British Steel has formally been taken into public ownership 15 months after the government stepped in to prevent the closure of its steelworks in Scunthorpe and the loss of 4,000 jobs.

Keir Starmer on Thursday said that it was in the national interest for the government to take over the factory from its Chinese owner, Jingye, in one of the last significant actions overseen by him as prime minister after the Steel Industry (Nationalisation) Act received Royal Assent on Wednesday.

The Labour government stepped in with an emergency recall of parliament to prevent the closure of British Steel in April last year, after Jingye threatened to walk away without taking steps to preserve the blast furnaces in Lincolnshire. That would have meant the imminent shutdown of Britain’s last remaining producer of primary steel from iron ore.

The company has been under the management of government officials since then, to the fury of Jingye, but the Chinese company remained the economic owner until the expropriation on Thursday.

The government will now appoint an independent valuer to “assess whether any compensation is payable”. Jingye has argued in its UK accounts and in statements on its WeChat social media account that British Steel was a valuable asset worthy of large compensation, even though it had been prepared to walk away z and let it fail.

Starmer said: “British Steel is part of the fabric of our nation and a cornerstone of Britain’s industrial strength.

“Today’s decision secures the future of steel making in the UK, protects skilled jobs and safeguards a vital national capability. This government will always act in the national interest to support British industry, strengthen our economy and ensure the industries we rely on can thrive long into the future.”

The government said that “despite extensive discussions”, it could not reach a deal with Jingye that would “secure the future of the company while delivering value for taxpayers”.

Unions representing steelworkers are delighted the government stepped in to save jobs. Alasdair McDiarmid, assistant general secretary for Community, said on Wednesday that the union was “incredibly grateful” for nationalisation “which will help to safeguard thousands of jobs and ensure the UK retains the capability to produce the steel our economy and national security depends upon”.

Peter Kyle, the business secretary, said the government had nationalised the UK’s “one virgin steel producer here in Scunthorpe” because “if this were to disappear, we would become at the mercy of international markets and the supply from other countries for the kind of production that goes into our railways and our construction”.

Pressed on whether the blast furnaces would continue to produce virgin steel in the long term, Kyle told Times Radio: “In the future, that will be a decision for this business and the government to decide going forward.

“But it is the intention of the steel strategy that we move towards green steel. That is where the primary demand is into the long term, and I want to make sure that this plant is a modern plant that is producing the kind of steel that those companies and organisations purchasing steel require.”

The nationalisation decision will not be the last difficult decision for the government, with Andy Burnham expected to take over as prime minister next week. British Steel’s ageing blast furnaces must be replaced, and a decarbonisation plan to install much less polluting electric arc furnaces is likely to cost well over a billion pounds.

Gareth Stace, director-general of UK Steel, a lobby group, said British Steel was the only maker of long products such as rails or girders in the UK that are crucial to the country’s “industrial resilience, national security and future economic growth”.

“Bringing British Steel into public ownership is the right move,” Stace said. “As the next government takes office next week, its priority must now be to deliver a long-term plan that restores British Steel to commercial sustainability, secures investment in modern, low-carbon steel making and creates the competitive business environment the sector needs to thrive.”