MINISTERS have been urged to take strong action to ease fears over the future of a mothballed £300m North-East refinery.

Ensus has halted production at its Wilton plant, near Redcar, for the third time in three years.

The factory is Europe's largest ethanol site and the company uses wheat to create bioethanol for road fuels, animal feeds, and carbon dioxide for soft drinks.

The company, which has retained its 100 workers across Wilton and its Yarm administration centre on full pay, blamed a poor harvest and rising energy costs for the decision.

A spokesman said it didn't know when the site would be fully operational again, and bosses have urged Government to provide greater support for the biofuel industry.

Last night, North-East Euro MP Stephen Hughes, who campaigned to re-open the plant in 2012 after it fell victim to cheaper imported US ethanol, said UK biofuel firms must be allowed to compete with international rivals.

He said: “I'm disappointed they have mothballed it again, but it is pleasing to see the staff retained.

“However, I do worry about what is happening because companies like this are constantly on the edge, due to the market circumstances that can change quite rapidly.

“We have to be sure we are dealing with a level playing field and what strikes me is how plants in America are now busy re-opening similar sites.

“I really can't believe that a plant in the North-East is suffering and the US is not.

“It would be a massive blow for this region's economy if this plant was to close, and equally disappointing to the efforts in reducing carbon footprint through bioenthanol.”

North-East MP Fiona Hall, who fought to stop US companies avoiding tariffs on imported ethanol through EU loopholes, said the EU and the UK Government had to look at new measures to reduce greenhouse gases to help biofuel companies progress.

She said: “One of the problems is that there is uncertainty over the future of biofuel.

“There is a reasonable prospect that this situation with Ensus will be resolved and we have to push to make sure legislation goes through to give it a market to grow in.”

Ian Swales, Redcar's Liberal Democrat MP, who also campaigned against the EU loopholes, said: “This plant is a valuable part of the local economy and I am optimistic they will be back online soon.

“The Government is committed to biofuels and I hope Ensus can support this growing market.”

Peter Sopp, Ensus chief executive, said the company was confident in its future and that of the biofuels sector.

He said: “We believe it is critical that the Government continues to support the use of high quality sustainable biofuels.

“We are able to supply genuine environmentally sustainable ethanol to satisfy demand, but market conditions are working against us at the moment.”