Reynolds has met Chinese commerce minister as Scunthorpe steel plant crisis deepens over ownership and bailout demands
The row over the future of British Steel surfaced during bilateral trade talks this week between UK Business Secretary Jonathan Reynolds and his Chinese counterpart Wang Wentao, as tensions persist over the fate of the Scunthorpe-based plant following its recent takeover by the UK government, media reported.
Although not publicly acknowledged in official statements, Whitehall sources confirmed that the fate of the embattled steelmaker was briefly raised during the meeting in London on Monday, Skynews reported.
Reynolds, in a social media post following the session, said the pair discussed “deeper UK-China cooperation – especially in services, investment and WTO reform”, but made no mention of British Steel.
The Scunthorpe site, home to one of Britain’s last remaining blast furnace operations, was effectively taken into government control in April after a long and bitter standoff with its Chinese owner, Jingye Group. The firm had acquired British Steel in 2020 from receivership, pledging to invest significantly in its future—but disagreements over funding and environmental upgrades brought the relationship to a head this year.
Sky News previously revealed that Jingye has engaged leading law firm Linklaters to explore legal options over the government’s intervention. Linklaters, which had advised Jingye on its initial acquisition of British Steel, is now understood to be assessing whether the group can recover any part of its reported £1 billion investment—much of which is tied up in inter-company loans logged on British Steel’s balance sheet.
The dispute revolves around the site’s two blast furnaces, which Jingye had reportedly planned to shut down unless it received £1 billion in public subsidies to support a transition to greener steelmaking technologies. The UK government, unwilling to meet that demand, instead moved to safeguard the plant’s immediate operations by ensuring supplies of essential raw materials and staffing continuity.
With Jingye refusing to make further investments without state backing, the government has taken a tough stance. Reynolds has stated that Jingye’s equity stake in British Steel is effectively worthless and indicated that there are no plans to compensate the company for its shares—a position that could escalate the legal and diplomatic confrontation between the two sides.
Despite the friction, officials at the Department for Business and Trade insist that discussions with Jingye are ongoing. “We are working closely with Jingye and a range of third parties on options for the future,” a spokesperson said. “We will continue work on determining the best long-term sustainable future for the site.”
British Steel is the UK’s second-largest steelmaker and a vital employer in the region. The plant’s future is not only an industrial concern but also a political flashpoint, with unions and local MPs warning of catastrophic job losses if production halts. Thousands of workers and contractors depend on the Scunthorpe facility, which has long been viewed as a strategic industrial asset.
While British Steel has yet to be formally nationalised, the government’s assertive management of the site’s affairs has effectively sidelined Jingye. Analysts suggest the impasse could test the UK’s broader diplomatic and trade relationship with China, particularly as London seeks to balance economic cooperation with strategic autonomy in critical industries.
The broader UK-China Economic and Financial Dialogue, which resumed earlier this year after a prolonged hiatus, had opened the door to improved trade ties, but frictions over sensitive assets like British Steel may complicate future agreements.
As legal teams prepare for a potential battle and ministers continue to weigh long-term solutions, the steelworks in Scunthorpe remain a symbol of Britain’s industrial anxieties—and a litmus test for the government’s commitment to strategic manufacturing resilience in a turbulent global economy.
