Chinese up pace in race for British Steel – as delay costs £1m a DAY
Chinese fly in for battle to snap up British Steel
CHINESE industrial giant Jingye has stepped up its pursuit of British Steel by registering a UK subsidiary.
The potential Chinese takeover has already sparked national security concerns, with one influential Tory MP describing the proposal as ‘undesirable’.
But Ministers are under mounting pressure to seal a rescue deal as soon as possible.
Industry sources have told The Mail on Sunday it is costing the Government more than £1 million a day to keep the plants running.
The MoS told last week how Jingye chairman Li Ganpo had led a delegation of executives on a tour of steel plants in Scunthorpe and Teesside to meet Government advisers, MPs and unions.
Jingye is believed to be aiming to sign a deal within days and it has registered a UK subsidiary at Companies House with the sole listed director named as Xi Feng Han – a 41-year-old Chinese national.
Jingye re-emerged as a contender to buy British Steel last month when rival bidder Ataer – an arm of the Turkish military’s pension fund – failed to agree a deal after holding ten weeks of exclusive talks with the Insolvency Service, which is managing the process.
British Steel, which employs around 5,000 people at its UK plants, collapsed into administration under the management of private equity firm Greybull in May.
The Government, which had refused Greybull’s requests for a £30 million loan, has been propping up British Steel over the last six months at an estimated cost of more than £1 million a day, which would equal around £170 million overall.
Government records show that former Business Secretary Greg Clark travelled to Turkey and China in late June to meet with Ataer and Jingye as he sought a buyer. In August, the Insolvency Service – working alongside professional services giant EY – entered exclusive talks with Ataer as the preferred bidder. But this period of exclusivity ended l ast month, prompting fears for British Steel’s workforce.
It i s understood t hat Ataer remains in contention to buy British Steel alongside Jingye and Liberty Steel, the industrial company of Indian-British entrepreneur Sanjeev Gupta. Liberty appears to be the least controversial option, but it is understood that its plans – which would include turning off the blast furnaces and replacing them with electric arc furnaces – would lead to more job losses.
Julian Lewis, the Tory chairman of the last Parliament’s Defence Sel ect Committee, l ast ni ght warned of China’s ‘ totalitarian Communist political system, which is all-pervasive and highly repressive’. He compared the potential British Steel takeover with the prospect of Chinese telecoms firm Huawei being allowed to help build the UK’s new 5G network.
‘Whilst this decision is not as dangerous as the proposal to let Huawei i nto our next generation telecommunications system, it is still undesirable that key parts of defence-related industry are continuing to pass under the control of countries politically opposed to our free way of life,’ he said.
In a letter to the Financial Times last week, Matthew Bryza – a former US ambassador and a senior fellow at America’s Atlantic Council think- tank – cautioned against agreeing a deal with the Chinese. He suggested this may ‘antagonise’ the US.
Jingye could not be reached for comment. The Insolvency Service, Liberty and Ataer declined to comment.