Supply Chain Council of European Union |

British Steel’s French factory for sale despite Chinese deal

British Steel’s factory in France is for sale separately from the rest of the company, despite an agreed plan by China’s Jingye Group to buy the whole of the failed manufacturer.

A rescue deal for the collapsed steelmaker was struck last month, with the Chinese conglomerate paying about £50m and saving 4,000 jobs, mostly based at its main Scunthorpe plant in England.

The conditional agreement covered all of British Steel’s assets, including a number of subsidiaries such as its mill in Hayange, northern France, which produces rail for train lines and tramways.

If a different bidder ends up purchasing the Hayange mill it could complicate the takeover by Jingye. Rail is one of the steelmaker’s few profitable areas of activity.

French authorities had sought assurances that Jingye would guarantee the supply of metal to Hayange as the plant is crucial for providing rails for France’s state-owned train operator SNCF.

However, a new process is now under way to find a buyer for the factory. Adverts appeared in the Financial Times and French newspaper Les Echo last week offering for sale an unnamed business located in France’s northeastern region that specialises in producing “steel railway products for railways, subways and tramways” and employs about 450 people.

Four people familiar with the situation confirmed the adverts referred to British Steel’s Hayange plant. Two of those people said the decision to launch the process to sell Hayange was initiated by the plant’s management as contingency planning in case Jingye’s deal fell through. The adverts were run by BTSG, a French firm that did not respond to requests for comment.

The UK Insolvency Service has kept British Steel running with a taxpayer-backed indemnity ensuring wages and bills are paid. British Steel is the sole shareholder of British Steel France, which runs the Hayange plant and is operationally independent of the Insolvency Service. Any proceeds from a sale would be part of the liquidation.

Questions have been raised about the purchase of some of the UK’s most important steelworks by a Chinese company, given past instances of Chinese steelmakers dumping underpriced product into the EU.

Europe’s steel lobby group, Eurofer, has asked Brussels to investigate the deal on concerns it may breach state aid rules.

The French government ultimately has the right to grant or withhold approval for any change of ownership because the rail factory is considered a strategic industrial asset. Ministers in France are keen for Hayange, which sources its basic material from Scunthorpe, to find other sources of supply.

Officials from Jingye visited France’s finance ministry this week to discuss the situation, said two people with knowledge of the matter. “They were furious,” said one of the people.

Jingye said in a statement: “Jingye Group has submitted a request to the French authorities for approval of our investment and has been engaged in constructive discussions with the French government.”

The French government declined to comment.

The UK’s Insolvency Service said: “The parties are working together to conclude a sale as soon as reasonably practicable.”

One potential bidder for the Hayange site is Ascoval, another French steelworks. Ascoval is controlled by Greybull Capital, the private investment firm under whose ownership British Steel failed three years after it was sold by the Indian group Tata Steel for £1.

Liberty House, the acquisitive industrial conglomerate run by businessman Sanjeev Gupta, is also interested, said two people close to the group.

Liberty House declined to comment.

Additional reporting by David Keohane in Paris

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