Job fears as steel plant mothballed

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Workers at the Teesside Cast Products plant in Redcar were told the grim news ahead of a 90-day consultation on the future of the plant.

Union leaders expressed "outrage" at the news, while Prime Minister Gordon Brown said the Government was doing everything in its power to help.

Owner Corus said the development had become "unavoidable" because of the termination of a contract by four international steel slab buyers.

Corus said: "The company has begun discussions with employees and their representatives about what can be done to mitigate the impact of mothballing the plant on the 1,920 employees and what future action may be needed. Any decision to mothball is likely to lead to a very significant number of redundancies."

Corus had agreed to sell a majority stake in the plant to a consortium led by Italian firm Marcegaglia, but the steel giant said the consortium had "unilaterally and unreasonably" initiated moves to terminate the contract, making Redcar "unviable".

Anglo-Dutch firm Corus, which has been owned by Indian conglomerate Tata since 2007, said it was using all legal means to ensure the terms of the 10-year contract were enforced and that the four members of the consortium lived up to their contractual obligations. The company said it was exploring alternative options that might secure a viable future for the Teesside Cast Products site at Redcar and its employees.

Corus chief executive Kirby Adams said: "I am extremely disappointed that the consortium members have seen fit to take this irresponsible action. Their unilateral termination of a legally binding 10-year contract could bring to an end a fine heritage of steelmaking at Teesside. We regret the distress their action will cause TCP's dedicated employees, who have worked steadfastly in the interests of the consortium."

Speaking in Sheffield, the Prime Minister said: "I still hope we can keep jobs. There is an agreement that the contractors are not holding to. There is legal action taking place.

"The workers have served the contract that they have been engaged on very well indeed. We are doing everything in our power to ensure that the contract is upheld."