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Calls for help with energy costs intensifies

The Welsh government has called for urgent help for energy intensive industries to mitigate the costs of UK green policies.

Calls for the support, first announced by the UK government last autumn, have intensified following last week’s announcement that up to 900 jobs could go across the UK in a restructuring of steel reprocessor Tata Steel’s operations.

Chief executive of European operations Karl Köhler said that the job cuts, understood to be prompted by difficult global trading conditions, were regrettable but necessary to create a sustainable business and be an “all-weather” steel producer.

The Welsh government called for more urgent action from the UK government to compensate energy intensive industries for the impact of green policies.

“Tata’s decision reflects the serious and ongoing challenges faced by manufacturing industries during these very difficult economic times,” a spokesman said. “In addition to these challenges, it is clear that high energy costs and uncertainty over UK government energy policy are having a significant impact on business investment decisions. As a government, we have warned for some time of the need for these costs to be reduced.”

“The UK government must now deliver quickly on its commitment on a fit for purpose support package to compensate energy intensive industries for the impacts of energy and climate change policies and help ensure they are able to compete internationally,” he added.

The department for Business, Innovation and Skills is currently running a consultation on a scheme to compensate electricity-intensive business to help offset the indirect cost of the Carbon Price Floor and the EU Emissions Trading System. The consultation will close on 21 December 2012.

The chancellor announced last autumn that the government planned to spend around £250m over the Spending Review period to help electricity-intensive industries, starting next year.

Tata Steel is proposing cutting 500 jobs at its Port Talbot-based production hub in South Wales, as well as the closure of 12 sites, including Tafarnaubach and Cross Keys in South Wales.

In addition, Tata said shift levels at the company’s Rotherham and Hartlepool operations will be reduced to match production to lower demand for bar products and pipelines.

The proposed changes are expected to lead to a net loss of 900 jobs in the UK, including 580 in South Wales, 155 in Yorkshire, 120 in the West Midlands and 30 in Teesside.

However, the company is will also restart Blast Furnace 4 at Port Talbot in the first quarter of next year. It is being rebuilt as part of a £250m investment programme which will also lead to the restarting of the hot strip mill at the company’s Llanwern site in Newport.

Secretary of state for Wales, David Jones, said that he had been assured that Tata remained committed to having a strong presence in Wales and the UK as a whole.

“The news that Tata is expected to light Blast Furnace 4 in the first quarter of 2013 is welcome news, as is the creation of 120 new jobs at the hot strip rolling mill at Llanwern and 65 new jobs at its distribution centre,” he said.

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