More than 700 workers are likely to lose their jobs with Tata Steel because high energy costs and cheap imports have made some operations uneconomic.

The Indian-owned speciality steels business has told employees that 720 could be made redundant at its plants in Rotherham, South Yorkshire and Wednesbury in the West Midlands.

Karl Koehler, chief executive of Tata Steel’s European operations, called on the government to act on electricity costs that were double those in mainland Europe, partly because of carbon taxes.

“While the UK government announced helpful measures to reduce the impact of its high energy taxes a few years ago, these measures still haven’t been introduced,” he said. He added that the strong pound had led to a rise in imports.

The company, which has invested more than £20m in recent years, says it will focus on aerospace and other steels with higher margins.

Since 2009, Tata has shed almost 1,800 well-paid jobs in the UK. It employs 2,200 in South Yorkshire at Rotherham and Stocksbridge.

Community, the steel workers’ union, said it was “devastating news”. Roy Rickhuss, general secretary, said: “We will give our members every support in the coming weeks and months and will oppose any compulsory redundancies.

“We will also engage independent experts to study Tata Steel’s proposals and look at alternatives that could save jobs and create a sustainable business.”

Mr Rickhuss also called for government support. “We have been saying for years that uncompetitive UK energy costs are damaging the steel industry.”

The Rotherham site uses an electric furnace in the process that turns used steel into high-grade product but costs have risen as the UK moves to a lower carbon economy.

Foundation industries such as cement and ceramics were promised relief from carbon levies in the 2013 Budget.

Mr Köhler said: “Now is the time for government to act. Foundation industries like ours urgently need a competitive business environment and a government willing to strengthen UK manufacturing supply chains. This would ensure the UK remains an attractive place to invest.”

Sarah Champion, Labour MP for Rotherham, said: “I have consistently challenged the government to address the inequality that British steel faces against the rest of Europe with higher energy prices and business rates up to 10 times greater. The chancellor promised a report into this by 2016. Today shows that is too little too late.”

Downing Street on Thursday said it was doing all it could to keep energy bills down for consumers and businesses.

Tata workers had threatened to strike over proposed pension changes but settled with the company this week.

Its European long products division, which makes steel for building and for train lines and which is up for sale, is unaffected.
However, its high cost base has led to big losses at Tata and is one reason why talks with Klesch, the Geneva-based industrial group, have dragged on since October.

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