LONDON, Jan 24 (Reuters) - Trade unions have reached a deal with China’s Jingye Group about its provisional deal to buy British Steel, acknowledging that up to 500 jobs will go in exchange for protecting pay and employment terms.
“The sale to Jingye is now firmly in sight and we would encourage all stakeholders in the business to focus on reaching a positive conclusion,” three trade unions said in a joint statement released on Friday.
Jingye Group announced a provisional deal to buy British Steel last November, but it has not been finalised nor received regulatory approvals.
The unions said they were in a difficult situation, since any new owner of a company in liquidation could offer new contracts with minimum terms and conditions.
“These discussions have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive, change is required,” the Community, Unite and GMB unions said in the statement.
British Steel’s main plant, in the northern English town of Scunthorpe, has been operating as normal since it went into compulsory liquidation in May.
The company produces high-margin, long steel products used in construction and the rail sector.
The British government has been paying its wage bill, which in 2018 totalled 250 million pounds ($329 million), industry sources said.
Jingye indicated that it plans to cut employment by up to 500, although “significant numbers” have already left, the unions said.
The unions said Jingye’s promise to invest 1.2 billion pounds over the next decade would “transform the business and secure the future of British Steel”.
British Steel was put into compulsory liquidation 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.
$1 = 0.7608 pounds Reporting by Eric Onstad; editing by Jason Neely