STEEL unions will start talks with management at SSI's Redcar plant after the company announced it would be axing 1,700 jobs.

Yesterday morning, the Thai-owned steek firm said it was mothballing the blast furnace at the iron and stee plant following a cashflow crisis. 

It said if global steel prices recovered there was a chance the plant could reopen.

The talks will focus on the mothballing process, whereby up to 500 people will continue to work on the coke ovens, power generators and materials handling sections of the plant. Bosses said keeping the coke ovens alight was crucial to the plant's future, but there is only enough fuel to keep them burning until the end of this week and there is no cash available to replenish supplies.

SSI management have said redundancy payments "must be made" but they admitted there was no sign at this stage where cash would come from to make the pay-offs and settle pensions contributions. 

The Thai-owned company initially paused production on September 18 before mothballing the blast furnace yesterday to slim down its losses.

It said it had carried out an assessment of its business and concluded there was "no other option".

Multi-union leader Paul Warren said morale among staff, who are now subject to a 45 day consultation, was at "rock bottom".

He said: " It is devastating for them all. To be trained for the work you do and then be told you have no job.

"It is sad times for everybody, employees, the local community in Redcar and the whole area. But we will do our utmost to make sure that we get the best solution for our members from this terrible situation."

The union boss said the Government must now help and said: "We cannot just walk away from the plant."

He also hoped a buyer could be found if necessary to provide a long term solution to the plant's troubles.