Chinese giant Jingye Group looks set to come to the rescue of British Steel within days, saving 4,000 jobs.
A £70 million bid is understood to be on the table, with government support also pledged as it seeks to invest in the Scunthorpe-headquartered company.
Reports suggest the company has flagged up access to a £300 million kitty, made up of loans, indemnities and grants as it seeks to boost production.
Union officials had heard “nothing official” as work began.
Paul McBean, British Steel’s Scunthorpe works multi-union committee chairman, was aware of the ramping up of speculation.
“We’ve heard nothing official yet. I think we are close, but we haven’t had anything official yet,” he said.
Jingye Group’s chairman Li Ganpo led a high profile visit just over a week ago, flying into Humberside Airport in a company jet and meeting management, council leaders and the Official Receiver, as well as North Lincolnshire MPs before parliament was dissolved.
A large Chinese team have been working through due diligence at the Scunthorpe site.
Jingye swooped after an exclusivity period with initial preferred bidder, Turkish operator Ataer, expired – opening the door to other parties.
At the time Nic Dakin, said he thought the Official Receiver would look to move the process on.
British Steel was placed into compulsory liquidation after a High Court hearing revealed debts of £880 million. Greybull, in charge for just short of three years after buying the business for £1 from Tata, was removed from control.
Mr Dakin, now the Labour candidate for Scunthorpe, said: “The workforce at British Steel have done an outstanding job continuing to make and sell steel through this difficult few months.
“It looks as if we’re coming to a point where a new owner may well be determined and that would be very good news for the business and the communities that are around it.”
The GMB greeted the speculation with cautious optimism.
Ross Murdoch, GMB National Officer, said: “On the face of it we cautiously welcome this sale which finally provides some light at the end of the tunnel for 4,000 British Steel workers.
“GMB also met with chairman Li and his senior team in Scunthorpe on October 30. We were impressed with the passion and enthusiasm from the Jingye team.
“However due diligence on this sale was completed very quickly and the devil will be in the detail.
“As such we will seek an urgent meeting with the Jingye Group to discuss their precise strategy.
“GMB’s position is the new owner takes on the whole workforce on existing terms.”
A spokesman for the Community trade union said: "If this is confirmed, then we welcome this positive step towards securing British Steel under new ownership.
"The fact that there has been ongoing interest from both Ataer and now Jingye, rightly demonstrates that potential buyers believe that British Steel can have a sustainable future.
"Any new owner would not just be acquiring a steel business, they would be taking on a dedicated and skilled workforce, who even through the uncertainty of recent months have been breaking production records to give the business a chance.
"In the meantime, everyone needs to remain focused on securing a viable deal to save our steel."
A deal with the Chinese could support the wider region’s role in the 21st century silk road too, helping forge stronger, smoother links between the West and the Far East.
Henri Murison, director of the Northern Powerhouse Partnership said: “The prospect of a rescue deal for British Steel is very welcome news potentially safeguarding around 3,000 in Scunthorpe and another 800 on Teesside as well as 20,000 jobs in the supply chain.
“British Steel is a vitally important asset to the Northern Powerhouse and the UK’s global trading ambitions. It is time to return to putting the Northern Powerhouse on the One Belt, One Road of deeper co-operation with China and this acquisition demonstrates that potential buyers do believe British Steel, along with its highly dedicated and skilled workforce, can have a sustainable future.”
Dr Jonathan Owens, logistics expert from the University of Salford Business School, believes this will prove to be long-term investment.
He said: “It appears the Chinese-based Jingye Group may have beaten the Turkish pension fund in the purchase of British Steel.
“It is not perhaps surprising that both the Jingye and the Turkish pension fund were committed on investment at Scunthorpe, by utilising the high-quality steel that is manufactured at Scunthorpe to complement their existing specialisms and concentrations within the volume market. Assuming there are no unforeseen problems with purchase, it will be interesting to understand what Jingye’s medium and long term recovery plans are for the plant. One strategic viewpoint could be to develop capacity for subsidised raw material into the UK market, which may be likely in the long-term not to be subject to high EU tariffs and, it can get enhanced leverage in the UK economy too.
“This investment should not be for the short term and seen as a benchmarking and knowledge stripping exercise though. Scunthorpe was initially the first to develop and apply technology that allows production of high grade steel with better reliability. In the past it has successfully fended of cheaper imports from China. Whilst other steel mills around the world have applied similar technologies, Scunthorpe is still considered ‘word class’ and the most experienced plant utilising this technology, and it still supplies Network rail for the UK’s railway track infrastructure today.”
