Media reports had indicated that the deal for British Steel would be between 50 million pounds (US$65 million) and 70 million pounds. Credit: Carbon Brief.

Not only has Chinese steelmaker Jingye Group saved British Steel and the 3,200 jobs that go with it, it has pledged to invest 1.2 billion pounds for modernizing British company’s plants and rejuvenating the business, China Daily reported.

Under the deal — which saved the company from the hammer of liquidation — Jingye has acquired British Steel’s steelworks at Scunthorpe and UK mills at Teesside Beam Mill and Skinningrove, as well as subsidiary FN Steel in the Netherlands and TSP Engineering, the report said.

It, however, does not include British Steel’s French operations at Hayange, the acquisition of which is still subject to further negotiations with the relevant authorities in France, the report said.

“What we have agreed is that we are going to complete the transaction in stages. We will acquire the Dutch and the UK assets first, and look at the French assets later,” said Li Huiming, the chief executive of Jingye.

British Steel was being funded and managed by the Official Receiver, part of the UK Insolvency Service, after it declared insolvency in May 2019, the report said.

Though the exact deal value has not been disclosed, earlier media reports had indicated that it would be between 50 million pounds (US$65 million) and 70 million pounds.

British Steel was founded in 2016 after private equity company Greybull Capital purchased it for a token 1 pound from India’s Tata Steel.

This is the second time that a Chinese steelmaker has bought a foreign steel plant after HBIS Group, the Hebei province-based steel conglomerate, bought the loss-making Smederevo steel plant in Serbia in 2016 and saved more than 5,000 jobs, the report said.

Jingye Group, a multi-industrial company based in Hebei mainly specializing in iron and steel, has more than 23,500 employees and an annual sales revenue of 127.4 billion yuan (US$18.4 billion).

“It has not been an easy journey after we announced our intention in November, but the longer I have spent in Scunthorpe, the more I have come to believe in the successful future of these steelworks,” said Li.

He said Jingye Group’s investment over the next decade will put the business on a more competitive and sustainable footing, as it will modernize the site and improve energy efficiency and environmental performance, the rpeort said.

Ron Deelen, CEO of British Steel, said that he was confident that the UK company would seize the opportunity to further cement its reputation as a manufacturer of world-class steel.

UK Business Secretary Alok Sharma said the sale marks the start of a new era for those regions that have built their livelihoods around industrial steel production.

Xu Xiangchun, information director and analyst with iron and steel industry consultancy, believes that the deal will be beneficial for both sides. “It will be helpful for economic stability and employment in the UK and help the Chinese company to expand its market share, global influence.”

Xu said he expects the current deal to have similar synergy like HBIS. Six months after the Chinese firm took over the ailing steelmaker, its Smederevo plant, currently named HBIS Group Serbia Iron & Steel, has turned the corner and emerged as Serbia’s second-largest exporter. It produced 1.4 million metric tons of steel in 2017, with its profit hitting a record 200 million yuan that year.