The Chinese owner of British Steel has demanded compensation from the UK government, accusing ministers of trampling on international investment rules days after the Scunthorpe steelmaker was taken into public ownership.
Jingye, which acquired British Steel for £70 million in 2020, said it has begun formal consultations under bilateral investment agreements. The Beijing-based group stated the UK disregarded its continuous investment and was only willing to provide almost zero compensation.
The claim arrives less than a week after ministers renationalised the business to protect the future of steel production. The Department for Business and Trade said the move was essential to maintain steel supplies for rail and construction and to safeguard the Scunthorpe plant and its supply chains.
For fabricators, builders, and engineering firms dependent on Scunthorpe's output, the intervention prevented a collapse that unions had warned would carry an unfathomable cost. Jingye's compensation claim does not alter day-to-day operations but opens a legal dispute that firms trading with China will monitor closely.
Beijing has criticised the nationalisation as a severe blow to Chinese companies' confidence in investing in the UK. Earlier warnings urged the British government to avoid the abuse of administrative coercive measures following operational control of the plant.
The financial burden on taxpayers is growing. Jingye expects government spending to operate British Steel to exceed £600 million by the end of June, up from £377 million in January, with projections above £1.5 billion by 2028.
Renationalisation is part of a £2.5 billion commitment to convert the country's last two blast furnace operators into green steel plants using electric arc furnaces. The transition aims to reduce pollution and energy intensity in domestic steelmaking.
Any compensation Jingye receives will be determined by an independent valuer under the Steel Industry (Nationalisation) Act. A compensation scheme will be established through regulations expected in autumn.
The government said commercial negotiations with Jingye failed to deliver value for the taxpayer, prompting intervention to secure UK steelmaking and skilled jobs. Officials emphasised continued openness to Chinese investment and a stable trading relationship.
British Steel has changed hands repeatedly since privatisation in 1988. Tata took control in 2007, later selling Scunthorpe for £1 to Greybull Capital, before Jingye acquired the business after that venture collapsed.
For business owners, the immediate outcome is twofold: steel supply for rail and construction is secure at public cost, but the state takeover of a Chinese-owned asset marks a sharpening complication in the UK-China investment relationship.
