China’s Jingye Group agreed in principle to buy British Steel for £70m on Monday, averting the company’s liquidation.

British Steel’s previous owners, Greybull Capital, walked away in May. There were negotiations with a Turkish state-military pension fund in August but the deal did not go through.

The prevailing Chinese investor is a conglomerate with 23,500 employees and manufactures iron and steel for construction. It exports in over 80 countries and regions. British Steel accounts for about a third of the country’s production and manufactures mostly high-quality rail and heavy sections. The two companies appear complementary in terms of capacity.

The Chinese company vows to increase production from 2,5 million to over three million tonnes a year but warns that productivity must also increase.

The British government will facilitate the Chinese takeover by extending loan guarantees and other financial support, shielding 4,500 employees from unemployment and protecting an additional 20,000 jobs in the supply chain. The deal also includes plants in the Netherlands and France.