Jingye, a prominent Chinese steel manufacturer, has taken formal steps to claim compensation from the UK government following the nationalisation of the Scunthorpe plant operated by British Steel. The company has initiated this claim under a bilateral investment treaty between the UK and China after lengthy discussions over financial settlement terms reportedly hit an impasse. Industry insiders suggest that the claim could surpass £1 billion.
The situation arose after the UK government took control of British Steel, citing national security reasons and emphasizing the importance of maintaining domestic steel production capabilities. This decision was made amidst concerns about the potential closure of the plant, which could have led to significant job losses. Jingye, which had acquired British Steel in 2020, had previously faced financial challenges and considered shutting down operations due to the global surplus in the steel market. The government’s intervention, however, prevented the plant’s closure and transferred the assets under state control.
The Chinese company contends that it deserves compensation for the losses and investments it has incurred since acquiring British Steel. Meanwhile, the UK government stands by its decision, arguing it was essential to safeguard strategic industrial capacity and preserve employment. Should the parties fail to reach an agreement during the treaty’s consultation period, the dispute is likely to advance to international arbitration. Experts caution that this case could further strain economic relations between the UK and China.
In parallel with the ongoing dispute, the UK is reassessing its overall steel policy, which includes reviewing import restrictions and considering potential restructuring of the domestic steel industry. These measures are part of the country’s preparation for long-term shifts in production dynamics and ownership within the sector.