SSI has confirmed its steel and iron production plant in Redcar will close with the loss of nearly 2,000 jobs.
The Thai steel company suspended production last week due to rising costs and a slump in demand, leaving the future of the plant and many local jobs unclear. However, but today it confirmed the plant will be mothballed.
On Friday, the government stepped in to ensure the wages of 1,700 workers were paid. The company said it will begin a 45 day consultancy period over the redundancies.
“This is an extremely sad day for all of us at SSI UK, and in particular our employees and their families," said SSI's UK business director and chief operating officer Cornelius Louwrend.
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.
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.
Redcar MP Anna Turley branded the news "devastating", and called on the government to step in and secure the plant's assets.
Roy Rickhuss, general secretary of steelworkers' union Community, added:
Steel making on Teesside must have a future and our fight to save our steel will continue.
We have serious concerns about the ability of SSI to do this and so the government must step in to ensure that the mothballing is done properly. The cost of inaction and the demise of the assets could extend to hundreds of millions of pounds. Not just the cost of cleaning up the site but the economic and social costs from devastating an entire steel community and the lives of the thousands of families who depend upon it.
SSI bought the plant from Tata Steel-owned Corus for £291m in 2011. The plant was previously mothballed under Corus in 2010, before the 170-year-old furnaces were fired up again in 2012.
Business minister Anna Soubry said the government hoped steel making would return to the plant.
The steel industry across the UK 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.