A rescue deal for the manufacturer British Steel looks set to go ahead as China's Jingye Group agrees in principle to purchase the struggling business for £70m.

British Steel, formerly Tata Steel, was put into compulsory liquidation in May after rescue talks with Whitehall broke down. They were in talks with the Turkish firm Oyak before the Jingye Group deal was announced.

Tees Valley mayor Ben Houchen described the news of a rescue deal as ‘wonderful’.

‘After many months of uncertainty and worry about the future of British Steel, today’s announcement that a deal has been done and Teesside jobs have been protected and secured is wonderful,’ said Mr Houchen.

‘I’m delighted for all of those who work at British Steel who now know that their job is secure. I couldn’t imagine a better early Christmas present for all of those workers who have had to deal with the uncertainty.’

It is understood that the Government will support the £70m rescue deal with loan guarantees and other financial support.

British Steel employs 4,000 people on its Scunthorpe and Teesside sites and supports an additional 20,000 jobs in the supply chain.

‘It’s been humbling to work with British Steel, Government and the unions to secure this deal and it shows what we can do when we pull together,’ said Mr Houchen.

He also added that the Jingye Group, which develops and manufactures steel products, have pledged to increase production at British Steel.

Henri Murison, director of the Northern Powerhouse Partnership, also welcomed news of the deal.

‘British Steel is a vitally important asset to the Northern Powerhouse and the UK’s global trading ambitions,’ he said.

‘It is time to return to putting the Northern Powerhouse on the One Belt, One Road of deeper cooperation with China and this acquisition demonstrates that potential buyers do believe British Steel, along with its highly dedicated and skilled workforce, can have a sustainable future.’