A major Chinese steel producer has demanded compensation from the British government, describing the state takeover of its subsidiary, British Steel, as “outright robbery.”
The UK government assumed operational control of British Steel last year after its owner, Jingye Group, warned that the country’s last facility capable of producing steel from raw materials was no longer economically sustainable.
What did Jingye say?
In a social media statement released on Saturday, Jingye threatened legal action against the UK government, accusing officials of “trampling on international investment rules.”
The Chinese company characterized the nationalization as “outright robbery” and stated that it “reserves all legal rights, firmly defends its lawful rights and interests, and will pursue full compensation through legal means to the very end.”
“The UK disregarded Jingye’s continuous investment and significant contribution and was only willing to provide almost zero compensation,” the statement added.
The firm also noted that nationalizing the company could cost UK taxpayers more than 1.5 billion pounds ($2.02 billion, €1.76 billion) by 2028.
Jingye said it had initiated a procedure under bilateral investment treaties to claim damages, without providing further details.
China’s Foreign Ministry supported the compensation demand, urging the UK to “earnestly respect market principles and the spirit of contract, and find solutions on compensation and other issues acceptable to both sides.”
Why did the UK seize control of British Steel?
After Jingye announced plans last year to shut down the blast furnaces at its Scunthorpe plant in northern England, the UK government enacted emergency legislation allowing it to take operational control of British Steel.
The immediate concern was that the blast furnaces would be permanently closed, eliminating the UK’s ability to produce primary steel from raw materials. The Scunthorpe site accounts for the vast majority of British Steel’s operations.
The government cited national security as the rationale for the intervention, which came five years after Jingye acquired British Steel from a London-based private equity firm for approximately 70 million pounds.
Ministers stressed the need to safeguard strategic steel supplies for construction, rail infrastructure, and defense.
The action was also viewed as a measure to protect thousands of jobs in a economically disadvantaged region. The Scunthorpe plant currently employs around 2,700 people.
In recent weeks, the UK Parliament passed legislation enabling the government on Thursday to bring British Steel into full public ownership.
Under the new law, an independent valuer must determine whether any compensation is owed to Jingye.
British Steel: Swinging from state and market control
The UK steel industry was nationalized after World War II, including the Scunthorpe facilities, which have produced steel since the late 19th century.
The sector returned to private ownership in 1988 under then-Prime Minister Margaret Thatcher and has since changed hands multiple times amid heavy losses driven by high operating costs, intense competition, and overcapacity.
The British Steel brand was revived in 2016 by Greybull Capital, which purchased the business for 1 pound and briefly returned it to profitability.
Following the company’s insolvency, it was acquired in 2020 by China’s Jingye Group.
Despite reporting 1.2 billion pounds in investment, Jingye said the Scunthorpe plant was still losing roughly 700,000 pounds per day.
Is the European steel industry at breaking point?
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Edited by Richard Connor
