Steelmaker SSI UK to mothball Redcar plant

Iron and steel making operations at a UK plant formerly owned by Tata Steel are to be mothballed with a loss of 1,700 jobs, SSI UK, part of Thailand’s Sahaviriya Steel Industries, said on Monday.

The development, which will come as a massive blow to Teeside, an industrial region in north-eastern England, and will further mount pressure on the UK government to take action in the face of the tremendous pressures facing the country’s steel industry.

SSI UK said that after stopping production at the Redcar plant ten days ago, it had taken the difficult decision to mothball the facility in the face of “extremely challenging” market conditions, including poor trading conditions and a “severe deterioration” in steel prices expected this year. While some parts of the plant would continue to operate, including the coke ovens and the power station, up to 1,700 jobs would go.

“This is an extremely sad day for all of us at SSI UK, and in particular our employees and their families,” said Cornelius Louwrens, UK Business Director at SSI UK, in a statement.

On Monday, unions and senior parliamentarians urged the government to act swiftly — both to ensure SSI lived up to its obligations to the Redcar workforce, as well as to take action to support the industry.

While the slowdown in China has put pressure on the global steel industry, in Europe the situation has been exacerbated by the dumping of goods from China and elsewhere. The European Commission has brought in temporary levies on certain categories of steel produce, but many in the industry argue that it is has been inadequate, compared to protections in other regions in the world. In Britain, the situation is particularly acute, because energy and other business costs are particularly high, even by European standards.

“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,” said Harish Patel of the union Unite. 

“It is a failure of political will,” said Roy Rickhuss of the Community Union, during a debate on an emergency motion put to the Labour Party conference on Monday calling on the government to step in and support the industry.

 The mothballing is the latest in a series of developments at Redcar, which has faced challenges over the years.

Tata Steel began the hunt for a buyer in 2009 after a consortium of slab buyers pulled out part way through a 10-year contract.

It completed the sale of Teeside Cast Products to SSI for $469 million in 2011, after which SSI, which planned to ship much of the product abroad, put millions of pounds of investment into the site, relighting the blast furnace in 2012.

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