British Steel is to be rescued by Chinese firm Jingye, potentially saving up to 4,000 jobs, the Insolvency Service has said.
The Government announced that the liquidators for the steel business, which had also been in talks with Turkish firm Ataer, have entered into a contract with the Chinese industrial firm.
It said the deal would see Jingye purchase the steelworks at Scunthorpe in North Lincolnshire, as well its other UK mills.
The Official Receiver said: “Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals.
“The parties are working together to conclude a sale as soon as reasonably practicable.
“The business will continue to trade as normal during the period between exchange and completion.”
The cost of the deal for British Steel, which has been kept running by the Government through the Official Receiver since May, has not been confirmed.
Jingye said the move will help to secure a “long-term future” for British Steel’s operations and confirmed plans to invest £1.2 billion into the business over the next 10 years.
It said funding will be used to upgrade plants and machinery, as well as improve its environmental performance and efficiency.
The prospective buyer said it is “committed to preserving UK jobs” and investing the British Steel’s workforce.
Li Ganpo, the group’s chairman, said: “We are delighted to have reached this agreement.
“As a young company with large ambitions we have long admired British Steel and appreciate its illustrious heritage.
“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.”
Jingye will also acquire the shares of FN Steel BV, British Steel France Rail SAS and TSP Engineering, as well as shares owned by BSL in Redcar Bulk Terminal.
Gareth Stace, director general of industry lobby group UK Steel, said: “Today’s announcement is positive news for British Steel and its workers.
“British Steel’s production facilities in Scunthorpe and elsewhere in the North East represent one third of the UK’s steel production and are a major strategic asset to our country; their loss would leave our manufacturing, construction and infrastructure capability in a considerably poorer state.
“While there remains much work still to be done, today’s announcement is a huge hurdle overcome on the way to delivering a sustainable future for this cornerstone of British industry.”
Roy Rickhuss, the general secretary of the steelworkers’ trade union Community, said: “We welcome this positive step towards securing British Steel under new ownership.
“Jingye’s interest rightly demonstrates that they believe that British Steel can have a sustainable future.”
Paul McBean, Community’s lead representative at British Steel in Scunthorpe, noted that detailed discussions are still needed to fine tune the arrangements but said”this is the kind of announcement we’ve been waiting for.”