Chinese fly in for battle to snap up British Steel
Surprise front-runner brings hope for 5,000 jobs – but sparks fears over national security
CHINESE industrial giant Jingye has emerged as a frontrunner to buy British Steel after a delegation of executives jetted into the North of England last week for a charm offensive.
Jingye is now competing with Ataer – a branch of Turkish military pension fund Oyak – for the UK business which collapsed into administration last May.
The Mail on Sunday understands that Liberty Steel, run by BritishIndian multi-millionaire Sanjeev Gupta, also remains in the running and held meetings with Government officials last week.
But Jingye is thought to have stolen a march on Liberty in the race to snap up British Steel’s assets, which include plants in Scunthorpe, Teesside and Skinningrove in North Yorkshire.
The Chinese company’s interest has been welcomed by local MPs and union bosses who want to safeguard 5,000 jobs in the steelworks. But critics last night raised concerns about the prospect of a Chinese firm taking control of an important British asset – even though Jingye appears to be independent of the State.
Professor Anthony Glees, director of the Centre for Security and Intelligence Studies at the University of Buckingham, said: ‘ You cannot get a cigarette paper between a Chinese company, the Chinese government and the Chinese Communist Party. They’re al l closely interconnected.’
Jingye’s chairman Li Ganpo – who is thought to be among China’s richest men – and several of his top team flew to England last week for a series of meetings with MPs, unions and special managers from professional services firm EY, who are trying to find a rescuer for the steel manufacturing giant.
The Government’ s Official Receiver, appointed after British Steel collapsed into administration, appeared to have secured a deal to save the company in August when it entered exclusive talks with Ataer. But last month – after the Turkish organisation was given ten weeks to pore over British
Steel’s accounts and finances – the Official Receiver was forced to reignite negotiations with other interested parties, sparking fears for the firm’s army of workers.
The Government has been supporting British Steel since it fell into administration under the management of private equity firm Greybull Capital, but Ministers want to find a buyer as quickly as possible.
Ataer is still talking with British Steel’s advisers, but sources said
CHARM OFFENSIVE: Officials from the Chinese firm Jingye land at Humberside Airport to visit the Scunthorpe plant
Jingye should also now be considered a frontrunner.
Gupta’s Liberty remains in talks to buy British Steel, but it is feared that its ownership could lead to more short-term job losses. The Mail on Sunday revealed in July that Gupta’s vision for British Steel would be to transform its Scunthorpe plant into a giant steel recycling centre.
This would entail switching off the plant’s blast furnace and replacing it with an electric arc furnace. While this is considered more environmentally friendly – because it involves turning recycled steel into sellable metal – it is less labour intensive and would lead to cutbacks in manpower.
Professor Glees warned that if any Chinese firm took over the ownership of an important British company that supports thousands of jobs it could lead to the UK being pressured politically by Beijing.
‘The steel industry in the UK is both job intensive and troubled,’ Glees said. ‘If we were to feel that what the Chinese were trying to do in the Asia-Pacific region went against our interests in the UK, Europe and the United States, we would need to assume that the Chinese would put pressure on us to go their way.’
Glees compared the potential deal with the controversial prospect of Chinese te le co ms company Huawei playing a part in the construction of the UK’s new 5G network. He said: ‘This is an investment in our country that we need. But to imagine that comes with no strings at t ached would be completely irresponsible. The person who pays for t he piper always ultimately calls the tune. So should we be worried? Yes we should.’
James Rogers, of foreign policy think tank the Henry Jackson Society, said: ‘There is a real argument that this takeover could subject Britain’s steel supply to undue interference from Beijing.’
However, local MPs and unions were impressed by Jingye’s plans and its enthusiasm for British Steel. A number of Jingye bosses, including chairman Li, visited British Steel plants in Scunthorpe and Teesside last week.
Anna Turley, Labour Co-op MP for Teesside who was called in for a meeting with Li, told the MoS: ‘He’s very, very determined. He made it clear that he wanted to do this deal.’
The Official Receiver and Liberty declined to comment. Jingye could not be reached for comment.