Owner SSI decides it can no longer financially support its loss-making UK subsidiary in Teesside after ministers refuse request for ‘open-ended’ funding

The company that owns the Redcar steel works in north-east England has been put into liquidation, threatening a total of 2,200 jobs, after the government rejected a last-ditch appeal for financial help.

Thailand-based Sahaviriya Steel Industries (SSI) said it could no longer support its loss-making UK subsidiary which has run up £500m worth of debts. Earlier this week, it mothballed the Teesside plant, Europe’s second biggest steelworks.

Cornelius Louwrens, chief operating officer for SSI (UK), emailed staff in Redcar on Friday saying he had just been told about the liquidation following a board meeting of the parent group in Bangkok.

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“Through the next few hours I will determine how this affects our plant operations and pleased be assured our focus remains to maintain operations at RCO [Redcar] if at all possible.”

On Monday, SSI’s UK unit said 1,700 directly employed staff would be axed as it announced it was mothballing the plant. But the liquidation process means there is now a threat to the remaining 500 employees, who were being kept on to maintain the plant in case it could be re-opened.

Liquidation means that accountants will be brought in to try to find a new buyer to save the recently modernised facility. This will not be easy in a wider industry that is in severe trouble.

SSI had asked the British government to help save the facility near Middlesbrough but ministers said it amounted to an “unrealistic” demand for a blank cheque which could not be granted.

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However, on Friday, the government announced an £80m support package for workers who are losing their jobs at the sprawling plant. Redcar has been making steel for 160 years under a number of different companies including, for a period, the state-owned British Steel.

Among steelworkers on site, the mood was one of confusion. “We still don’t know what that means to us on a day-to-day basis. Do we have to still come in to work? Are we still going to get paid at the end of the month? If we aren’t going to, why do they want us in work?”, asked Brian Dennis, 49, the production supervisor who made a rousing speech to the Labour party conference on the day that the 1,700 redundancies were announced.

A pressing concern, as well as whether this month’s wages will be paid, is the redundancy money on offer. Dennis, who worked at the steelworks for 26 years, said his contract entitled him to just over two weeks of salary for every year he had worked. But if he was given a statutory redundancy payoff, he would probably receive just a quarter. “That’s the difference for me between having the breathing space to up-skill, retrain and find a job to a couple of months’ wage where I’m in a job market with 7,000 people in an area that’s absolutely depressed for work,” he said.

Anna Turley, Labour MP for Redcar, said the situation could be an opportunity to work with the receiver to ensure that people were paid and the site was mothballed safely.

“I think the government has accepted defeat far too easily,” she said outside the entrance to the steelworks on Friday. “They’ve said today that they accept the end of steel-making on Teesside. We don’t accept that. The official receiver has a responsibility to ‘maximise the asset’, it’s their responsibility to get the most value they can from the asset, so for me that means them doing a proper closure and a proper mothballing that maintains the value of the site, not just allow it to close in a hard closure and be lost for ever. We’re going to keep fighting.”



Sajid Javid, the business secretary, who met local representatives in Redcar on Friday, accepted it was an “extremely difficult time” for the workforce at SSI and the local community. “The (£80m) package we are announcing today will provide important support to workers and the local economy. Across government we will continue to focus on providing assistance where we can,” he said.

The government confirmed that the company made a “last-minute and unrealistic” request for the taxpayer to make an “open-ended” funding commitment to maintain the coke ovens in Redcar.

A statement by the business department said: “The government cannot accept the request. On the basis of the limited business case it was given, the government has no confidence that this is a realistic proposal for taxpayers to support.”

When the owners of the Redcar plant announced that they planned to mothball the facility, they said they could no longer compete with low-cost imports from places such as China. They also complained that their situation was made worse by high energy costs in Britain and the soaring price of the pound against other currencies, which made its exports expensive and rival imports cheaper.

The £80m support package includes funding for workers to train at local further education colleges and to help them start their own business, but Teesside is an area of high unemployment.



The problems there are mirrored elsewhere in the UK. Steel industry leaders have warned that the whole sector and its 30,000 jobs are now threatened.

A steel summit will be held on 16 October, involving steel companies, MPs, unions and government to discuss the future of the industry.

Commenting on reports that SSI may be going into liquidation, Gareth Stace, director of UK Steel, said: “It may be too late for SSI, but the situation in Redcar brings the problems facing the UK steel sector into sharp relief. The government must now spearhead efforts to support the steel industry and the supply chains it feeds. The steel site in Redcar remains a viable and efficient plant and the government-led steel summit taking place in two weeks will be a make or break event for the entire industry.”