Chinese firm seeks compensation over British Steel nationalisation

The former proprietor of British Steel has announced intentions to seek compensation from the UK government following the nationalisation of the company, which had been operating at a loss. Last year, the British government assumed control over the Scunthorpe steelworks after Jingye Group, a Chinese firm, indicated plans to close the facility due to its unprofitability. The government officially took full ownership of the plant on Thursday.

Jingye Group responded on Sunday with a statement affirming that it would pursue “full compensation through legal means to the very end” in reaction to the UK’s move. Meanwhile, a government representative revealed that draft compensation regulations expected this autumn will outline the process, including the involvement of an independent assessor to determine what, if any, compensation might be due.

The Lincolnshire steel plant was acquired by Jingye in 2020, but by March of the following year, the company initiated consultations on its closure, citing daily losses of £700,000. Although the government took operational control of British Steel in April 2025, ownership remained with Jingye until this recent nationalisation, which now grants the government authority to make decisions about the site’s future. The government has framed this intervention as necessary to preserve a “vital national capability.”

This decision has the potential to heighten tensions between the UK and China, particularly as Andy Burnham prepares to assume office as prime minister. China expressed strong opposition to the nationalisation, with its commerce ministry condemning the move as a serious violation of Jingye’s rights and a damaging signal to Chinese investors in the UK. While Beijing pledged support for Chinese companies to safeguard their interests, further details were not provided. From the UK’s perspective, talks with Jingye failed to reach a commercially acceptable deal, though officials emphasized that they value the relationship with China and remain open to future investment.

British Steel’s workforce totals around 2,700 employees, with the plant playing a key role in supporting industries throughout North Lincolnshire. Despite this, the steelworks has faced prolonged uncertainty. The National Audit Office reported in March that keeping the plant operational costs the government roughly £1.3 million daily. However, Business Secretary Peter Kyle has stated that allowing the closure would risk the UK losing its domestic primary steel production, making it dependent on international supply chains. He affirmed government commitment to cover immediate running costs, underscoring the strategic importance of maintaining steel production within the country. British Steel was last publicly owned before its privatisation in 1988 under Prime Minister Margaret Thatcher

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