LONDON (Reuters) - UK trade unions have reached a deal with China's Jingye Group 600768.SS about its provisional deal to buy British Steel, acknowledging that up to 500 jobs will go in exchange for protecting pay and employment terms.

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“The sale to Jingye is now firmly in sight and we would encourage all stakeholders in the business to focus on reaching a positive conclusion,” three trade unions said in a joint statement released on Friday.

Jingye is making progress with securing approvals for the deal and aims to complete the takeover in the first quarter of this year, the Chinese group said in a statement.

Jingye Group announced a provisional deal to buy British Steel last November. At the time, sources close to the talks said it would pay around 50 million pounds ($66 million).

The Community, Unite and GMB unions said they were in a difficult situation, since any new owner of a company in liquidation could offer new contracts with minimum terms and conditions. However, they said they were encouraged by Jingye’s pledge to invest 1.2 billion pounds in the business over the next decade.

“These discussions have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive, change is required,” the unions said.

British Steel’s main plant, in the northern English town of Scunthorpe, has been operating as normal since it went into compulsory liquidation in May.

The company produces high-margin, long steel products used in construction and the rail sector.

The British government has been paying its wage bill, which in 2018 totaled 250 million pounds, industry sources said.

Jingye indicated that it plans to cut the workforce by up to 500, although “significant numbers” have already left, the unions said.

Jingye’s statement confirmed it had sealed an agreement with trade unions, but did not mention 500 job cuts, only saying its business plan would preserve the “majority of jobs”.

“It will pave the way for significant investment in the company that will transform the business and allow it to succeed,” Jingye Group CEO Li Huiming said in the statement.

British Steel was put into compulsory liquidation after Greybull Capital, which bought it for one pound from Tata Steel TISC.NS in 2016, failed to secure funding to continue its operations.

Its closure would affect 5,000 jobs in Scunthorpe and a further 20,000 jobs in the supply chain.