Jingye Group, the former owner of British Steel, announced plans to pursue compensation from the UK government following the nationalization of the loss-making firm. The UK government took control of the Scunthorpe steelworks on Thursday, citing the need to safeguard a "vital national capability". Jingye stated it would seek
full compensation through legal means to the very end
regarding the government's decision.
Key Details
The nationalization comes after Jingye indicated plans to close the plant due to financial losses, reporting a loss of £700,000 per day. Jingye acquired the Lincolnshire steel plant in 2020 but initiated a consultation for its closure in March 2022. The UK government had previously been unable to shape the firm's future while it remained under Jingye's ownership.
In response to the nationalization, China's commerce ministry criticized the UK move, stating it "seriously infringed" upon Jingye's rights and undermined the confidence of Chinese companies investing in the UK. A UK government spokesperson mentioned that negotiations with Jingye had failed to yield an agreement that represented value for taxpayers.
Background
The UK government plans to release draft compensation regulations this autumn, which will outline a process for determining any compensation payable through an independent assessor. The situation may strain relations between London and Beijing, especially with Andy Burnham set to become the new Prime Minister.
The nationalization of British Steel could impact the UK steel sector, particularly regarding future investments and operations. The move may also influence investor sentiment towards UK-China relations, especially in sectors involving foreign investments. Watch for the upcoming release of draft compensation regulations from the UK government this autumn.