Chinese firm demands damages over UK's nationalization of British Steel

Chinese steel giant Jingye Group demanded compensation from the United Kingdom government on Sunday, claiming the takeover of its subsidiary British Steel was 'outright robbery.' The UK government took operational control of British Steel last year after owner Jingye Group warned that Britain's last factory capable of making steel from scratch was no longer financially viable.

In a statement on social media on Saturday, Jingye threatened legal action against the UK government, accusing ministers of 'trampling on international investment rules.' The company noted that nationalization could cost UK taxpayers more than 1.5 billion pounds ($2.02 billion) by 2028. Jingye said it had begun a procedure under bilateral investment agreements to seek damages, without expanding further.

China's Foreign Ministry backed the compensation move, calling on the UK to 'earnestly respect market principles and the spirit of contract' and find solutions on compensation and other issues acceptable to both sides.

The UK government took control after Jingye last year planned to close blast furnaces at its plant in Scunthorpe, northern England. The government cited national security to protect strategic steel supplies for construction, rail infrastructure and defense, and to preserve thousands of jobs. The Scunthorpe plant currently employs about 2,700 people.

Recently, the UK Parliament passed legislation allowing the government to bring British Steel into full public ownership on Thursday. Under the new law, an independent valuer must assess whether any compensation is payable to Jingye. Jingye bought British Steel in 2020 from a London-based private equity firm for around 70 million pounds, and reported investing 1.2 billion pounds, but the plant was still losing around 700,000 pounds per day.