UK government expropriates British Steel from Jingye to secure national supply

The UK government has formally taken British Steel into public ownership, expropriating the Scunthorpe factory from its Chinese owner, Jingye. The move follows the Royal Assent of the Steel Industry (Nationalisation) Act on Wednesday and marks the culmination of a 15-month intervention by the Labour government to prevent the closure of the Lincolnshire steelworks and the loss of 4,000 jobs.

Prime Minister Keir Starmer described the acquisition as being in the national interest, noting it as one of his final significant actions before handing over power. The government had been managing the company since April last year after Jingye threatened to abandon the plant, a scenario that would have ended Britain’s production of primary steel from iron ore. Although Jingye remained the economic owner until Thursday, ministers concluded that extensive discussions had failed to produce a deal securing the company’s future while delivering value for taxpayers.

Business Secretary Peter Kyle emphasised the strategic necessity of the nationalisation, stating that the loss of the Scunthorpe facility would leave the UK dependent on international markets for steel used in railways and construction. Kyle indicated that while the long-term production of virgin steel remains subject to future decisions, the current strategy prioritises a transition to green steel production using electric arc furnaces. This shift aims to meet long-term demand and modernise the plant, aligning with broader decarbonisation plans for the industry.

An independent valuer will be appointed to assess whether compensation is payable to Jingye. The Chinese company has argued in its UK accounts and on its WeChat social media account that British Steel is a valuable asset worthy of significant compensation, despite its prior willingness to let the plant fail. The government maintains that the expropriation was necessary to safeguard a vital national capability and protect skilled employment.

The decision presents immediate challenges for the incoming administration. Andy Burnham is expected to take over as prime minister next week and will face the difficult task of replacing the facility’s ageing blast furnaces. The transition to electric arc furnaces is estimated to cost well over one billion pounds, a financial burden that will require careful management as the government seeks to ensure the industry’s long-term viability.