency, said that Jingye’s chairman Li Ganpo met with him and Scunthorpe MP Nic Dakin last week to offer reassurances over the future of British Steel should the group’s bid succeed.
Percy told the Grimsby Telegraph: “They [Jingye] have assured us that if they do progress with this acquisition, they have every intention of investing to expand production to serve the UK and European market.
"That's really important and what they wanted from us was assurance from the government and the council about support we could give and we said we are committed to work together for that.”
Should their bid succeed, Jingye would want to increase the volume of production at the Scunthorpe plant from 2.5 million tonnes of steel per annum to three million, along with improving efficiency and cutting costs, according to the Financial Times.
Several hurdles still need to be cleared for an agreement with Jingye to be reached, including numerous legal requirements, which will likely take several weeks.