Up to 1,700 jobs could be at risk after Sahaviriya Steel Industries UK (SSI) announced that the steel and iron works at Redcar were to be mothballed because of problems with the supply of raw materials and services.
Thai company SSI said preparations had been made to systematically reduce production at its UK plant at Teesside.
SSI UK business director and chief operating officer Cornelius Louwrens said he greatly regretted having to make the announcement and blamed falling steel prices.
“The problems within the global steel industry have been well publicised in recent weeks and our decision follows a major deterioration in steel prices affecting our business during the course of this year,” said Louwrens earlier this month.
“We are taking this pause in production in order to re-evaluate and assess the situation following the outcome of ongoing discussions with our various stakeholders, including government and suppliers. Discussions will be held as soon as possible with our trade unions and employee representatives to clarify the effect the production pause will have on our employees.”
Trade union Unite said up to 1,700 jobs at the Redcar facility could be lost.
National officer Harish Patel said: “This is devastating news for Redcar and the thousands of people who depend on the steelworks for their livelihoods. Steel is the lifeblood of the local economy and runs through the community’s veins.
“The government’s much vaunted Northern Powerhouse risks being nothing more than empty rhetoric unless it steps in with assistance to save the SSI plant on Redcar.
“With so many livelihoods at stake and the UK steel industry at crisis point, government ministers need to follow the lead of their counterparts in France, Italy and Germany by pursuing an active industrial strategy which supports the UK’s steel industry.”
Business minister Anna Soubry has called a “steel summit” and has set up a local taskforce.
“Despite everyone’s recent efforts to help SSI this is very sad news and a big blow for the workforce and their families,” she said. “They are the priority, and with SSI’s difficulties being no secret, I had already asked Amanda Skelton, chief executive of Redcar and Cleveland Borough Council, to chair a local taskforce to help support workers and the local economy. I also have concerns about reports that local contractors have gone unpaid.
“I hope that SSI’s announcement that they are mothballing the furnace gives some hope that steel making could be restarted on Teesside in the future.
“The steel industry across the UK is facing very challenging economic conditions. The price of steel has almost halved over the past year, with overproduction in the world market. While government cannot alter these conditions, I have called a steel summit to see what more can be done to help our steel industry.”
The company said the Redcar coke ovens and power station would continue to operate at a reduced level.
In 2010, the Redcar site’s owner at the time, Indian industry giants Tata Steel, decided to close down the plant.
However in 2011, SSI signed a $469M (£309M) deal to acquire the Redcar steelworks and refurbished its blast furnace to give it a life of 15 to 20 years and a capacity of 3.6M.t of slab production per annum.