London — British Steel's proposed sale to China's Jingye Steel Group "is now firmly in sight", following the striking of a deal with unions on jobs and investment at the UK-based steelmaker which entered compulsory liquidation in May 2019, UK labor union GMB said Friday.
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Jingye said the sale is expected to be completed in the current quarter.
Unions led by GMB have been involved in intensive negotiations with the Chinese steel group for the last 10 days. The "breakthrough" deal now struck may involve up to 500 job losses at British Steel plants but will also involve Jingye investing GBP1.2 billion ($1.57 billion) in the works, preserving the future of the plants including the main Scunthorpe mill, GMB said.
"Jingye Group is pleased to have reached an agreement with union representatives on its proposed terms and conditions for British Steel employees," the Chinese steelmaker said in a statement. "Jingye's business plan will successfully preserve the majority of jobs at British Steel, while providing the business with a platform for long-term, sustainable growth and profitability."
Jingye Group CEO Li Huiming said: "We believe that this agreement lays the groundwork to provide well-paid, skilled jobs at British Steel for many years to come. It will pave the way for significant investment in the company that will transform the business and allow it to succeed."
British Steel has capacity of around 3 million mt/year at sites in the UK, France and the Netherlands and is a major producer of rail.
British Steel's Official Receiver Michael Gibbs indicated the transaction is set to go ahead. "We have concluded an asset purchase agreement with Jingye already. They are currently seeking the required regulatory approvals they need to complete the sale," he said.
Jingye said it continues to make progress in securing all other necessary approvals for the transaction, which it aims to complete in the first quarter of 2020.
GMB said the talks "took place in the context of the Special Managers having made it clear that there will not be another sales process for the whole business if the Jingye deal does not complete. British Steel would be broken up and sold in parts," the union said.
Two Turkish groups had also shown interest in a purchase of British Steel.
"We have seen the detail (of Jingye's investment plan) and this investment would transform the business and secure the future of British Steel...we have reached a point where there is an outcome regarding employee pay, terms and conditions. These discussions have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive change is required," GMB said.
Jingye did not immediately give any further details of the investment plan.