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SSI to 'pause' Redcar steel plant production amid supply issues

Published 18/09/2015

The SSI steelworks at Redcar, next to the river Tees
The SSI steelworks at Redcar, next to the river Tees

Iron and steelmaking operations at a huge steel plant are to be "paused" because of issues with the supply of raw materials and services.

SSI said preparations are being made to systematically reduce production at the site on Teesside during the course of today.

The Thai-owned firm said it would retain the plant 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 mothballed.

Around 2,000 workers are employed on the site, which was bought by SSI from Tata Steel.

Cornelius Louwrens, SSI's UK business director and chief operating officer said: "It is with great regret that we have had to make this announcement and we are deeply aware of the concern it will give to our employees and their families.

"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.

"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.

"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 "

The Government announced that a top-level steel summit is to be held urgently, amid warnings the UK industry was at "breaking point".

A debate on the plight of the industry was held in the Commons on Thursday, when MPs warned about its "dire prospects".

Business Minister Anna Soubry said officials from the Welsh Assembly and Scottish Parliament would be invited to join their Westminster counterparts alongside worker and company representatives.

Ms Soubry told the Commons she echoed Prime Minister David Cameron's pledge for the Government to do everything it could to support the industry.

The minister is planning to visit China next week to discuss issues affecting the industry, although she noted the UK is unable to control global steel prices and over-production.

She said: "I will do all I can to make the argument within Government where it is the case we're doing things we shouldn't do ... because although I'm not an actual free marketeer, I do believe there is a role for Government."

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."

Ms Soubry said: "This is disappointing news. My officials and I have met and been working with SSI, local MPs and union leaders. The Government stands ready to assist workers where needed.

"The steel industry is going through a tough time. The price of steel has plummeted as worldwide production rises and sales fail to pick up. Government can't fix the price of steel but we are doing what we can to help.

"We help with energy costs and recently voted to protect our steel industry from Chinese dumping. Next week I am in China and I will talk to Chinese officials.

"I am also looking at how we can improve our procurement rules and procedures to encourage businesses to buy British and support our steel industry."

David Hulse, national officer at the GMB union, said he was in contact with managers to deal with a very "difficult and distressing" position for the workers and their families.

"Over the past six months the unions have been trying to get support from the UK Government to help this plant deal with a difficult position.

"The high pound, weak euro, high energy prices and very difficult market conditions have led this plant in to jeopardy.

"These factors threaten the future of the UK steel industry. It is of too much strategic importance to the UK economy to be allowed to go under."

Redcar's Labour MP Anna Turley, who called a Commons debate on the issue yesterday, said it was "devastating news".

She said: "At this stage, the blast furnace is not being mothballed and will remain lit.

"We have to keep fighting to keep the plant open. It is too important to UK industry and to our community to fail. The Government must step in."

Unite national officer Harish Patel said: "We will be meeting urgently with the company and assisting our members and their families through this difficult and worrying time.

"The news is yet another blow to steelmaking in the UK and devastating news for the local economy and the people whose livelihoods depend on steelmaking at Redcar.

"Britain's steel industry is at crisis point due to high energy costs and difficult market conditions. The UK Government needs to follow the lead of their French, Italian and German counterparts and step up support for steelmaking here in the UK as part of a wider industrial strategy to rebalance the economy."

Shadow business secretary Angela Eagle said: "This is clearly devastating news for all of the workers affected, and I know that trade unions and others are doing all they can to assist those impacted by today's announcement.

"The urgency of the situation at Redcar now demands immediate action from the highest levels of Government to ensure it lives up to the promises made to steel workers, their families, and the wider community, just a few days ago.

"The steel industry is of vital strategic importance to the UK economy, and the announcement today is another example of why urgent action from the Government to address high energy prices, unfair and anti-competitive practices from some international producers, as well as additional export and procurement support, is required immediately."

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