The UK government may limit or refuse compensation to Jingye Group, the Chinese owner of British Steel, following the nationalization of the company. Jingye initiated consultation procedures under a bilateral investment treaty, seeking reparations for the Scunthorpe plant.
This situation highlights potential international investment disputes arising from nationalization and underscores the UK government's commitment to its domestic steel industry, even at the risk of challenging treaty obligations.
The UK government has indicated it might deny or restrict compensation to Jingye Group, the Chinese owner of British Steel, following the recent nationalization of the company. Jingye Group initiated a process under a bilateral investment treaty to seek reparations, having previously claimed the Scunthorpe plant was losing £700,000 daily.
British Steel was taken under government control on April 12, 2025, to safeguard its operations and prevent the closure of its last two blast furnaces. A spokesperson for the Department for Business and Trade (DBT) informed the BBC that any payout would be subject to an independent determination and would only be made if deemed payable. Bilateral investment treaties are international agreements designed to protect investments between two countries.
Jingye Group, which acquired British Steel in 2020 and employs 2,700 staff, stated on its WeChat account that it hopes the UK government will protect the rights of Jingye and other global investors. The company has claimed the business is no longer financially sustainable. The DBT spokesperson reiterated the government's commitment to complying with international obligations and revitalizing the steel sector, noting that an independent valuer would be appointed if the powers in the Steel Industry Bill are used.
The Steel Industry Bill, which facilitates the nationalization, is currently moving through Parliament, having completed its passage in the House of Commons and awaiting consideration in the House of Lords. Prior to the government's intervention, discussions between Jingye and the DBT regarding a transition to electric arc furnaces between 2022 and 2025 had collapsed. The government reportedly failed to reach a commercial sale agreement with Jingye.
Recent reports indicate that British Steel is costing the government approximately £1.3 million per day. Despite securing significant contracts, including one for a Turkish railway and a £500 million deal with Network Rail, analysts question the company's long-term future.