Chinese industrial giant Jingye Group has agreed to buy bankrupt British Steel for an undisclosed amount, the official receiver said Monday in a rescue deal that saves thousands of jobs.

Jingye added separately that it would invest £1.2 billion ($1.5 billion) over the next decade to place the business, which collapsed in May, on a competitive and sustainable footing.

“The Official Receiver and Special Managers from EY can confirm that a sales contract has been entered into with Jingye Steel (UK) Ltd and Jingye Steel (UK) Holding Ltd to acquire the business and assets of British Steel Limited,” read a statement.

A source had already confirmed to AFP that a deal was in the works earlier on Monday, amid press reports that Jingye would pay £70 million.

Jingye will purchase British Steel’s sprawling steelworks at Scunthorpe, northern England, as well as its other UK mills.

The deal also includes the company’s stakes in Dutch steelmaker FN Steel, British Steel France, and specialist UK manufacturer TSP Engineering.

‘Preserving thousands of jobs’

Some 5,000 people are employed by British Steel, which had collapsed into liquidation in May, while another 20,000 jobs have links to its supply chain.

A total 4,000 British Steel staff work in the UK, with an additional 1,000 based in France and the Netherlands.

Jingye added that the deal will save “thousands of jobs” in Britain, as the pair will together form a global giant.

“The agreement will see the two businesses combine to create a world-class steelmaking group with global scale and ambition,” Jingye said.

“The combination will bring together expertise from both businesses to help secure a long-term future for British Steel’s operations through the continued production of high-quality steel products.

“A completed sale will also preserve thousands of jobs in a key foundation industry for the UK.”

Jingye plans to invest £1.2 billion over the next 10 years in upgrading the plants and machinery, improving environmental performance and boosting energy efficiency, as it seeks to ensure the group’s “long-term sustainable future.”

The business will continue to trade as normal until completion, which is conditional on regulatory approval.

Greybull Capital created British Steel, a maker of long steel products, in 2016 after snapping up assets from Tata Steel.

In October, Turkish military fund OYAK had pulled out of a deal to rescue British Steel, whose owners Greybull had blamed Brexit for its financial collapse.

Cheap Asian imports

The European Steel Association has urged the EU to help the bloc’s struggling sector, which it said has been swamped by cheap steel from Asia since the US imposed import tariffs in 2018.

Although it did not take the steel producer into state ownership, the UK government said in May that it would keep paying staff wages in the hope that a buyer could be found.

Long steel products include plates, rails for railways, sections used in construction, and wire rod. The latter can be used as steel rope for infrastructure like suspension bridges or filaments for car tires to give rigidity.

China’s Hebei-based Jingye Group specializes in iron and steel but has investments in tourism, hotels and real estate.

According to its website, it has total assets of 39 billion yuan ($5.5 billion) and 23,500 employees.

“We have long admired British Steel and appreciate its illustrious heritage,” added Jingye Group Chairman Li Ganpo on Monday,

“We share with the thousands of British Steel workers a passion for this industry and we are determined that together we can transform this business.”

– AFP