China firm seeks damages over state control of British Steel
The UK government took over British Steel last year to prevent the closure of the country's last primary steelmaking facility. China's Jingye Group, which bought
The UK government took over British Steel last year to prevent the closure of the country's last primary steelmaking facility. China's Jingye Group, which bought the firm in 2020, claims it is owed compensation. A Chinese steel giant demanded compensation from the United Kingdom government on Sunday, claiming thetakeover 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. What did Jingye say? In a statement on social media on Saturday, Jingye threatened legal action against the UK government, accusing ministers of "trampling on international investment rules." Describing the nationalization as "outright robbery," the Chinese firm said it "reserves all legal rights, firmly defends its lawful rights and interests, and will pursue full compensation through legal means to the very end." "The UK disregarded Jingye's continuous investment and significant contribution and was only willing to provide almost zero compensation,” the statement continued.
The company noted that nationalization could cost UK taxpayers more than 1.5 billion pounds ($2.02 billion, €1.76 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." Why did the UK seize control of British Steel? After Jingye last year planned to close the blast furnaces at its plant in Scunthorpe, in northern England, the UK government passed emergency measures, allowing it to take operational control of British Steel. Scunthorpe is the UK's last plant able to produce steel from scratch Image: Danny Lawson/REUTERS The immediate concern was that the blast furnaces would be shut permanently, ending the UK's capacity to produce virgin or primary steel from raw materials. The plant accounts for the vast majority of British Steel's operations.
The government cited national security for the move, which came five years after Jingye bought British Steel from a London-based private equity firm for around 70 million pounds. Ministers cited the need to protect strategic steel supplies for construction, rail infrastructure and defense. The move was also seen as a way to protect thousands of jobs in a deprived area of the UK. The Scunthorpe plant currently employs about 2,700 people. In recent weeks, the UK Parliament has passed legislation that allowed the government on Thursday to bring British Steel into full public ownership. Under the new law, an independent valuer must assess whether any compensation is payable to Jingye. British Steel: Swinging from state and market control The UK steel industry was nationalized after World War II, including the facilities at Scunthorpe, which have been producing steel since the late 19th century. Jingye Group is expected to seek around 1 billion pounds in compensation Image: Lindsey Parnaby/AFP The sector returned to private hands in 1988 under the late Prime Minister Margaret Thatcher and has since changed hands several times due to massive losses stemming from high operating costs, fierce competition and overcapacity.
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