Chinese Company Seeks Compensation from UK Over British Steel Nationalization

The former owner of British Steel, China’s Jingye Group, has requested compensation for investment losses from the UK government. This follows the company’s nationalization last week. The UK had taken control after Jingye considered shutting down its blast furnaces in Scunthorpe, northern England. These furnaces are the last in the UK to produce ‘virgin steel’ from raw materials.

In a statement on WeChat, Jingye criticized the nationalization. The company claimed it affected the UK’s credibility, alarmed international investors, and led to substantial losses for both Jingye and British taxpayers. Jingye urged the UK to adhere to international investment rules and announced it had begun negotiations under relevant bilateral investment agreements. The company is reserving rights, including pursuing international arbitration. Jingye also intends to represent British taxpayers to hold the UK government and British Steel’s management liable, though details of this approach remain unclear.

According to Jingye, the UK ignored its ongoing investments and contributions, offering little to no compensation. Last week, the UK government mentioned an independent evaluation to assess any potential compensation for Jingye Group.

The Department for Business and Trade, on July 17, highlighted the significance of the move, arguing it preserves jobs and protects national interests. This includes securing a domestic steel supply essential for construction and defense. The Scunthorpe plant, where steel has been produced for over 130 years, employs around 2,700 people. Jingye went on to purchase British Steel in 2020, claiming it rescued the company from crisis.

China’s Foreign Ministry emphasized that the UK’s handling of this issue affects Chinese investors’ perceptions of the UK investment landscape and the government’s credibility. The ministry urged the UK to respect market principles and contracts and to seek mutually agreeable compensation solutions. They also expressed China’s support for enterprises in legally defending their rights.