Group cites market “weakness” and uncertainty over carbon cost rises

Tata Steel is cutting up to 1,500 jobs over concerns about recovery prospects for the UK construction market.

The firm said demand for structural steel in the UK is only two-thirds of the 2007 level and is not expected to fully recover within the next five years.

The bleak forecast has prompted cost-cutting that could see up to 1,500 jobs go at its Scunthorpe and Teeside plants.

In a statement the group said its “restructure” was also partly prompted by uncertainty over UK carbon cost rises.

Tata Steel Europe chief executive, Karl-Ulrich Köhler said: “The continuing weakness in market conditions is one of the main reasons why we are setting out on this difficult course of action; another is the regulatory outlook.

“EU carbon legislation threatens to impose huge additional costs on the steel industry. Besides, there remains a great deal of uncertainty about the level of further unilateral carbon cost rises that the UK government is planning.

“These measures risk undermining our competitiveness and we must make ourselves stronger in preparation for them.” 

In March the government announced a carbon floor price of £16 per tonne from 2013, which Köhler branded a “potentially severe blow” to the sustainability of UK steelmaking.