Redcar steel plant to be mothballed causing loss of 1,700 jobs, owner SSI confirms

The Teeside plant had paused production on 18 September due to a global drop in steel prices

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The Independent Online

The Redcar steel plant has been mothballed, owner SSI has confirmed, causing the loss of 1,700 jobs.

The Teeside steel works had paused production on 18 September due to a global drop in steel prices, leaving workers and their families in limbo and fighting for their wages.

But today the company said it was with “regret” that is had to announce the decision to mothball the iron and steel making facilities, though the Redcar Coke Ovens and the Power Station with continue to operate.

SSI claimed that after a further evaluation of the business it had “no other option,” blaming a severe deterioration of steel prices for the decision.

A statement from the company said: "This decision has had to be taken against a continuing background of poor steel trading conditions across the globe and the consequential severe deterioration in steel prices experienced during the course of 2015, together with the view that this is unlikely to change in the short term.

"We will continue to work with various stakeholders, including government, with the objective of restarting operations at Teesside at some point in the future.

"As a further consequence of the mothballing, it is proposed to reduce by 1,700 employees, including those affected by the mothballing of the South Bank Coke Ovens which was announced previously,” adding that consultation with the trade unions and employee representatives will commence as soon as possible.

Just this week SSI had confirmed it would be able to process its payroll and pay workers last month's wages due to a tax relief by the Government, which union Unite has now called on to step in and “take some responsibility for this”.

Production was halted at Redcar’s steelworks previously because of supply problems

“They can still intervene to save Redcar and the thousands of jobs that rely on the plant,” a Unite spokesman said.

David Hulse, national officer at GMB, said the news was “absolutely devastating” for the workers, their families and the community.

“All that will be left operating will be the coke ovens unless the UK Government steps in even at this stage. It is not too late for them to do so while the furnaces are still burning.

"GMB will do all in our power to press the case for Government to act and to protect our members and their families,” he promised.

Business minister Anna Soubry said the steel industry across the UK is facing "very challenging economic conditions" with the price of steel almost halving in the past year, stating the current move will be "a big blow for the workforce and their families" who are a "priority".

"I hope that SSI's announcement that they are mothballig the furnace gives some hope that steelmaking could be restarted in Teeside in the future," she said, adding that "while governement cannot alter these conditions," she has called a steel summit to discover what more can be done to aid the UK's steel industry. She has also asked Amanda Skelton, chief executive of Redcar and Cleveland Borough Council, to chair a local taskforce to help support workers and the local economy.

But shadow business secretary Angela Eagle said the mothballing of the steel works shows how "critical" the situation is in Redcar. "Unless the Government acts, 1,700 jobs will be lost. 

"It is unacceptable that the Goverment is allowing strategic industries to fail. This Government's ideological decision not to have an industrial stategy is putting jobs at risk," she said. 

The UK business director and chief operating officer of SSI called it “an extremely sad day” for all at SSI UK, adding that he hoped the facility would once again restart operations.

"Despite the significant progress we made in the financial performance of the business during 2014, market conditions this year have been extremely challenging and unfortunately this has led to the decision we are announcing today, he said.

"I would like to pay tribute to and thank everyone connected with SSI UK for their great support. My wish is that this facility can once again restart operations and fulfil the potential of the plant and its loyal workforce."

Additional reporting by PA