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The UK’s move to take over British Steel sparks an ongoing dispute with China amid a change in political leadership in London.
A Chinese company is seeking compensation from the United Kingdom government for financial losses following the closure of a steel plant last week.
Jingye Steel called on the UK on Sunday to stop “immediately trampling on international financial regulations” and to compensate the company quickly, fully and fairly for all the damage caused by the decision to set up British Steel.
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The UK government launched a crackdown on the company last year after Jingye Group said it was considering closing furnaces at its Scunthorpe site in northern England, the last in the UK to produce “black steel” from raw materials.
Here’s what we know about the controversy:
Why nationalize crops?
The government has established British Steel to protect the strength of the country’s steel and for the company’s Chinese owners to close the blast furnaces.
The Department of Business and Trade announced this on Thursday, saying it will save thousands of jobs and protect the UK’s interests by ensuring that domestically produced steel is supplied to major construction and defense projects.
“British Steel now belongs to the British people and our focus is on the future: business sustainability, supporting the communities that depend on it and building a stable, competitive and resilient steel sector for years to come,” Business Secretary Peter Kyle said in a statement.
The row comes as Labor Party leader Andy Burnham is expected to replace Keir Starmer as prime minister on Monday, possibly starting his first term in office at odds with China, one of the UK’s biggest trading partners.
How has China responded?
In a statement on Sunday, the Jingye Group said the British side had “ignored ongoing investment and substantial contributions”, offering “almost zero compensation”.
The company said the UK spent 377 million pounds ($507m) on British Steel at the end of January. He also expected the total to exceed 600 million pounds ($807m) by the end of June and possibly exceed $2bn (1.5 billion pounds) by 2028.
China said it would monitor the situation and take measures to protect legitimate rights and interests if necessary.
China’s Ministry of Commerce said that the UK “disrespects” Jingye’s contribution to the British economy and that it “forcibly expropriated and established” British Steel in the name of national security, “severely harming” Jingye’s rights and interests and “severely undermining” Chinese investor confidence in the UK.
The Ministry of Foreign Affairs of China said what the British government should do in terms of law: “China and the UK have signed an investment protection agreement and the rights and interests of investors must be fully protected according to the law.”
China and the UK signed a bilateral agreement in 1986, which includes “protection against illegal expropriation without compensation” – Jingye’s clause refers to compensation.
What happened to British Steel?
British Steel is said to have played a major role in the UK economy thanks to its ability to produce steel from raw materials rather than recycled steel.
Its Scunthorpe plant employs around 2,700 people and produces around three million tonnes of steel a year. But it was not always profitable.
In 2016, Tata Steel sold the company for one pound to private equity firm Greybull Capital, which renamed it British Steel.
However, in the midst of the financial crisis in 2019, the British government’s mortgage service seized the company, which was sold the following year. Jingye
The UK government says British Steel wastes hundreds of thousands of pounds a day working at the steel mill. It said the plant was dependent on British government support to continue operating.
Government ministers have said that if the economic downturn continues, Britain will rely on international markets to supply basic materials needed for construction and other sectors.
“British Steel is part of our nation and the cornerstone of Britain’s industrial strength,” Prime Minister Keir Starmer told parliament.
