The former owner of British Steel has said it will pursue the British government for compensation after the loss-making firm was nationalised.
The UK took control of the Scunthorpe steelworks a year ago after China’s Jingye Group said it planned to close the site because it was not financially viable, and fully nationalised the plant on Thursday.
In a statement on Sunday, Jingye said it will seek “full compensation through legal means to the very end” over the UK’s move.
A government spokesperson said draft compensation regulations due to be released in the autumn will set out a compensation process through which an independent assessor “would determine what, if any, is payable”.
Jingye bought the Lincolnshire steel plant in 2020, but in March last year the firm launched a consultation on its closure saying the plant was losing £700,000 a day.
The government took control of British Steel operations in April 2025, but until this week it remained under Jingye’s ownership which limited the government’s ability to shape the firm’s future.
On Thursday the UK government said it was taking the firm into public hands in order to safeguard a “vital national capability”, giving the government the power to decide the plant’s future.
The decision to nationalise British Steel has threatened to strain the relationship between London and Beijing just as Andy Burnham prepares to enter Downing Street as prime minister on Monday.
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China hit out at the nationalisation of British Steel on Friday, saying it “firmly opposes and is strongly dissatisfied with the British government’s decision”.
China’s commerce ministry said the move “seriously infringed” upon Jingye’s rights and interests, and “severely undermined the confidence of Chinese companies investing in the UK”.
The statement added that Beijing would support Chinese firms to protect their rights, but did not detail what that might involve.
A UK government spokesperson said on Friday that commercial negotiations with the Chinese steelmaker had failed to reach an agreement “that represented value to the taxpayer”.
“We highly value our relationship with China and remain open to Chinese investment, and we will continue to work together to deliver a successful trading relationship that provides the best opportunities for British businesses,” they added.
The steelworks employs about 2,700 people and supports other industries in North Lincolnshire, but has faced significant uncertainty over the last few years.
In March, the National Audit Office released a report that found it was costing the government about £1.3m a day to keep the plant running.
But Business Secretary Peter Kyle has said letting the operation close was not an option, and the government will continue to cover the running costs “for the immediate future”.
“If that business disappears, we will lose the ability for primary steel production in our country, we will become entirely dependent on global supply,” he said on Thursday.
British Steel was last under state ownership in 1988 when it was privatised by Prime Minister Margaret Thatcher’s government.
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Image source, PA Media
