Jingye, a Chinese steel manufacturer, has started formal legal action to claim compensation from the UK government after the Scunthorpe plant of British Steel was nationalised. The company is pursuing this under a UK–China bilateral investment treaty, as prolonged talks over financial settlement failed to yield an agreement. Sources in the industry suggest that the compensation claim might surpass £1 billion.
The conflict arises from the UK government’s choice to nationalise British Steel on the grounds of national security, with an emphasis on safeguarding the country’s steel production capacity. This decision was driven by concerns about the potential closure of the plant and the consequent large-scale job losses. Jingye, which had taken ownership of British Steel in 2020, previously considered shutting down the plant because of financial difficulties and a worldwide steel market oversupply. Nonetheless, the UK’s intervention averted the closure, transferring control of the assets to the state.
Jingye contends that it deserves compensation for the losses incurred and investments made since it acquired the company. The UK government, on the other hand, insists that its intervention was vital for protecting strategic industrial capabilities and preserving jobs. If the two parties fail to reach a settlement during the treaty’s consultation period, the dispute is likely to advance to international arbitration. Analysts caution that this situation could further strain economic relations between the UK and China.
Amidst this ongoing legal dispute, the UK is also reassessing its broader steel policy. This review includes examining import restrictions and considering potential restructuring of the domestic steel industry. These efforts are part of the UK’s preparation for long-term changes in steel production and ownership within the country.