The Chinese owner of British Steel, Jingye has applied for the UK government’s commercial loans doled out for large enterprises hit by the COVID-19 pandemic, according to local media reports. Jingye has requested a £100mn to tide over COVID-19 crisis.
The financial aid dubbed as COVID loans or Coronavirus Large Business Interruption Loan Scheme (CLBILS) was earlier capped at £50mn but was on Tuesday extended to £200mn with some restrictions including limiting dividends and senior executive pay. Under this scheme, companies can borrow upto 25pc of their turnover.
Jingye completed the acquisition of British Steel in March with a promised investment of £1.2bn over a period of 10 years. The acquisition includes steelworks at Scunthorpe and mills in Teesside and Skinningrove. British Steel produced 2.8mn mt steel in 2018 and has a nominal capacity of 4.5mn mt and Jingye is keen on developing the company’s long products portfolio.
Jingye’s identity as a Chinese company is expected to hinder British Steel’s efforts in accessing government loans. The UK government has up until the acquisition of British Steel borne £1mn-a-day losses to run the company which when bankruptcy in May last year.
Tata Steel Europe, which has steelworks in Britian, has sought £500mn from the UK government.
Even before the pandemic struck, European steelmakers were struggling due to lower priced steel imports from China, Turkey and others. European steelmakers have cut production after many auto manufacturers in the region shut plants. Construction activities have also stopped due to restrictive measures. Steelmakers face huge losses as new orders are down by nearly 75pc, according to European Steel Association (Eurofer).