Caixin Weekly | The Battle for Control of British Steel (AI Translation)

财新周刊｜英国钢铁控制权之争

On April 12, 2025, the UK’s Labour government passed the Steel Industry (Special Measures) Act in a single day, giving it legal power to take control of British Steel, a company owned by China’s Jingye Group since 2020. This unprecedented intervention lacked a sunset clause and stunned the market, signaling the UK’s increasing willingness to step into strategic industries during times of crisis [para. 1][para. 2]. The move responded to British Steel’s planned closure of two aging blast furnaces and steep financial losses averaging £700,000 daily since Jingye’s takeover, despite £1.2 billion invested since 2020. Losses exceeded £1 billion over five years, and by 2025 net assets stood at negative £250 million [para. 3][para. 4][para. 5].

Jingye’s 2020 acquisition was its first overseas foray, intending to revive British Steel by boosting output and profitability. However, output fell from 2.6 million tons (2020) to 1.7 million (2023), fixed costs remained high, and global competition and energy prices eroded margins. The company’s inherited assets included three UK mills and one in the Netherlands, but British Steel’s two blast furnaces—Queen Anne (1954) and Queen Bess (1938)—were old and, if shut down, unrecoverable. These forts of primary steelmaking carried weight for national defense, as British Steel supplies steel for three-quarters of UK construction and is the only domestic producer of certain products [para. 6][para. 7][para. 8][para. 9][para. 10].

For nine months, Jingye and the UK government negotiated British Steel’s future, ultimately disagreeing over subsidies (Jingye sought £1.2 billion vs the government’s £500 million offer) and blast furnace closures. In March 2025, Jingye canceled raw material orders and issued layoff notices to 2,500 workers, hoping to shift UK operations to downstream processing with steel billets imported from China [para. 11][para. 12][para. 13]. The Labour government, which swept to power in July 2024, prioritized “securonomics”—economic policies centered on national security [para. 14].

Despite losing operational control, Jingye still formally owns British Steel. In April, the government appointed interim executives and provided vital loans. However, long-term subsidization is unlikely; attracting private investment for modernization is seen as a challenge, given project financing difficulties in the UK’s current high-interest, high-cost environment [para. 15][para. 16][para. 17][para. 18].

The Special Measures Act does not nationalize British Steel outright but grants the government sweeping powers—senior appointments, financial support, and even the threat of criminal charges for noncompliance. Many MPs justified intervention on grounds of industrial and defense security—if Scunthorpe closed, the UK would be the only G20 nation without virgin steelmaking. Critics argued government management could be costly and inefficient, referencing the troubled nationalization experience from 1967–1980, which resulted in over £1.5 billion in losses [para. 19][para. 20][para. 21][para. 22][para. 23].

British Steel’s struggles echo much of the wider UK steel industry, which has faced privatization cycles, historic underinvestment, high energy costs, and post-Brexit turbulence. UK crude steel production in 2024 was just 4 million tons (down 50% from 2010), with imports covering 60-70% of domestic demand. Electricity prices, labor costs, slow project approval, and volatile policy make economic transformation difficult [para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31].

Jingye’s acquisition was controversial, undertaken rapidly and with the aim of saving jobs and preserving industrial capacity. Despite introducing Chinese cost controls and management, macroeconomic disruption—Brexit, Covid, energy cost spikes, war in Ukraine, and tariffs—proved overwhelming. Shareholder loans from Jingye to British Steel soared to £711 million by 2023. While compensation for Jingye is possible via UK courts or international arbitration, outcomes are uncertain, and regulatory risk for Chinese investors has clearly increased [para. 32][para. 33][para. 34][para. 35][para. 36].

The future of British Steel requires viable technological solutions, substantial new investment, and improved UK industrial competitiveness. Whether public, private, or mixed ownership, ongoing challenges around costs, political support, and global market conditions remain daunting [para. 37][para. 38].