The Chinese owner of British Steel has triggered a formal dispute under an international investment treaty, seeking compensation after the UK government nationalised the Scunthorpe steelworks in April 2025. But the Department for Business and Trade (DBT) has signalled it could limit or refuse any payout, saying an independent valuer will decide what, if any, compensation is payable.
Jingye Group, which bought the steelmaker in a government-brokered deal in 2020, said it had “recently initiated consultation procedures under the bilateral investment treaty with the UK government”, according to a statement on its WeChat account reported by Reuters. The company hopes the UK will “fully safeguard the legitimate rights and interests of Jingye and other Chinese companies as well as global investors”.
“China's Jingye seeks compensation under treaty after UK nationalises British Steel; government signals payout may be limited.”
The move comes after more than a year of negotiations over the size of any payout. Industry sources told the Guardian that Jingye is seeking more than £1bn, having previously claimed it planned to recover as much as £711m in debts owed by British Steel. The firm had said the Scunthorpe plant was losing £700,000 a day.
The government seized control on 12 April 2025 to prevent the last two remaining blast furnaces from closing, fearing that closure would put 2,700 jobs at risk. Prime minister Keir Starmer said the move was on national security grounds, stressing the need to retain the ability to make steel from iron ore. Insiders suggested that fears of immediate job cuts in a historic British industry also played a significant role, with Jingye reportedly planning to close the plant within days.
Jingye and DBT had earlier been in talks between 2022 and 2025 about transitioning to electric arc furnaces, but those talks collapsed amid accusations that the Chinese firm was planning to switch the furnaces off. The government also tried to negotiate a commercial sale but failed to strike a deal.
The nationalisation was enabled by emergency legislation passed in April 2025. The Steel Industry Bill, which allows the government to take control of the steelworks, has completed its main passage through the House of Commons and is set to be considered by the House of Lords.
A DBT spokesperson said: “We will always respect and comply with our international obligations, and where the powers in the Bill are used, an independent valuer will be appointed to determine what compensation, if any, is payable.” The National Audit Office noted that British Steel is costing the government about £1.3m a day.
The dispute, which could take up to six months before being sent to international arbitration under the China-UK treaty, risks straining relations between Beijing and London.