The nationalization came after Parliament on Wednesday passed a law allowing the government to take the steel industry public in circumstances where it met a public interest test.
Jingye is seeking compensation, having previously said the company was losing £700,000 a day. The BBC was unable to get a response from Jingye herself to Thursday’s announcement.
Small Business Minister Blair McDougall told the House of Commons on Thursday that the government would appoint an independent assessor in the fall “to make a judgment on any compensation owed, which may be nil”.
By bringing British Steel into public ownership, the government now has the power and freedom to decide the future of the plant, while keeping the blast furnaces running.
The government is unlikely to want to continue running the business in the long term as it costs them more than a million pounds a day.
In March, the National Audit Office said the Scunthorpe steelworks was costing the government around £1.3 million a day.
Business Secretary Peter Kyle told the BBC the government would need to cover operating costs “immediately”.
The steelworks directly employs around 2,700 people in Scunthorpe and supports thousands more jobs across the supply chain.
The UK imports most of its steel, from major suppliers such as the European Union, the United States, China and India.
If the plant stopped producing virgin steel, the UK would become the only member of the G7 group of major economies without the capacity to do so.
Steel production elsewhere in Britain relies on electric arc furnaces (EAFs), which recycle scrap metal into new products.
Although the government’s long-term strategy is for all steel produced in the country to come from EAF, which is cheaper and far less carbon-intensive to operate, it does not want to lose production at Scunthorpe yet again.
The factory produces types of steel not yet made anywhere else in the country, much of which is needed by Network Rail and the construction industry.
The fear was that the loss of this production would have disruptive consequences and make the country too dependent on imports. It was therefore decided that Scunthorpe would remain open until alternatives were available.
British Steel last became state-owned in 1988, when it was privatized by Prime Minister Margaret Thatcher’s government.