Time is running out to save UK steel sector, warn steelmakers and unions

By Maytaal Angel

LONDON (Reuters) - Time is running out to save the British steel sector, steelmakers and unions warned on Friday following news of hundreds more possible job cuts.

Tata Steel , the biggest steelmaker in the country, is expected to cut around 1,200 jobs at its Scunthorpe plant in northern England, a union source said earlier. The firm has already cut thousands of UK jobs since it entered the sector in 2007.

A Tata spokesman said it continued to review the performance of its business, without addressing reports of job losses.

The government convened a crisis summit on the steel sector on Friday, where it pledged to set up working groups to tackle energy and environmental costs, business rates, regulations and industrial competitiveness.

 

The summit followed the liquidation of SSI UK - the country's second-largest steelmaker - earlier this month, resulting in the loss of 2,000 direct jobs and thousands more jobs indirectly related to steelmaking.

"I cannot emphasise enough that there is an urgency here and very little time before we start to see more job losses. This really is about saving Britain's steel industry and time is of the essence," said Gareth Stace, director of industry group UK Steel.

The Unite union said: "Now is not the time for platitudes from government ministers, we need urgent action. The government ... needs to take action against the dumping of cheap Chinese imports and ... high energy costs."

According to government figures, British energy-intensive industries like steel paid about 80 percent more for electricity than the EU average in the first six months of this year, versus about 33 percent more in the last six months of 2013.

Aside from this, producing steel profitably in Britain is difficult due to cheap imports, especially from China, a strong currency, poor demand plus "green" taxes imposed on heavy industry that are some of the highest in the world.

Also, steel prices globally are at their lowest levels in over a decade thanks to over-capacity and tepid global economic growth, especially in China, which consumes nearly half the world's steel.

"There is no straightforward solution to the complex global challenges facing the steel industry. But today was an important opportunity to bring the key players together and we now have a framework of action," said British business secretary Sajid Javid.

The British steel sector currently employs fewer than 20,000 people directly, down from about 200,000 in the 1970s.

(Reporting by Maytaal Angel; Editing by Pravin Char)