The Chinese owner of British Steel has demanded compensation from the UK government, accusing ministers of “trampling on international investment rules” just days after the Scunthorpe steelmaker was taken into public ownership.
Jingye, which bought British Steel for £70 million in 2020 after the business fell into the hands of the Official Receiver, said it had started formal consultations under bilateral investment agreements. Announcing the move on WeChat, the Chinese social media platform, the Beijing-based group did not hold back.
“The UK disregarded Jingye’s continuous investment and significant contribution and was only willing to provide almost zero compensation,” the company said.
The claim lands less than a week after ministers brought British Steel back into public ownership to protect “the future of steel production” in the UK. The Department for Business and Trade said renationalisation was essential to maintain steel supplies for the rail and construction industries, and to protect the Scunthorpe plant and its supply chains.
For the fabricators, builders and engineering firms that depend on Scunthorpe’s output, the intervention headed off a collapse that unions had warned would carry an “unfathomable” cost. Jingye’s counterattack does not change that day-to-day picture, but it opens a second front that smaller firms trading with China, or courting Chinese backers, will want to watch.
Beijing has already weighed in. China’s ministry of commerce warned on Friday that Britain’s move was “a severe blow to Chinese companies’ confidence in investing in the UK”. The government’s decision last year to take operational control of Scunthorpe after Jingye threatened to close it, followed by legislation to nationalise the business, had earlier prompted Beijing to warn Sir Keir Starmer to “avoid the abuse of administrative coercive measures”.
The bill for the taxpayer is mounting either way. Jingye said it expected government spending to operate British Steel to have passed £600 million by the end of June, up from £377 million at the end of January, and possibly rising above £1.5 billion by 2028.
Renationalisation forms part of a £2.5 billion government commitment to convert the country’s last two polluting, energy-intensive blast furnace operators into so-called green steel plants, where electric arc furnaces melt recycled steel instead.
Whether Jingye sees a penny is now a question for an independent valuer, required under the Steel Industry (Nationalisation) Act to assess whether any compensation is payable. The compensation scheme will be set up through regulations expected in autumn.
A government spokeswoman said: “The government held commercial negotiations with Jingye but it wasn’t possible to reach an agreement that represented value to the taxpayer, so we acted to secure the future of UK steelmaking and protect skilled jobs.
“We highly value our relationship with China and remain open to Chinese investment, and we will continue to work together to deliver a successful trading relationship that provides the best opportunities for British businesses.”
British Steel has been passed around like an unwanted heirloom since privatisation in 1988. Tata took control in 2007, then broke the business up after a financial crisis in 2015, selling Scunthorpe for a nominal £1 to Greybull Capital, which revived the British Steel name. Jingye picked it up when that venture failed, promising billions in investment that the government evidently concluded would never arrive.
For business owners, the practical takeaway is twofold. Steel supply for rail and construction is secure for now, at public expense. But the sight of the state taking a Chinese-owned asset, and Beijing’s sharp response, is a reminder that the UK’s investment relationship with China just became considerably more complicated.
