THERE were calls last night for the government to renationalise steelmaking after production was halted at the region’s last surviving works, jeopardising thousands of jobs.

Debt-ridden SSI at Redcar has started redundancy consultation with 150 workers employed at South Bank Coke Ovens, which has been mothballed. The futures of 1,900 steelworkers, 1,000 contractors and

thousands of supplier jobs hang in the balance after creditors ran out of patience, forcing plant bosses to suspend production.

GALLERY: The highs and lows of iron and steelmaking on Teesside.

MP for Stockton South and Northern Powerhouse Minister, James Wharton, said: "It's not necessarily the end of the story for steel on Teesside...but it's clearly a difficult time."

Cornelius Louwrens, SSI UK business director and chief operating officer, warned the production hiatus could last months.

He said: "The steel market is too difficult and some of our key suppliers have decided not to further support us. It is devastating,” adding that the decision had been made “reluctantly and in a scenario where no other practical options are available at present”.

The blast furnace – the heart of the iron and steelmaking process - is not being mothballed and will remain lit while a rescue deal is thrashed out.

Roy Rickhuss, general secretary of the Community union, which represents the majority of workers and contractors at SSI UK, said yesterday’s announcement was “devastating news”.

Earlier this week, following an emergency Commons debate, ministers agreed to hold a steel summit on the worsening steel crisis which threatens other UK producers including Teesside’s Tata Steel. But the Government is coming under increasing pressure to bail out the Redcar works now before it collapses for the second time in five years.

Ministers are reluctant to break EU competition rules that prevent state intervention in private companies. Labour and unions want David Cameron to show Teesside steel the same kind of support UK banks were given during the financial crash.

Saving our steel industry is this Government's 2008 RBS moment" said Middlesbrough MP Andy McDonald.

“The powers that be have to pull out all the stops to make sure we keep producing steel on Teesside, even if it means renationalisation of our UK steel industry," said George Dunning, a Teesside steelworker of 30 years, who was leader of Redcar and Cleveland Council the last time the works was mothballed.

SSI’s long-running cashflow problems have come to a head in recent days after it emerged the Thai-owned company had defaulted on bank loans. The dramatic fall in steel prices this year from $500m to less than $300m per tonne and cheap Chinese exports have hobbled SSI which has failed to show a profit since production restarted in April 2012.

It is unable to afford raw materials meaning the plant is unable to make steel. Workers have been paid late and suppliers are taking steps to recover their debts. A source close to the plant said utility firms had threatened to turn off supplies to SSI unless bills – some running into millions of pounds – were settled.

All of this has added to the woes of the former British Steel plant which was rescued five years ago following a Save Our Steel campaign led by Geoff Waterfield the late union boss who tragically died before seeing the works restart. His son Wills (CORR) was given the honour of relighting the blast furnace in an emotional ceremony to mark the return of one of the area’s industrial powerhouses.

Redcar MP Anna Turley, said: "My thoughts are with the workers and their families. They have put their hearts and souls into this. We are doing all we can to help get things back up and running."

Last week she wrote to SSI President Mr Win Viriyaprapaikit, who has ploughed hundreds of millions of pounds into the Teesside works, asking for talks, but he has not replied.