The numbers are starting to speak for themselves

FOR 160 years, Teesside steel was prized around the world. Gradually, the industry that two years ago looked down-andout is attracting global interest once more.

This summer, SSI UK has hosted site visits by potential buyers from across Asia, Europe and the Americas whose interest has been piqued by the renaissance of one of the North-East’s most famous industries.

Few commodities are prized more in the business world than credibility, and the credibility of the Redcar works has grown steadily since it returned to operation last year following a two-year hiatus.

The past six weeks have been marked with 20 new production records – a sign that the firm’s seemingly endless teething problems are beginning to ease.

“When we started up, lots of people looked at us as someone who had come back from the dead and they waited to see if we could get back on our feet and start walking,” says Phil Dryden, SSI UK chief executive, an engaging man who is no stranger to a colourful metaphor.

“Now we have proven to the world that this place does everything that you want it to. We have gone from being a car that you’d trust for a short hop into town to one that you would take on your holidays.

“As a result we are getting more inquiries every month.

“When people come here we talk proudly about the heritage of Teesside steelmaking. We bring out members of the team who have a lifetime of experience, such as Dr Mike Copeland, our technical director, whose passion for steel is intoxicating.”

SSI UK’s credibility with potential buyers is at an all-time high. But Mr Dryden admits that its long-suffering Thai parent takes a more circumspect view.

The pulverised coal injection plant at SSI, which has been beset by teething problems

The South Shields-born steel boss is an unassuming but very persuasive character. However, even Mr Dryden has struggled to maintain a convincing front amid a succession of problems that have cost the Bangkok firm millions.

The UK business suffered eye watering net losses of more than £327m last year. Without the patience and deep pockets of owner Win Viriyaprapaikit and his backers, the Redcar firm would surely have folded with the loss of 1,800 jobs.

There is a school of thought that says the Thais have got to a point of no return. If they pulled the plug on their investment now, it would leave them with devastating losses. The option they have taken is to keep the operation afloat until steel prices take an upswing.

In the meantime, their patience has been sorely tested.

WHEN the business was being sold to SSI, there was a big play made that the days of British industrial action were a throwback to the 1980s. Yet the plant has been hit by third-party strikes.

Start-up of the plant was delayed by a host of niggles, but many of these have been out of SSI UK’s hands.

The most recent was the collapse into administration of main contractor Rowecord, which halted the implementation of a £37m pulverised coal injection (PCI) plant.

It was estimated that every week the PCI project was delayed, it cost SSI up to £1m.

Frustrations in Thailand grew further, Mr Dryden says, when even after PCI was commissioned it was beset by problems.

Linking a top-of-the-range grinding mill with the site’s existing infrastructure proved harder than expected, he says.

The first steel slab shipment from SSI UK to SSI Thailand is loaded onto the Blue Fin at Teesdock last December

“It ended up being a pretty drawn-out affair.

Every day we were rooting out problems – electrical, instrumentation, you name it.

“Because I held PCI up as the next shining light in the breakthrough for Teesside, I set myself up for people to watch us intently. All the board in Thailand wanted to know was that everything was running hunky-dory.

“If I was in their position I’d not have been too happy.”

Siemens, the suppliers of the PCI plant, have been retained on site until the end of this month – a month longer than planned – to help iron out any lingering problems.

“I do think we have lost a little bit of credibility with the Thais,” says Mr Dryden. “We have been very credible operationally. We are now hitting record after record. The only blot on our copybook has been the execution of some of our projects. We must make sure these things don’t happen again.”

He has a board meeting next week which he hopes will prove to be an easier ride than recent sessions.

“We still wrestle with the problems of cashflow, profitability and the legacy of starting this thing up.

“But we stick to our prediction that we will reach profitability by the end of the year. Prices of steel are starting to edge up. All we can do is make as many tonnes as possible,” says Mr Dryden, who is enjoying the prospect of some relative calm.

Regular shipments of steel slabs leave Teesport for SSI’s Thailand plant and to a client in Turkey.

Destinations over the Atlantic could soon be on the client list.

The next 18 months will be about fine tuning the Redcar plant’s existing assets before it hits an inevitable bottleneck in the production line as the casting operation – where molten steel is turned into slabs – cannot cope with output from the blast furnace. At that stage the firm will invest in a third caster at a cost of about £45m.

Project manager Nigel Chudley next to the pulverised coal buffer storage

It also has plans to use the excess energy produced by the plant as an additional source of income.

Investing in energy-saving measures will also help to boost profitability and combat steadily rising energy prices.

Mr Dryden says: “Your credibility as a steel producer is time served.

“We have hit daily and weekly records but I want quarterly records. Then we will know that we are really hitting our stride.

“The numbers are starting to speak for themselves.

The best situation is when I don’t have to say anything.”