A rescue deal for British Steel involving the Chinese company Jingye could mean around 500 job losses if such a deal goes ahead, according to three unions – the GMB, Community and Unite – which make up the Steel Committe. While all three unions claim to support the deal, they have said that they cannot endorse job cuts.

The Steel Committee is warning that up to 10% of the workforce could go, seriously denting British Steel's 4000-strong workforce.

The deal has been agreed, but needs the approval of regulators before it can be completed. The deal, it is said, will secure the future of British Steel.

Should the deal NOT go ahead, it seems likely that British Steel will be broken up and sold in parts, according to steel unions.

Ross Murdoch, national officer for the GMB, commented: “In endorsing this package in principle, the trade unions believe they have struck the right balance between delivering cost savings and maintaining jobs with decent terms and conditions to drive the new business forward. It also includes a positive and innovative business plan for the future, which hopefully will secure employment for many years going forward.”

Alastair McDiarmid, operations director for Community said: “We used the opportunity to shape Jingye’s proposals in the best interests of our members. Faced with challenging circumstances we believe that the dialogue between Jingye and the unions has produced a better deal for employees than what was otherwise on the table. We look forward to working with everyone to secure the future of British Steel under Jingye’s ownership.”

Unite's national officer, Harish Patel said that everyone wants to see British Steel survive and thrive. "Crucial to that will be Jingye delivering on their ambitious investment plans. If employees are making sacrifices, then they need to see that this is done in return for investment that can make the business successful and secure jobs for the long-term."

A press release issued by the three unions underlined the importance attached to the unions being 'fully engaged' in shaping Jingye's proposals on the employment package. The talks have been described as 'extremely challenging' and that British Steel must change if it is to survive.

British Steel went into liquidation last June and since then has been costing the British taxpayer roughly £1 million per day. In November, the Chinese company Jingye agreed to buy the doomed steelmaker for £50 million.

There have been talks with rival buyers, according to media reports, just in case the Jingye deal falls through. A number of industry observers have suggested that Sanjeev Gupta's Liberty House Group would be keen to buy British Steel should things turn sour with Jingye.