STEEL bosses insist 1,800 jobs at a famous North-East plant are safe despite fears that its losses are unsustainable.

SSI UK, which runs the former British Steel works at Redcar, has reported an annual deficit of $309.4m (£193.5m) down from $439.2m (£275m) losses the previous year - leading its accountants to voice "significant doubt" the company can continue as a going concern.

Two-and-a-half years after it restarted production, following a lengthy hiatus, the Redcar works still depends on funding from its Thai owner and a syndicate of three banks to meet day-to-day costs.

However, SSI bosses and unions have been heartened by recent signs the business is close to profitability. It is expected to have moved into the black when its quarterly figures are published next month.

The firm blamed weak global demand for steel, which has kept prices of slab low, as a key reason behind its failure to balance the books. Furthermore, production was affected by delays last year to the start of a pulverised coal injection (PCI) plant, which has since boosted output and cut raw material costs.

In SSI UK's annual report published yesterday (Saturday October 4) auditors KPMG wrote: "A return to profitability is forecast but is dependent on volatile steel prices.

“The Company is reliant for its funding on the continued support of its banks and of its parent company, the 2013 financial statements of which referred to various uncertainties.

"These factors (together with other matters laid out in the report) indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern."

Paul Warren, chair of the multi-union at the plant, told The Northern Echo: "Normally there would be doom and gloom when you read a report like this, but it is not like that at all. These figures relate to last year and things have improved a lot since then.

"We have no worries whatsoever about jobs or the future of steel making on Teesside. This was always going to be a 20 to 30 year project and Win (Viriyaprapaikit) has always said he is in it for the long haul. The mood at the plant is positive because we are heading in the right direction."

In a statement this morning SSI said: "The accounts filed with Companies House and the associated comments ,reflect the financial performance in 2013, during which SSI UK encountered extremely difficult business conditions, as did many steel businesses across the world.

"Whilst the 2013 result was a significant loss, it also showed a marked improvement over the previous year .SSI’s long term commitment to the business was again demonstrated with the commissioning of the PCI plant , although the start-up was delayed by two months until July. "Further capital expenditure is continuing with the objective of reducing costs and increasing revenue through improved operational efficiency.

"As forecast earlier in the year, the financial performance during 2014 has continued to improve and in June a positive monthly EBITDA (earnings before interest, tax, depreciation and amortisation) result was achieved for the first time since the plant was restarted in April 2012. "This trend of improved financial performance is continuing and with the support of the parent company, key stakeholders and suppliers, we are confident of achieving our goal of SSI UK becoming established as a viable and sustainable business."

In November last year, SSI UK renegotiated its loan payments to the banks which agreed to delay them until the end of 2014. Plant efficiency has improved this year, but despite its financial woes there has never been any suggestion that jobs would be shed.

"The Redcar business been running at a loss since SSI bought it from Tata steel in a £291m deal and then spent hundreds of millions to bring the plant back to life in April 2012, saving more than 1,000 jobs.

Win Viriyaprapaikit, owner and SSI group president, has been praised for his unwavering faith in the business and for investing huge sums to ensure one of the icons of North-East industry survives. It is estimated the Thai parent company and it's backers have spent more than £1bn to keep alive Teesside steel making alive. Without their ongoing cash injections the business will fold.

Steel production at the site has risen significantly year-on-year and the plant now exports to clients in Europe, the US and Thailand. A total of 2.8 million tonnes were produced in 2013, compared with 1.8 million in its first year. However, it had targeted output of 3.2 million by year two and blamed teething problems with the PCI facility for the shortfall.