British Steel Soon to Get Saviour in Form of China’s Jingye Group
An industrial giant in China, Jingye Group has promised to invest £1.2 billion in British Steel. By doing so the Chinese conglomerate aims to protect nearly 4,000 jobs in Scunthorpe and Teesside. The Staff of British Steel at Scunthorpe plant has been already informed about the deal and contracts have been exchanged.
Reports claim that the government will aid in the contract, in the form of loan guarantees and provide other financial support.
The recent news came out after discussions between British Steel and Ataer, which is at the third place in the bidding now, behind the Liberty House Group, owned by steel baron Sanjeev Gupta.
The firm took to Twitter to announce the news yesterday via @BritishSteelUK handle on Twitter.
People aware of the matter have raised serious issues about the deal and the government’s decision to handover the British asset to Jingya Group. But the deal has received positive response from local MPs and union bosses who are thinking in the interest of lost jobs.
Speaking about the deal, the Director of the Centre for Security and Intelligence Studies at the University of Buckingham, Professor Anthony Glees said, “You cannot get a cigarette paper between a Chinese company, the Chinese government and the Chinese Communist Party. They’re all closely interconnected.”
Li Ganpo, Chairman of Jingye Group, flew to England early in November, along with his team for attending several meetings with MPs, unions and special managers from the professional services firm EY.
Sources claim that if Liberty Group would have purchased British Steel, it would mean a significant loss of jobs as Gupta’s vision for the firm is to transform the Scunthorpe plant into a giant steel recycling centre.
British Steel has been facing turbulences since a long time now. Earlier in 2018, Greybull wanted to expand British Steel, including a bid for a US producer of carbon and alloy wire. At this time, the steel industry of the UK was undergoing tough times because of sudden surge in US tariffs. Soon in April 2019, the UK based firm made a request for a loan worth £120m from the UK government in order to deal with the credits owed to the European Commission for carbon emissions.
In May 2019, British Steel put the future of thousands of jobs at risk by entering into insolvency proceedings. Soon after, Ataer Holding reached a provisional agreement for a takeover and walked away later due to failure to agree terms. Since then the firm is on a look out to find the perfect rescuer and Jingye Group might just be the saviour that British Steel needs.
Despite experiencing significant losses in near time, British Steel is still a firm for which different contenders are fighting. Commenting on the same, a spokesperson for steelworkers’ union community said, “The fact that there has been ongoing interest from both Ataer and now Jingye, rightly demonstrates that potential buyers believe that British Steel can have a sustainable future. Any new owner would not just be acquiring a steel business, they would be taking on a dedicated and skilled workforce, who even through the uncertainty of recent months have been breaking production records to give the business a chance.”
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