BEIJING/LONDON--China's Jingye Group said on Monday it has reached a provisional deal to buy British Steel and promised to invest 1.2 billion pounds ($1.5 billion) over the next decade and save thousands of jobs.
An agreement is of major political significance as Britain prepares to elect a new government on Dec. 12. The lack of opportunities in northern England, where British Steel is based, is an election issue, as the social gap between north and south widens.
The deal has yet to be finalised, but Business Minister Andrea Leadsom said in a video clip she was optimistic it would be.
Jingye Group Chairman Li Ganpo said the ambition was to create a world-class group. "We believe that this combination will create a powerful, profitable and sustainable business that will ensure the long-term future of thousands of jobs while producing the innovative high-quality steel products that the world needs," he said in a statement.
The value of the deal was not disclosed. Earlier a BBC report saying a deal was imminent gave a figure of 70 million pounds ($90 million), while sources close to the talks said the price was likely closer to 50 million pounds.
Uncertainty over the future of British Steel has hung over its workforce for much of the year. It was put into compulsory liquidation in May after Greybull Capital, which bought it for one pound from Tata Steel in 2016, failed to secure funding to continue its operations.
Its closure would impact 5,000 jobs in Scunthorpe and a further 20,000 jobs in the supply chain. British Steel, which makes high-margin, long steel products used in construction and rail, would give Jingye access to Europe's large infrastructure market. But it could face challenges as the European steel industry grapples with weak demand, high costs for energy and labour and exacting environmental standards.
