Jingye Group initiates legal action against UK over British Steel nationalisation

Jingye Group, the Chinese steel manufacturer that acquired British Steel in 2020, has commenced legal proceedings to claim compensation from the UK government following the nationalisation of its subsidiary. The firm described the state takeover as “outright robbery” and accused ministers of violating international investment rules, asserting that it reserves all legal rights to pursue full compensation through established legal channels.

The dispute centres on the UK government’s assumption of operational control last year to prevent the closure of the Scunthorpe plant, Britain’s last primary steelmaking facility. Ministers cited national security and the protection of strategic steel supplies for construction, rail infrastructure, and defence as the primary drivers for the intervention, which also aimed to safeguard approximately 2,700 jobs in northern England.

In a statement released on social media on Saturday, Jingye threatened legal action, accusing UK ministers of “trampling on international investment rules.” The company argued that the state disregarded its continuous investment and significant contribution, noting that the initial offer provided by the government was almost zero despite prior capital injections. Jingye stated it had begun a procedure under bilateral investment agreements to seek damages, without providing further procedural details.

The financial implications of the nationalisation have become a central point of contention. Jingye warned that the state takeover could cost UK taxpayers more than £1.5 billion ($2.02 billion, €1.76 billion) by 2028. This projection contrasts with the firm’s earlier reports that the Scunthorpe plant was losing around £700,000 per day, despite an investment of £1.2 billion reported by Jingye since its acquisition from Greybull Capital.

The UK Parliament has since passed legislation to bring British Steel into full public ownership, a move that followed emergency measures allowing the government to take operational control. Under the new law, an independent valuer must assess whether any compensation is payable to Jingye. China’s Foreign Ministry has backed the compensation move, calling on the UK to “earnestly respect market principles and the spirit of contract” and to find solutions acceptable to both sides.

The nationalisation marks a significant shift for the British steel sector, which was last nationalised after World War II before returning to private hands in 1988. The Scunthorpe plant, which has been producing steel since the late 19th century, remains the core of British Steel’s operations. The firm’s history includes a revival in 2016 by Greybull Capital, which bought the brand for £1 and briefly turned a profit before filing for insolvency, leading to Jingye’s acquisition in 2020.

Jingye’s legal challenge highlights the complexities of cross-border investment and state intervention in strategic industries. As the independent valuation process unfolds, the outcome will determine the extent of financial liability for the UK government and set a precedent for future state takeovers of private assets deemed critical to national security.