Nearly 2,000 jobs in the North East are likely to be lost as Corus, the steelmaker, prepares to shut its plant in Redcar.

The company, which used to be British Steel, warned that it may close the Teesside plant because a consortium of customers pulled out of a deal to buy its slab steel. Redcar employs 1,920 people.

Gordon Brown, Lord Mandelson, the Business Secretary, and unions reacted angrily to the decision by companies from Italy, Argentina, Switzerland and South Korea to pull out of a ten-year deal, which was signed five years ago, to buy 78 per cent of Redcar’s output.

Mr Brown said: “I still hope we can keep jobs. There is an agreement that the contractors are not holding to. There is legal action taking place.”

Lord Mandelson said: “It is essential that Corus does everything it can legally, and with the Government’s assistance, to reinstate the agreement. It is unacceptable that such a development should threaten jobs on such a scale, with such a potentially devastating impact on the area.”

Michael Leahy, general secretary of Community, the steelworkers’ union, said: “This is appalling news. We cannot believe that the consortium is taking such irresponsible action that will have a devastating effect on our members and the whole community in Teesside.”

The potential job cuts follow the company’s decision in January to cut 2,500 jobs because of the slump in demand for steel.

Kirby Adams, the chief executive of Corus, said: “I am extremely disappointed consortium members have seen fit to take this irresponsible action. Their unilateral termination of a legally binding ten-year contract could bring to an end a fine heritage of steelmaking at Teesside.”

The closure of Redcar would be a further blow for Tata, the Indian conglomerate that owns Corus. It is struggling to get £800 million in loan guarantees from the Government for its Jaguar Land Rover division, which it bought last year.

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