Cheap imports and a strong currency have made UK steel production unprofitable

Steel-making 'pause' at Redcar plant blamed on falling prices

Iron and steel-making operations at SSI UK's Redcar plant will be put on hold because of a steep fall in steel prices, putting up to 2,000 jobs at risk.

The firm became Britain's second-largest steelmaker after Thai parent company Sahaviriya Steel Industries (SSI), Southeast Asia's largest fully integrated steel sheet producer, bought the Redcar plant in Teeside, northeast England, from Tata Steel in 2011.

But cheap imports and a strong currency, plus relatively high energy costs and some of the highest 'green' taxes imposed on heavy industry have made it increasingly difficult to profit from steel production in the UK.

Media reports this week said up to 2,000 jobs were at risk after SSI UK missed several debt repayments to banks. For now production will merely pause, but permanent closure of the plant could put tens of thousands of jobs in the north of England at risk.

"It is with great regret that we have had to make this announcement. Our decision follows a major deterioration in steel prices affecting our business during the course of this year," said Cornelius Louwrens, SSI UK business director and chief operating officer.

"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."

Production will be systematically reduced at the site during the course of the day, according to SSI UK, but it said the plant will be kept in a condition whereby it can be brought back into production "at an appropriate point".

The coke ovens and power station on the site in Redcar will continue to operate at a reduced level, but production at the South Bank coke ovens will cease and the plant will be mothballed.

The Government admitted during a debate yesterday following reports of problems at SSI UK that Britain's steel industry is in crisis. Just last month, Tata Steel announced that it would mothball a plant in south Wales as a result of tough market conditions.

Roy Rickhuss, general secretary of steelworkers' union Community, said: "This is devastating news. Our first thoughts are with the workers who will be affected by today's announcement.

"We will be seeking urgent talks with SSI management to find out the full extent of the impact this will have on both SSI employees and contractors. In the coming days we will do all we can to support our members.

"Only yesterday, following the parliamentary debate on the steel industry, we said that the time for delay is over and immediate Government action is needed to support the industry.

"The Government must ensure SSI receives every assistance to preserve the integrity of these vital industrial assets and to resume production at the earliest opportunity."

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