British Steel

The sale of British Steel could be scuppered by French intervention.

Chinese firm Jingye agreed in November to buy the collapsed business, which has a plant in Scunthorpe, for £50m and save about 4,000 jobs.

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But, the deal requires French government approval because British Steel also has a plant in France that is considered a strategic national asset.

Now French Finance Minister Bruno Le Maire has threatened to veto the deal, as first reported by Sky News.

The Anglo-French row centres on the Hayange factory, which supplies the French railway network, including state-owned train operator SNCF.

However, the UK government remains hopeful that the sale can still be completed and talks to seal the deal are ongoing.

A spokesperson for the Department for Business, Energy & Industrial Strategy said: "Like any sale of this nature, there are a number of regulatory steps that need to be taken over the coming weeks before the sale can complete.

"The deal with Jingye is very much on track and we expect that the transaction will complete in the coming weeks.”

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Government sources confirm that the French finance minister Bruno Le Maire has indicated to the Chancellor Sajid Javid that he is opposed to Chinese ownership of what the French consider strategically important assets.

As a major supplier of steel to state-owned rail company SNCF, British Steel's plant at Hayange falls into that category.

The French position is different to that of the UK government despite the fact that British Steel is a major supplier to state owned Network Rail.

Sources within the steel industry also confirm knowledge of the French objections.

There is also widespread unease within the UK steel industry of the scale of Chinese ambitions within the UK.

Jingye’s ambitions to significantly increase production at Scunthorpe along with the acquisition a week ago of UK steel trading company Stemcor have caused alarm among other steel producers at the increasing penetration of Chinese interests in an important primary industry.

French objections were widely anticipated and a process carve out the plant from the rest of British Steel if necessary has been underway for several months.

The government remains hopeful that the deal with Jingye can still be completed and talks to seal that deal are ongoing.

But selling the profit-making French business separately is thought to make the overall deal less attractive to Jingye and for that reason, a deal with Turkish group Cengiz has been lined up as a potential fall back option if the deal with Jingye collapses.

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Chinese firm Jingye came forward to rescue British Steel, paying about £50m to take over the collapsed business.

The deal has now received backing from trade unions, including Community, Unite the union and GMB.

In a joint statement, they said discussions with the Chinese industrial firm had been "extremely challenging", but acknowledged that "if the business is to survive, change is required".

They also said that Jingye intends to reduce overall headcount at British Steel, with up to 500 jobs at risk.

They added: "This is not something that the unions could endorse and we have consistently made the argument that the business needs to ensure the plant can be run efficiently and safely."

Earlier this week, the government said it "believes the Jingye transaction will complete in the coming weeks."

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The Department for Business, Energy and Industrial Strategy has now responded to the story that the government is lining up a backup bid for British Steel in case its sale to Jingye falls through (see earlier story).

A BEIS spokesperson said: “Officials have met and continue to meet all parties interested in acquiring British Steel as the Government is not party to the exclusivity agreement signed by the bidder and the official receiver.

"The Government believes the Jingye transaction will complete in the coming weeks.”

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The government is lining up a backup bid for British Steel in case its sale to Jingye falls through, the Guardian reports.

It's holding talks with Turkish conglomerate Cengiz Holdings, despite confidence the £50m bid from the Chinese firm will go through, according to the paper.

A spokesperson for for the Department for Business, Energy and Industrial Strategy wouldn't comment on whether discussions had taken place.