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Baseefa Ltd

UK steel plant production to be “paused”

18 September 2015

Production at the SSI steel plant in Redcar will be "paused", the company said on September 18. The plant, which employs up to 2,000 people, was taken over by Thai-based SSI after Tata Steel mothballed it in 2010. About £1bn has been invested in reopening the blast furnace, the BBC said.

Redcar steel works - Image: John Yeadon
Redcar steel works - Image: John Yeadon

Operation of the South Bank Coke Ovens, which employ 150 people, will cease first before production stops. The Redcar Coke Ovens and the Power Station will continue to operate, but at a reduced level. At full capacity the Redcar plant produces up to 400 slabs of steel a day, each weighing up to 33 tonnes.

Chief operating officer Cornelius Louwrens, said: "We are deeply aware of the concern it will give to our employees and their families.

"Our parent company and other stakeholders have given great support to the business, and the decision to pause our iron and steel production has been taken reluctantly and in a scenario where no other practical options are available at present.

"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."
Last month the company warned the plant's future was at risk, citing a slump in demand for steel in China and Russia for its problems.

Louwrens said the price paid for slab steel had plummeted from $500 (£318) a tonne to below $300 (£191) over the past year.

Business Minister Anna Soubry, said: "This is disappointing news. The government stands ready to assist workers where needed.

Gareth Stace, director of UK Steel, said the government needed to act decisively otherwise "the damage to one of the most important industries underpinning our entire manufacturing industry will be irreversible".

On September 20, Soubry said EU rules meant state cash could not be directly used to support British steel production.

But Louwrens said: "Other European countries are finding ways to support their steel industries because they believe it is so important."

He urged ministers to approve the underwriting of "key projects" to enable it to secure commercial loans, as well as reduce business rates and ease restrictions linked to CO2 emissions.

Update: On September 28, SSI said it was mothballing its plant at Redcar in Teesside and was laying off 85% of the 2,000-strong workforce. A skeleton staff of 300 will be retained, but the BBC said talks with unions could result in 450 staff continuing to work at the site.  

"This is an extremely sad day for all of us, and in particular our employees and their families," Cornelius Louwrens, SSI UK’s chief operating officer, said.  SSI, which is in talks with lenders about restructuring its $1.4 billion debts, blamed a collapse in world steel prices and said that it was struggling with high green taxes and energy costs. SSI said it hoped to resume production in the future if economic conditions change.

Redcar lies in one of Britain’s most impoverished regions and thousands more local jobs rely indirectly on the plant.

Anna Soubry, the business minister, said the closure was "very sad news". "The price of steel has almost halved over the past year, with overproduction in the world market. While the government cannot alter these conditions, I have called a steel summit to see what more can be done to help," she said.

Gareth Stace, a director of UK Steel, said the decision to mothball Redcar was distressing news. He accused the government of failing to protect the industry from "the high cost of electricity caused by the imposition of climate change policies".

Frances O'Grady, general secretary of the TUC, said pressure should be put on the government to devise a rescue plan. She said: "Energy costs in Britain are on average 80% higher than those in the rest of Europe and do we really think that Angela Merkel would sit by and let the German steel industry go down the pan? Certainly not.

"She would be calling in the unions and the company and looking at how we secure the long-term future of what is a strategic industry for the whole economy."

According to The Times, Britain’s steel industry has shrunk from 200,000 employees in the 1970s to only 20,000 today. The closure of Redcar alone would reduce its size overall by nearly 10%.

 


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