Chinese steel producer Jingye has launched formal proceedings to seek compensation from the UK government following the nationalisation of the British Steel plant in Scunthorpe. The compensation claim is being pursued under a UK–China bilateral investment treaty after prolonged negotiations over financial settlements reportedly failed to yield an agreement. Industry insiders suggest that the compensation could amount to more than £1 billion.
The conflict arose after the UK government decided to nationalize British Steel, citing national security concerns and the necessity to maintain domestic steel production capabilities. This move was prompted by fears of potential plant closures and significant job losses. Jingye, which took over British Steel in 2020, had considered closing operations due to financial strains and a global steel market surplus. However, the UK government’s intervention prevented the closure and transferred asset control to the state.
Jingye contends that it deserves compensation for the investments and losses incurred since it acquired British Steel. Meanwhile, the UK government argues that its decision was imperative to safeguarding strategic industrial capacity and jobs. If the parties fail to reach a settlement during the treaty’s consultation period, the matter is expected to advance to international arbitration. Analysts caution that this case might further strain economic relations between the UK and China.
Amidst these developments, the UK is reassessing its overarching steel policy, which includes considerations around import restrictions and potential restructuring of the domestic steel industry. This review is part of the country’s preparation for long-term changes in production and ownership within the sector.