British Steel is on the verge of sealing a £70m rescue deal with a Chinese industrial giant that could save thousands of UK jobs.
Sky News reported last month the Jinge Group had contacted the government over a takeover of Britain’s second-biggest steel producer, which collapsed into liquidation in May.
It came after talks with the company behind Turkey’s military pension fund, Ataer, stalled.
The buyout by Jinge could be announced by the Official Receiver, which has been managing the insolvency, later today.
The firm has also held out the prospect of being able to draw on up to £300m in loans, indemnities and grants to back its plan to hike production at the Scunthorpe plant by 10%.
Staff at the Lincolnshire site have been told in an email that contracts between British Steel and Jingye have been exchanged, it has been reported.
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.
A rescue of British Steel would 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 Chinese 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.