Chinese firm Jingye has agreed a provisional deal to buy British Steel and pledged to pump £1.2bn into the stricken company, saving up to 4,000 jobs.

The takeover covers the firm's main steelworks in Scunthorpe, along with the Teesside and Skinningrove steel rolling mills, as well as subsidiary businesses FN Steel, British Steel France and TSP Engineering. British Steel's stake in the Redcar bulk terminal port is also be included.

Along with 4,000 workers at the firm itself, it also protects another 20,000 positions in the supply chain.

Foreign policy experts warned that Shanghai-headquartered Jingye must be carefully vetted before a sale goes through given the steel industry's strategic importance, although ministers played down national security risks.

The firm's founder Li Ganpo spent more than a decade in politics with the country's Communist regime.

The takeover was confirmed in an internal document sent to staff on Monday from consultant EY, which has been running British Steel since it collapsed into insolvency in May.

All sides are working on a sale as soon as possible, according to the document, which added that a deal is conditional on regulatory approvals and enough employees signing up to new contracts.

After a weekend of talks, Jingye delegates retired to Mulligan's Sports Bar in Scunthorpe and told cheering drinkers the deal had been agreed - before buying a round of drinks for the pub.