UK steelmakers boosted by EU aid approval

http://www.theguardian.com/business/2015/dec/17/uk-steelmakers-boosted-by-eu-aid-approval

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The government has won EU approval to compensate steel producers for the cost of green taxes, but unions warned that the concession was not enough to save the industry.

British energy-intensive industries such as steel paid 80% more for electricity in the first half of 2015 than the EU average, which is itself about twice as high as in the US. High energy costs have contributed to thousands of job losses at British steelmakers, including 2,200 at Redcar in north-east England.

Business secretary Sajid Javid said: “This is very welcome news and meets a commitment we made to deliver energy compensation for the steel industry by the end of the year. Relief from energy costs will save our steel industry hundreds of millions of pounds.”

But the industry and unions called for more action to stop alleged Chinese dumping of cheap steel and to put in place a procurement policy for big state projects. Alex Flynn, of the Unite union, said: “The government has dragged its heels on this and it’s all very late, too late for those 2,000 workers at Redcar who face a very uncertain christmas and new year.”

SSI, the Thailand-based company that owned the steelworks in Redcar, went into administration in October. “The only reason the government felt forced to do anything was because of the collaboration between the unions and the steel industry bodies,” added Flynn.

The industry body UK Steel has been working with unions and the government to try to rescue the industry, setting up working groups to look at how best to influence government on buying British on infrastucture projects and how best to attack the problem of steel being dumped in the market by lower cost producers.

“This is a hugely significant and welcome announcement, but this is far from job done. The dumping of Chinese steel continues and must be stopped. The business secretary has done well to deliver this first stage of the state aid package,”,” said Gareth Stace, director of UK Steel.

“But the government cannot afford to let up on ensuring that all major procurement projects, from rail to tidal barrages and airports, all use British steel to give this vital UK industry confidence for the long term. And ministers can do more by reforming business rates to exclude some of the penalties steel companies and others face if they invest in plant and machinery.”

The British government promised in October that it would start refunding the costs of green taxes as soon as it received EU approval. The state aid request relates to the so-called renewables obligation, the government’s main incentive mechanism for large-scale renewables projects.