The UK government has signalled it could limit or refuse compensation to the Chinese owner of British Steel as the company seeks reparation costs following a decision to nationalise the steelworks, according to a BBC report.
Nationalisation and Compensation Claim
Jingye Group said it began the process to seek compensation under a bilateral investment treaty (BIT). It previously claimed the Scunthorpe plant was losing £700,000 a day.
Last month, the government announced British Steel would be nationalised after it took control of the business on 12 April 2025 to prevent the last two remaining blast furnaces from closing.
The Department for Business and Trade (DBT) told the BBC any payout would be determined independently and only paid "if any, is payable".
Bilateral Investment Treaty Context
A BIT is an international agreement between two countries to protect investors' money in both territories. According to Reuters, Jingye said in a statement on its WeChat account: "Jingye has recently initiated consultation procedures under the bilateral investment treaty with the UK government."
It hopes the UK government could fully safeguard the legitimate rights and interests of Jingye and other Chinese companies as well as global investors, the statement went on to say.
Jingye's Role and Steel Industry Bill
Jingye bought British Steel, which employs 2,700 staff, in 2020. However, the company has since claimed the business was no longer financially sustainable.
In a statement on Friday, a DBT spokesperson said it would "comply with our international obligations".
"Revitalising our steel sector is a top priority for this country, and the Steel Industry Bill is the first step to securing our steelmaking capability which will allow us to secure the future of British Steel and explore possible options to modernise the industry," the 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 development comes as legislation to enable the nationalisation of British Steel makes its way through Parliament. The Steel Industry Bill has completed its main passage through the House of Commons and is set to be considered by the House of Lords.
Failed Transition Talks and Recent Contracts
Before the government stepped in and seized control of the plant, Jingye and DBT had been in talks about transitioning to electric arc furnaces between 2022 and 2025, but that collapsed amid accusations the Chinese firm was planning to switch the furnaces off. It is thought the government previously tried to negotiate with Jingye on a commercial sale but failed to strike a deal.
The plant recently secured major contracts to build a railway in Turkey, as well as a £500m deal to make tracks for Network Rail. But analysts believe they may not be enough to secure the company's long-term future.
Implications for Trade Policy and Investors
For import/export professionals and trade policy analysts, this case underscores the risks inherent in bilateral investment treaties when host governments nationalise assets. The UK's signal that it may block or limit compensation under the BIT could set a precedent for future investor-state disputes involving Chinese entities. The Steel Industry Bill introduces a statutory mechanism for independent valuation, but the ultimate payout remains uncertain. Businesses operating in sectors deemed strategic by the UK government should monitor this legislative process closely.
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