The Chinese company previously owning British Steel has called for compensation from the U.K. government due to investment losses after the manufacturer was nationalized last week. Jingye Group, the former owner, had considered shutting down the blast furnaces at its Scunthorpe plant, the last in the U.K. to produce virgin steel.
Jingye Group expressed in a WeChat statement that the nationalization harmed the credibility of the British government, worried international investors, and led to considerable losses for the company and British taxpayers. It urged the U.K. government to refrain from violating international investment standards.
The company announced that it has started negotiations under bilateral investment agreements, reserving rights to international arbitration. It plans to represent British taxpayers wishing to hold the U.K. government and British Steel’s management accountable, though details on handling the case remain unclear.
The U.K. disregarded Jingye’s continuous investment and significant contribution and was only willing to provide almost zero compensation.
Last week, the U.K. government stated an independent evaluation would determine if compensation is warranted for Jingye Group. Operational control was assumed by the Department for Business and Trade on July 17, aiming to save jobs and protect the national interest by ensuring domestic steel supply for construction and defense.
The Scunthorpe plant has a heritage spanning over 130 years and employs about 2,700 workers. Jingye acquired British Steel in 2020, claiming it rescued the firm from turmoil. On Saturday, the Chinese Foreign Ministry warned the U.K. handling of this issue will impact Chinese investors’ perception of the British investment climate.
China has urged the U.K. to respect market principles and contract obligations, seeking a compensation agreement favorable to both parties. It also encouraged companies to protect their rights using legal avenues.