A David v Goliath battle will begin in the north-east of England on Tuesday as the mayor of the Tees Valley (population 700,000) faces off with the government of Thailand (population 69 million) over the future of the former Redcar steelworks.
Ben Houchen, the Tory mayor of the industrial Tees Valley, wants to force three Thai banks, including one owned by the Thai state, to sell him a crucial 352-hectare (870-acre) plot on the 1,820-hectare Redcar site.
More than 2,500 jobs were lost when the plant’s Thai-based owners, Sahaviriya Steel Industries (SSI UK), went bust in October 2015, ending Teesside’s 170-year history of steel and ironmaking. Houchen wants to decontaminate and redevelop the site into a low-CO2 manufacturing hub, creating 20,000 jobs in the next 20 years.
The site has stood rusting on the North Sea coast for more than four years amid squabbles over how much it is worth. An independent valuation estimated the contested 352 hectares at just under £20m, but the banks – which lent SSI £800m in the year before it went into liquidation – claim it is worth “tens of millions of pounds more”, according to Houchen.
It currently costs UK taxpayers £20m a year just to keep the mothballed site safe, by Houchen’s calculation. About 300 people still work there as engineers, technicians and security guards.
Demolishing and decontaminating the site would cost about £190m, said Houchen. He leads a new body, the South Tees Development Corporation (STDC), that wants to redevelop the whole site, which is – as Houchen likes to point out – “three times the size of Gibraltar, six times the size of the City of London and 1.5 times the footprint of Heathrow.”
STDC has already acquired 575 hectares of land on the site but a 12-day public inquiry begins on Tuesday to decide whether the government can grant the STDC a compulsory purchase order (CPO) on the SSI land.
Redcar voted in its first Conservative MP in December, and in January the government committed £71m to pay for the CPO and future decontamination work.
After his surprise election as mayor in May 2017, Houchen began negotiations to secure the former SSI land with the three banks in Thailand who hold a charge over the SSI UK’s assets – Tisco, the Siam Commercial Bank and the state-owned Krung Thai bank.
In May 2018 Houchen flew to Thailand to try to persuade the banks to sell up. He returned home with what he thought was an agreement, only for the Thai bankers, led by Krung Thai, to change their minds over what the site was worth and play what he calls “a load of silly games”.
He said: “It is an absolute travesty that the UK taxpayer has to pay a penny for any of this, all because there was a bad business deal done by SSI UK, which went bust, and three Thai banks who can’t get their money back.
“There absolutely needs to be a review of what mechanism is in place for large industrial complexes and businesses if a company goes bust.”
Houchen noted that Teesside was also home to the largest chemical works in western Europe. He said: “God forbid any of that goes bust because we will be in the same position.”
The banks all object to the CPO, saying “a gross lack of transparency exists due to STDC’s near total failure to publish its relevant meeting agendas, reports and minutes”. They also accuse the Tees Valley combined authority, led by Houchen, of hiding behind confidentiality clauses to avoid handing over “key documentation”.
Houchen said the Thai banks did not understand the importance of the site for Teesside, which produced steel for landmarks like the Sydney Harbour Bridge, Canary Wharf in London and the new World Trade Center in New York.
He said: “I met the Thai ambassador to the UK in London to impress on him the importance of it, and he seemed completely disengaged. He said he would follow up with me on a number of points and I never heard from him again.”
