Chinese giant Jingye poised to sign £70m deal for British Steel

British Steel's Scunthorpe plant is pictured in north Lincolnshire, north east England
Jingye is expected to pay about £70m for British Steel and will be able to tap into a £300m taxpayer-funded package of loans to seal the deal. Credit: LINDSEY PARNABY/AFP

A Chinese firm is poised to buy British Steel out of insolvency as soon as tomorrow, in a deal expected to safeguard 4,000 jobs and end months of uncertainty about the Scunthorpe plant.

Advisers were this weekend putting finishing touches to a draft agreement. It is understood Jingye will pay about £70m for British Steel and will also be able to tap a £300m taxpayer-funded package of loans and other support to seal the deal.

The little-known buyer swooped when exclusive talks with Turkish investor Ataer were deadlocked last month after the Erdogan regime put hurdles in the way of a deal. Li Ganpo, founder of Jingye and whose business interests include steel, manufacturing, tourism and property, visited Scunthorpe and other British Steel plants a fortnight ago and met 125 senior staff.

Mr Li and Jingye officials flew to Humberside Airport in a company jet and met Government officials, local MPs and unions.

“Mr Li was very open and transparent, answering any questions the ‘G125’ group of British Steel managers had,” said one person with knowledge of the event. “Jingye’s proposals were really positive and very well-received.”

A series of presentations by Jingye indicated its willingness to pump money into British Steel, upping output by more than 10pc to more than 3m tons. Jingye said while cost cuts would be necessary, it was ready to upgrade existing facilities.

However, even if a draft agreement is settled in the next few days, it will likely lead to weeks of talks, with no certainty that a final agreement will be reached.

Roy Rickhuss, general secretary of steel union Community, added: “If the business is secured by Jingye we will welcome it as a positive sign for this important British industry.”