The fate of British Steel has been hanging in the balance since the company fell into insolvency in early 2019, however, Chinese company Jingye is set to finalise their purchase in the week commencing 8 March 2020.
Jingye To Buy British Steel From The Insolvency Service
The rescue deal had stalled due to worries expressed by the French government regarding the inclusion of the Hayange plant within the sale.
This plant is one of the profitable areas of the business and manufactures rail lines which are seen as vital to the French national infrastructure.
However, as of early March 2020, the French government has failed to put legal measures in place which would prevent Jingye from acquiring the Hayange manufacturing plant.
This has encouraged the Chinese buyer to go ahead with the purchase from EY insolvency practitioners. The purchase price was £70mn, and the company intends to invest over £1.2bn in their new business.
Around 400 employees at British Steel are likely to receive redundancy notices, while 3,200 workers will retain their jobs.
New employment contracts for employees being retained were issued on Monday, 2 March. There are 100 additional workers to be transferred to Barrett Steel, a UK-owned brand which is also buying the distribution centre’s side to the British Steel business.
About The British Steel Liquidation
British Steel went into liquidation in May 2019, and unions have been negotiating terms and conditions with Jingye since January this year.
The loss of 400 jobs is the worst-case scenario, and these are the first job losses from the British Steel plant, which is based in Scunthorpe. The Chinese manufacturer intends to increase the plant’s production from 2.5mn tons of steel annually up to at least 3mn.
The Jingye Chairman, Li Ganpo, has been quoted as telling senior plant managers: “Need funds? No problem. Jingye is here to invest.”
Despite the potential redundancies it really does look as though things are looking brighter for British Steel and ensures steel is still manufactured in the UK. Unions have advised members to accept the new contracts they’ve already received, in order that Jingye hit the ground running on the takeover date.