The sector still has concerns over the low price of Chinese steel exports

Energy intensive industries exempted from renewables burden

Energy intensive industries, including steel firms, are to be given £300m in annual compensation by the government after state aid rules were approved by the European Commission.

The steel sector alone will benefit by £45m every year from this total which the government said should give it greater certainty around energy costs.

The industry savings will be achieved by removing the cost burden of supporting renewables policy in their bills for the most electricity intensive businesses.

Relief for energy intensive industries was one of the recent demands from trade body UK Steel after the sector was badly hit by a series of job loss announcements in recent months.

The loss of 250 jobs at the Tata Steel plant in South Wales in August was followed by 1,700 redundancies in the SSI steel factory in Redcar in September.

Gareth Stace, UK Steel director, said: "This is a hugely significant and welcome announcement which will bring some much-needed relief to a steel sector saddled with spiralling energy policy costs which has undermined its competitiveness.

"We are relieved that compensation payments can finally now start for most of the steel sector and that we now have long-term certainty of relief following the commitment to permanently exempt the sector from renewables policy costs.

"But this is far from job done. The dumping of Chinese steel continues and must be stopped.

"The Business Secretary has done well to deliver this first stage of the state aid package. But the Government cannot afford to let up on ensuring that all major procurement projects, from rail to tidal barrages and airports, all use British steel to give this vital UK industry confidence for the long term.”

The UK steel trade union Community said that without the new measures, steel production would not be sustainable in the UK.

The GMB union made similar comments, but said that the sector would need additional support in the light of low-cost Chinese steel exports.

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