British Steel will be broken up if sale to Jingye fails, warn unions

BRITISH STEEL will be broken up and sold off if a sale to China’s Jingye falls through, trade unions have warned.

The takeover is seen as the last chance to save the bailed-out firm – with a failure likely to put many of its 4,500 staff jobs at risk as buyers cherrypick sections.

There are just weeks to a deadline for the tie-up to be agreed.

Unions say they have been told by interim bosses running the Scunthorpe-based steel maker that if its £50m sale to Jingye fails, the business will be sold off piecemeal.

Less profitable areas of the company – which both produces raw steel and turns it into finished products in rolling mills – would be unlikely to find bidders, resulting in their closure.

As well as the company’s direct employees, the business supports a further 20,000 supply chain jobs.

It collapsed into insolvency last May and was taken over by the Official Receiver, a part of the civil service which is running it on taxpayer life support with “special managers” from consultancy EY.

British Steel is understood to be losing £1m a day. Jingye is the second bidder to enter exclusive talks to rescue it – a bid by Turkish army pension fund Ataer fell through.

Unions revealed the break-up risk after negotiations with Jingye about its turnaround plan, which involves investment of up to £1.2bn in British Steel.

It also means new contracts for staff and up to 500 jobs being axed – something which unions said they could not endorse. The unions added that they have seen Jingye’s plan in detail and believe it will secure the future of British Steel.

It is understood the initial agreement between Jingye and the Official Receiver lapses at the end of February, meaning that only weeks remain to sign off the deal.

Harish Patel, national officer for the Unite union, said: “Everyone wants to see British Steel survive and thrive. Crucial to that will be Jingye delivering on their ambitious investment plans.”

Jingye said it was pleased to have struck a deal with unions, adding that its plan would preserve the majority of jobs and lead to long-term profits.

Jingye hopes to complete the takeover in the first quarter of this year.

Andrea Leadsom, the Business Secretary, said: “I welcome that the unions and Jingye have reached this agreement. All parties are working extremely hard to finalise a sale in the coming weeks, and secure a bright future for the company.”