British Steel rescue deal under threat

WEEK ONE, AND PM FACES TWO INDUSTRIAL DRAMAS

Boris Johnson faces an industrial crisis within days of his election triumph after the fate of British steel was again called into question.

The PM has vowed to keep the collapsed manufacturer going until a buyer is found.

China’s Jingye is currently the preferred bidder having offered £50m and pledged to pump in more than £1bn over the next decade.

But there are fears the bid may fall through after reports that talks between Jingye and the official receiver, which took responsibility for British steel in May, are faltering.

if negotiations collapse it would put the jobs of 4,000 steelworkers at risk along with 20,000 in the supply chain.

As the parties near a deadline to finalise terms, Jingye is said to have warned that its proposals are being hampered by capital controls that mean it must seek permission from Beijing to transfer cash.

The British steel business comprises a steelworks in scunthorpe, mills in Teesside and skinningrove, the redcar Bulk Terminal and subsidiaries, including one in Hayange, northern France.

There have also been suggestions France could block the deal. Unions there are concerned the new Chinese owner could create unfair competition for European steel makers.

scunthorpe, an industrial area with a long history of supporting Labour, is one of the constituencies that flipped to elect a Conservative MP last week. Uncertainty over the Jingye deal has prompted Government officials to sound out alternative bidders for British steel, with sanjeev Gupta’s Liberty House thought to be waiting in the wings.

Jingye last night insisted it was making progress and rejected claims that its rescue plan was in jeopardy. The company said it is still aiming to have the deal done by the end of January.

‘Any suggestion to the contrary is completely incorrect,’ a spokesman added.

A spokesman for the save our steel campaign, which includes unions and community groups, said its representatives had met with Jingye last week and there had been no indication that the takeover was in trouble.

Last night a spokesman for the insolvency service said: ‘A sales agreement for the purchase of British steel was signed in early November and the parties have been working together since then to complete the deal as soon as practicable.’