Steel giant TATA has welcomed a GBP 250 million support package for energy intensive industries announced by the Chancellor Mr George Osborne. But it has warned it might not be enough to insure UK steel making from the deep malaise afflicting the European economies.

Measures announced in Mr George Osborne's Autumn Statement last week offered a mixture of compensation and tax relief to counteract higher costs as a result of the carbon price floor price, and other costs caused by the European Union's emissions trading system.

The move came after TATA claimed, following the budget in March 2012, that a new super tax on heavy industries reliant on carbon based fuel represented a potentially severe blow to the sustainability of UK steel making and prompted fears the firm could leave the UK.

Now Mr Osborne has told Parliament that he was worried about the effect green policies adopted in Britain and the European Union could have on some of the UK's heavy, energy intensive industries. He said that "We are not going to save the planet by shutting down our steel mills, aluminum smelters and paper manufacturers. All we will be doing is exporting valuable jobs out of Britain."

The government will now provide up to GBP 100 million over the spending review period to mitigate the effects of the carbon price floor on electricity costs to businesses that are electricity intensive and operate in internationally competitive markets. It will consult on the precise thresholds for eligibility, and the compensation is also subject to relevant state aid rules.

The government will also provide compensation to heavy energy users for the indirect impact of the EU emissions trading system on electricity costs of up to GBP 110 million.

Separately, the Government will increase the tax relief companies can claim from the UK climate change levy.

Responding to the announcement, Mr Karl Ulrich Koehler MD & CEO of TATA Steel in Europe said that "I welcome the positive approach to manufacturing in the Chancellor's Statement, though the crisis in Europe faces remains extremely challenging, with the outlook getting worse rather than better."

He said measures to mitigate the effects of the various reforms on energy intensive industries were a step in the right direction. He added that "Though some of the most crucial detail remains unclear and this relief could be short lived, it was good to hear the Chancellor stress that forcing steel mills out of business will do nothing more than export jobs. I cannot say that these measures will insure UK steel making from the deep malaise afflicting the European economies."

He added that "Many of the additional costs we faced before the statement will not disappear. But it is important for the UK to have a steel industry. We cannot build a sustainable, green economy on ever increasing volumes of imported manufactured goods, taking jobs away from British manufacturers and further hollowing out the UK's industrial supply chains."

(Sourced from www.thisissouthwales.co.uk)