UK Government Signals Potential Refusal of Compensation to British Steel’s Chinese Owner Jingye Group
The UK government has signalled it could limit or refuse compensation to the Chinese owner of British Steel, Jingye Group, as the company seeks reparation costs following the nationalisation of the steelworks.
Jingye Group stated it commenced the process to seek compensation under a bilateral investment treaty (BIT), having previously asserted the Scunthorpe plant was losing £700,000 daily.
Last month, the government announced British Steel would be nationalised after assuming control of the business on 12 April 2025. This intervention aimed to prevent the closure of the last two remaining blast furnaces.
The Department for Business and Trade (DBT) confirmed that any payout would be determined independently and only disbursed “if any, is payable.” A BIT is an international agreement designed to protect investors’ assets across two territories.
Jingye, which acquired British Steel in 2020, stated via its WeChat account: “Jingye has recently initiated consultation procedures under the bilateral investment treaty with the UK government.” The company expressed its expectation that the UK government would fully safeguard its legitimate rights and those of other Chinese companies and global investors.
A DBT spokesperson reiterated on Friday that the government would “comply with our international obligations.” They added: “Revitalising our steel sector is a top priority… the Steel Industry Bill is the first step to securing our steelmaking capability which will allow us to secure the future of British Steel and explore possible options to modernise the industry.” The spokesperson further stated that an independent valuer would be appointed to determine any payable compensation when powers in the Bill are utilised.
Legislation enabling the nationalisation of British Steel is currently progressing through Parliament, having completed its main passage in the House of Commons and now awaiting consideration by the House of Lords.
Prior to government intervention, Jingye and the DBT had engaged in discussions regarding a transition to electric arc furnaces between 2022 and 2025. These talks reportedly collapsed amidst allegations that the Chinese firm intended to shut down the furnaces. The National Audit Office has estimated British Steel’s cost to the government at approximately £1.3 million daily.
