UK nationalises Chinese-owned British Steel, sparking Beijing row
The UK has fully nationalised the loss-making British Steel to prevent the collapse of domestic primary production, triggering a compensation dispute with its Chinese owner and a diplomatic rift with Beijing.
The British government has taken British Steel into full public ownership after failing to reach a commercial agreement with its Chinese owner, Jingye Group. The move, confirmed on Thursday, ends a year of limited state control that began when the UK stepped in to run the Scunthorpe plant in April 2025.
The nationalisation underscores a stark economic reality for European industrial policy: maintaining domestic primary steel production comes at a steep price. The plant employs roughly 2,700 people in North Lincolnshire, but according to a March report by the National Audit Office, keeping the furnaces burning costs the state about £1.3m a day.
Business Secretary Peter Kyle defended the intervention, arguing that the alternative was unacceptable for supply chain security. "If that business disappears, we will lose the ability for primary steel production in our country, we will become entirely dependent on global supply," he said.
Jingye, which acquired the Lincolnshire plant in 2020, cited daily losses of £700,000 when it announced plans to close the site last year. The company has now vowed to pursue "full compensation through legal means to the very end" over what it views as the seizure of its property.
The fallout threatens to complicate Anglo-Chinese relations just as Andy Burnham prepares to enter Downing Street as prime minister on Monday. Beijing's commerce ministry condemned the nationalisation, stating it "firmly opposes and is strongly dissatisfied with the British government's decision" and warning that the move "severely undermined the confidence of Chinese companies investing in the UK."
London is attempting to balance industrial security with its desire to remain an attractive destination for foreign capital. A government spokesperson said draft compensation regulations due this autumn will use an independent assessor to determine what is owed. The spokesperson added that the government "highly value[s] our relationship with China" and remains "open to Chinese investment."
British Steel returns to state hands for the first time since Margaret Thatcher privatised the industry in 1988. For European investors and industrial firms, the episode highlights the growing tension between keeping heavy manufacturing onshore and the financial limits of private ownership in a fiercely competitive global market.
