U.K. Steel Plant to Close with 1,700 Job Losses

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--One of the biggest steel-making plants in the U.K. is to close with the loss of 1,700 jobs.

SSI U.K. Limited, part of Sahaviriya Steel Industries PCL (BAK:SSI) (Bangkok), has confirmed that following a review of the business, it had "no other option but to mothball its iron and steel making facilities" at Redcar, in Teesside, England. The company originally had proposed a pause in production due to ongoing issues with the supply of raw materials and services, but later in the same day it announced the plant's closure. It blamed falling steel prices for its decision to shut down the blast furnace, the second largest in Europe.

The Teesside Cast Products Steel Works plant has supplied steel for iconic structures, including the One World Trade Center in New York and the Sydney harbor bridge in Australia. It has a capacity of 3.6 million tonnes of steel per year.

The Redcar coke ovens and the power station will continue to operate, SSI UK said.

"This is an extremely sad day for all of us at SSI U.K., and in particular our employees and their families," said Cornelius Louwrens, U.K. business director and chief operating officer. "Together with our parent company and the various other stakeholders, they have worked so hard in their endeavours to try and make this business successful. 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."

The Teesside complex was originally shut down in 2010, bringing to an end 160 years of continuous iron and steel manufacturing. SSI bought the plant from Tata Steel Europe (London, England) for $470 million in 2011, and after investing heavily in relining the blast furnace and refurbishing the other mothballed plants, re-opened for business in April 2012. The steel industry has blamed China's dumping of cheap steel for the plunging price of steel in Europe.

Gareth Stace, director of trade association UK Steel, said: "This is an extremely worrying development. I am pleased that the Business Minister, Anna Soubry, has said in Parliament that she and the Chancellor will make representations to the Chinese government about the issue of Chinese steel being dumped in the European market, when they visit China."

U.K. Business Minister Anna Soubry said: "Despite everyone's recent efforts to help SSI, this is very sad news and a big blow for the workforce and their families. I hope that SSI's announcement that they are mothballing the furnace gives some hope that steel making could be restarted on Teesside in the future. The steel industry across the U.K. is facing very challenging economic conditions. The price of steel has almost halved over the past year, with overproduction in the world market. While government cannot alter these conditions, I have called a steel summit to see what more can be done to help our steel industry."

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