Jingye Group has signed the deal with the Government's Official Receiver to take on the company - which has been bankrolled by the state since it was placed in compulsory redundancy last May.
It means 3,200 British Steel jobs will be secured in Scunthorpe and Teesside, as well as thousands more in the supply chain.
The completion comes with a £1.2 billion investment pledge from the Chinese firm, as it seeks to make the business thrive once more, with a sustainable future in the UK.
Business Secretary Alok Sharma was at the works’ headquarters in Scunthorpe to oversee the milestone moment, which all have been working towards since November.
Jingye agreed terms back then, with a figure of £70 million unconfirmed, but doubts over the French rail rolling operation have led to a phased approach, with the UK and Dutch subsidiary elements tied up today.
British Steel was plunged into compulsory liquidation last may when debts of £880 million were revealed at a High Court hearing.
Owner Greybull was immediately stripped of control, having only taken over in 2016, with the Official Receiver and special managers appointed. It has traded on through the negotiations, which also included a period of due diligence with a Turkish firm, Ataer Holdings, and interest from two British-led consortiums.
A key bit this from Mr Li, Jingye’s chief exec. ...
Asked how Jingye will be able to turn around a business others have failed with, Mr Li said: “Different enterprises will take different approaches to the same project.
“Jingye’s strategy is to internationalise British Steel . It is a fantastic business and we think if we can combine our strengths with those of British Steel we have a great future ahead of us. We are not in this for the short term. this is about building a long term sustainable future for British Steel.”
Secretary of State for Business, Energy and Industrial Strategy Alok Sharma speaks to the media during his visit to British steel, Scunthorpe on the day that the company was taken over by the Gingye Group(Image: David Haber/ScunthorpeLive)
Business Secretary Alok Sharma told ScunthorpeLive:
I think it is a very positive moment, and I think it brings uncertainty to an end. It secures several thousand jobs, 3,200 in the business and in the wider supply chain as well, and the steel users.
Everyone has worked hard to get this deal over the line and I pay particular tribute to employees and their families. British Steel has incredibly dedicated, strong employees who are hghly skilled and who we need.
The very good news is Jingye has clearly set out a long term commitment to British Steel and a long term investment plan - in value terms £1.2 billion - and I have sat in discussions we have had with Jingye today and they are very keen to emphasise they are committed to Net Zero and clean growth.
We are going to continue to stay in close contact with Jingye Group, and indeed throughout this whole process, my colleagues and officials worked incredibly hard and have been part of the process leading to completion.
The new employer has said very publicly this is a long term commitment to British Steel, which is very good news, and while it is positive news it has been tinged with some sadness because some colleagues here are not being taken forward, and some have worked for 20-odd years. That is very sad to hear and we persevere with the support, and I can say the government is doing everything it can.
The government has immediately responded with Brexit, we are now over the line in terms of this particular issue too, and the Prime Minister was very keen that we provide the support we have done, and he and the rest of Government absolutely welcome this new chapter.
I think this deal is a vote of confidence in the UK and the UK steel industry. there is a long term plan here, and there is no doubt we have world-class products being produced in British Steel, and a world-class workforce as well.
Jingye Group chief executive Huiming Li pictured as his company completes the takeover of British Steel (Image: David Haber/scunthorpeLive)
The Official Receiver, David Chapman, said:
The sale of British Steel is the culmination of nine months of work to transition this business to a new owner committed to its future. I am grateful to the British Steel workforce for their professionalism during difficult times as the business continued to trade and to its customers who have continued to show their confidence in the products the company produces. This show of commitment was an essential element in concluding the sale.. My team and the Special Managers at EY are very pleased to have completed the sale. This is the best outcome in the liquidation and also ensures continued high-quality raw steel production in Scunthorpe.
Sam Woodward of EY said:
Maintaining the business in challenging market conditions whilst the right deal was secured, is testament to the commitment of BSL’s employees, customers, suppliers and the Trade Unions. Without it, the most likely outcome would have been the closure of the business, the loss of its rich heritage and significant impact on BSL’s supply-chain.
We would particularly like to thank the BSL workforce for their loyalty, through what has been an uncertain and difficult time for them and their families. The way that they have continued to produce a world leading product is a tribute to their ingenuity and desire to keep this business alive.
Jingye has shown a great desire to effect ambitious plans that will invest in British Steel and help the business to once again be competitive on the world map.
Although British Steel has been sold, securing approximately 3,200 jobs, around 400 employees have not received offers of employment in the new company. We recognise this will be a challenging time for those affected and support and advice has already been, and will continue to be, provided.
Scunthorpe MP Holly Mumby-Croft said:
It’s a huge relief, tinged with sadness of course that not all of the workers have been carried forward.
This has been my top priority ever since I was elected MP. It has been on my mind every single minute since the day I was elected.
