More than 2,000 jobs could be on the line after one of the UK’s largest steel plants missed a series of debt repayments, it has been reported.
SSI, the Thai-based owners of the Redcar plant on Teesside, has been hammered by falling demand for the slab steel produced there, with prices for the commodity plummeting 40% in the last year as a result.
SSI chief operating officer Cornelius Louwrens warned this summer that its “significant and substantial” losses could not be sustained.
While SSI has declined to comment, The Telegraph is reporting that the company failed to repay loans worth £80 million in June and was given a short-term stay of execution by lenders.
“Failure to stump up the cash could result in the 160-year-old site, which employs more than 2,000 workers and 1,000 contractors in a region where unemployment is among the highest in the country, being put into administration after a long battle with huge losses,” the newspaper said.
SSI took over the Teesside plant in 2010 after it was mothballed, and is believed to have spent around £1 billion getting it up and running.
A spokesman for steelworkers’ union Community said: “We are fully aware of the difficult market conditions in which SSI UK is operating and the worries and concerns of SSI workers. The multi union reps on site at SSI are pushing for updates from management through their usual channels.
“While we appreciate the incredibly difficult market conditions faced by all UK steel producers, we believe that a lack of support from the UK government in vital areas such as energy, environmental and business taxes and procurement threaten the very future of the UK steel industry.”
“We will continue to communicate with our members as soon as information is received.”
Michael Blench, regional officer of the GMB union, said SSI is in a “very precarious” position, adding: “They are awaiting a decision from the main board on whether to keep Redcar as a going concern or whether to mothball it.
“It is an exceptionally worrying time for the workers.”
Labour MP for Redcar Anna Turley demanded government action.
She said she has been in “daily contact” with the firm for the past few months and has lobbied for support for the steel industry.
“Our steelworks in Redcar sustains thousands of jobs and it is vital that these are protected,” she said.
“The Government need to be stepping up to support the industry to help it weather the current storm.”
She added: “Steel is important to our region and the UK economy as a whole and should be a key part of the Northern Powerhouse project.
“We need the Government to commit to playing its part in safeguarding the industry’s future.”
The steel industry’s plight will be debated in the Commons on Thursday morning, she said.