British Steel yet to see Chinese owner’s cash

News Jingye has to date put £156m of £1.2bn pledged prompts Tory grandee to demand more safeguards

The Chinese owners of British Steel have injected a fraction of the £1.2bn they promised to invest despite begging British taxpayers for a bailout worth hundreds of millions of pounds. Jingye, the Chinese company that acquired British Steel in March 2020, has put in £156m since acquiring the business. Jingye is threatening to close one of the plant’s two blast furnaces and make 2,000 people redundant unless ministers agree to provide state aid.

THE Chinese owners of British Steel have injected only a fraction of the £1.2bn they promised to invest despite begging British taxpayers for a bailout worth hundreds of millions of pounds.

Jingye, the largely unknown Chinese company that acquired British Steel in March 2020, has put in just £156m since acquiring the business in a government-supported takeover, The Daily Telegraph can disclose.

Jingye is threatening to close one of the plant’s two blast furnaces and make 2,000 people at the works redundant unless Grant Shapps, the Business Secretary, agrees to provide hundreds of millions of pounds of state aid.

China has been “busy fishing into our pond” when it comes to industrial assets, said former Conservative leader Sir Iain Duncan Smith, who called on the Government to safeguard strategic industries such as steel. The move places a large question mark over the company’s intentions, he said, since prior deals suggest that “China is not a reliable partner, it’s a threat to us”.

Filings show that the capital has been injected as loans from the steel plant’s Beijing-controlled parent company, meaning not one penny has been invested in equity, according to recently filed accounts.

Structuring Jingye’s investment as debt rather than equity means that should the Scunthorpe plant again crash into insolvency, the Chinese company’s loans would be repaid before unsecured creditors such as staff and suppliers.

A British Steel spokesman said: “Jingye has invested hundreds of millions of pounds to support the ongoing transformation of the business and is committed to investing in the long-term future of British Steel as we transition to net zero. The steel we make can play a central role in transitioning to a lowcarbon, circular economy.”

British Steel employs more than 4,000 people and is considered a nationally significant asset, producing steel for railways and other major projects.

The Chinese company has been locked in talks with Whitehall officials for months to unlock fresh payments from British taxpayers.

Long-delayed accounts filed at Companies House earlier this month reveal for the first time the extent of Jingye’s investment in British Steel to date.

The accounts relate to the period ending December 2020, but any additional investment by Jingye made between December 2020 and the date at which the accounts were signed off would still have be disclosed. The filings were approved by the British Steel board on Oct 27 2022.

Bosses said that “the group and parent company can be self-sufficient under current facility arrangements but recognise any recall of short-term shareholder funding, for which there is no formal extension agreement, would challenge the group and parent company liquidity position”.

This was despite appealing to UK taxpayers for state aid to pay levies to cover carbon emissions.

China’s track record of steel dumping makes its ownership of the Scunthorpe mill a strange choice, said Sir Iain. He said the Government must press ahead with classing the country as a threat in order to safeguard key industries.

Sir Iain said: “Declare China as a threat, as we do with Russia – that immediately starts to put pressure on any Chinese entity that intends to invest or buy in the UK.”

Mazars, which resigned as British Steel’s auditor earlier this year in a row over fees, said a “material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

A government spokesman said ministers are “in discussion with the steel sector on achieving their sustainable and competitive long-term future”.

They added: “We recognise that businesses are feeling the impact of high global energy prices, including steel producers, which is why we announced the Energy Bill Relief Scheme to bring down costs.”

Jingye was contacted for comment.