The steelworks is so crucial to the town, not just in the jobs it brings but in how it supports other business. Scunthorpe has a really positive future ahead of it.
Jingye have been really clear that they want to make a long-term investment - they said at today’s ceremony that they are here to make steel, they’re not here to make money and move on.
See the joint press release issued by Jingye and British Steel on the takeover.
The Scunthorpe steelworks is part of the deal, as well as UK mills at Teesside Beam Mill and Skinningrove. Subsidiary businesses FN Steel in the Netherlands and TSP Engineering are also included.
However, British Steel’s French operations at Hayange has not changed hands due to ongoing negotiations. Jingye says it hopes to conclude them seperately.
Business Secretary Alok Sharma and Scunthorpe MP Holly Mumby-Croft, pictured during a visit to the British Steel works in Scunthorpe (Image: Scunthorpe Live)
Business Secretary, Alok Sharma, said:
“The sale of British Steel represents an important vote of confidence in the UK’s steel industry. It also marks the start of a new era for those regions that have built their livelihoods around industrial steel production.
“I would like to pay tribute to everyone who has been involved in getting this deal over the line, in particular to British Steel’s workforce for whom I recognise the uncertainty will have been challenging.
“I also want to reassure British Steel employees who may be facing redundancy that we are mobilising all available resources to give immediate on the ground support and advice to those affected.”
Workers arrive for their shift at British Steel (Image: LINDSEY PARNABY/AFP via Getty Images)
Roy Rickhuss, General Secretary of the steelworkers’ trade union Community, said:
Today marks the start of a new chapter for British Steel. It has been a long and difficult journey to get to this point. In particular, this acquisition is a testament to all the efforts of the world class workforce, who even through the uncertainty, have broken production records. Today would also not have been possible without the government recognising the importance of steel as a key foundation industry. The decision to support the business through to new ownership is an example of positive industrial strategy at work. The government now need to build on this with more action to create the right environment for all our steel producers to thrive. That means further action on energy costs, business rates and procurement.
We look forward to working with Jingye as they bring forward their investment plans, which have the potential to transform the business and secure a sustainable future. Jingye are not just taking over a business, they are taking on thousands of workers and giving new hope to steel communities in Scunthorpe and Teesside
We know there is a lot more work to do, most importantly supporting those who have not secured employment with the new business. These people have paid the ultimate price to get the deal over the line in a process that we did not agree. We will continue to push for them to have the opportunity to return to employment and will be offering support and guidance, in particular to access their redundancy payments, over the coming days and weeks.
The GMB union said the deal is worth pursuing to safeguard UK steel for future generations, stating it is a big win for the industry – but job losses are heartbreaking. Up to 500 jobs are understood to have been lost as a slimmed-down workforce emerges. It is mitigated by West Yorkshire’s Barrett Steel taking on more than 100 as it swoops for four metals centres and two office locations.
Charlotte Childs, GMB Organiser, said:
On the one hand this deal must be celebrated; it keeps the steel industry alive in the UK, it safeguards more than 3,000 jobs and offers a bright future - providing Jingye stick to their plan.
On the other it is heartbreaking that long-serving members of high-skilled staff, many of whom have given their entire career to British Steel, are seen as surplus to requirements.
This deal is worth pursuing to safeguard UK steel for future generations.
But, for the UK’s steel industry to have a long term future, we still need more Government assistance on energy costs to compete with European competitors, as well as domestic procurement orders.”
Leader of the Council, Councillor Rob Waltham pictured during the meeting. (Image: David Haber/scunthorpelive)
Council leader Rob Waltham welcomed the investment in Scunthorpe and the UK as a whole. He said:
This is really good news for the town. The cornerstone of the deal is the £1.2 billion investment that the Jingye Group is making in British Steel. It will cover everything from a new power plant and improvements in production processes to more environmentally friendly practises.
Work on this scale is a massive boost to the local economy. Investment will naturally bring further work and jobs to North Lincolnshire.
Jingye have been pretty clear that they have a long-term interest in British Steel. They have helped to secure 3200 jobs at the site and more in the supply chain. It is always welcome to see this commitment in the UK, and shows how we can continue to do business with the world post-Brexit.
Jingye Group CEO, Li Huiming, said: “It has not been an easy journey since we first announced our intentions in November but the longer I have spent in Scunthorpe, the more I have come to believe in the successful future of these steelworks and the employees that have made them famous throughout the world. Together, we can forge a new partnership that will mark the beginning of a new illustrious chapter in the history of British steelmaking.”
The completion secures the future of approximately 3,200 jobs and follows the agreement of new terms with customers and suppliers.
British Steel CEO, Ron Deelen, said: “This is a momentous day for our business, and I’d like to thank everyone for their dedication during a challenging year. I’m confident we’ll seize the incredible opportunity Jingye have given us to build on 150 years of heritage, and further cement British Steel’s reputation as a manufacturer of world class steel.”