The UK government has signalled it could restrict or decline compensation to Jingye Group, the Chinese owner of British Steel, as the company pursues reparation costs following the decision to nationalise the steelworks. Jingye announced it has commenced consultation procedures under a bilateral investment treaty (BIT), an international agreement designed to protect investors' capital in both territories.
Last month, the government confirmed the nationalisation of British Steel, taking control of the business on 12th April 2025. This intervention was made to prevent the closure of the last two remaining blast furnaces at the Scunthorpe plant, a move deemed crucial for safeguarding the UK's steelmaking capacity. Jingye had previously asserted that the Scunthorpe facility was incurring losses of £700,000 per day.
A spokesperson for the Department for Business and Trade (DBT) stated that any potential payout would be determined independently and would only be made 'if any, is payable'. This position underscores the government's cautious approach to the compensation claim, despite its commitment to complying with international obligations. The DBT spokesperson further emphasised that 'Revitalising our steel sector is a top priority for this country, and the Steel Industry Bill is the first step to securing our steelmaking capability'.
Jingye Group, which acquired British Steel in 2020, conveyed via its WeChat account that it had initiated consultation procedures under the bilateral investment treaty with the UK government. The company expressed its hope that the UK government would 'fully safeguard the legitimate rights and interests of Jingye and other Chinese companies as well as global investors'. This highlights the international dimension of the dispute and the potential implications for foreign investment relations.
The development coincides with the progression of the Steel Industry Bill through Parliament. This legislation is essential for enabling the nationalisation of British Steel and has completed its main passage through the House of Commons, now awaiting consideration by the House of Lords. Prior to the government's intervention, discussions between Jingye and the DBT regarding a transition to electric arc furnaces, spanning from 2022 to 2025, had collapsed amid allegations that the Chinese firm intended to shut down the existing furnaces.
Despite British Steel recently securing significant contracts, including a £500 million deal to produce tracks for Network Rail and an agreement for railway construction in Turkey, analysts suggest these may not be sufficient to ensure the company's long-term viability. The government is believed to have previously attempted to negotiate a commercial sale with Jingye, but these efforts were unsuccessful.
Source: BBC, Reuters