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Steelmaker SSI UK to axe 1,700 jobs

UK, September 29, 2015

Britain's second-biggest steelmaker SSI UK said on Monday it plans to mothball its Redcar plant in northeast England and axe about 1,700 jobs, calling its future into question and deepening a crisis in the British steel sector.

The loss-making company, a unit of Thailand's biggest steelmaker Sahaviriya Steel Industries (SSI), has been hit by a slump in steel prices this year, which it expects will continue in the short term.

The Redcar plant, SSI's only British operation, employs 2,000 people directly, meaning it plans to axe nearly its entire workforce.

The company said it will continue to work with stakeholders with a view to restarting operations in the future, and will therefore keep its Redcar coke ovens and power stations running.

"This is an extremely sad day for all of us, and in particular our employees and their families," said Cornelius Louwrens, SSI UK's chief operating officer.

SSI UK missed several debt repayments earlier this year. Offering some relief to workers, it said on Friday that it would process this month's payroll.

"The steel industry across the UK is facing very challenging economic conditions," said UK business minister Anna Soubry.

"The price of steel has almost halved over the past year. While government cannot alter these conditions, I have called a steel summit to see what more can be done to help."

Soubry previously promised to raise allegations of "dumping" by Chinese firms - where products are sold at below fair value - during a trip to China.

The Redcar plant, on the coast near the industrial town of Middlesbrough, is in an economically deprived region of Britain, where locals fear the loss of thousands more jobs indirectly related to steelmaking.

"Any loss of the UK's steel-making capability is a huge blow and has knock-on effects across the manufacturing supply chain," said Terry Scuoler, chief executive of Britain's largest manufacturing body, EEF.

Producing steel profitably in Britain is difficult due to cheap imports and a strong currency, plus relatively high energy costs and "green" taxes imposed on heavy industry that are some of the highest in the world.

Britain's biggest steelmaker, Tata Steel, said in July it could cut more than 700 jobs as it had been hit by cheap imports and high energy costs. The company has cut thousands of jobs since it bought Anglo-Dutch producer Corus in 2007.

"We need a clear indication from government - as a matter of urgency - that it will honour its commitment to compensate steel and other energy intensive industries from the cripplingly high cost of energy," said Scuoler.

"Failure to do so would mark a tipping point for this vital industry."

The government says it has to date provided steelmakers with over £47 million in compensation for carbon permit costs. Beyond that it says its hands are tied by strict European Union state-aid rules.

"Our fight to save our steel will continue," said Roy Rickhuss, general secretary of trades' union Community.

"The blast furnace must be mothballed properly to give it the chance of a future. We have serious concerns about the ability of SSI to do this and so the government must step in," he said.

SSI bought the Redcar plant from Tata Steel in 2011, bringing cheer to locals as it revived 160 years of steelmaking.

British unions say that if SSI UK fails it could cost taxpayers hundreds of millions of pounds in redundancy and clean-up costs.

"The Prime Minister said his government would do 'everything we can' to support the UK steel industry. He needs to deliver on that," said Rickhuss.

SSI UK's Thai parent company is working with three of Thailand's major banks to consider options to restructure its $1.4 billion debt pile, including selling the UK business. - Reuters




Tags: | cut | SSI UK | Redcar plant |

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