Tata Steel, Britain's largest steelmaker, may cut up to 720 UK jobs in a revamp of its speciality and bar business, which has been hit by cheap imports and high energy costs, it said on Thursday.

Most of the jobs at risk are at the company's operations in Rotherham, Northern England.

“We have invested more than £20 million pounds in recent years in our speciality steels business. We want to play our role in reinvigorating the UK's manufacturing industry, but increasing imports and high energy costs have further undermined the competitiveness of foundation industries," Karl Koehler, chief executive of Tata Steel's European operations, said in a statement.

The speciality and bar business is being refocused on high-value markets such as aerospace, as British and European steelmakers in general struggle to make profits on commodity grade steels which can be imported cheaply from China.

Tata Steel, Europe's second-largest steelmaker, said it would work with staff and trade unions to redeploy affected employees if possible and minimise compulsory redundancies.

The Community union said it would oppose compulsory redundancies.

“This is a smack in the face for the workforce. Since 2009 the business will have gone through three restructurings, which if this proposal goes through, will have seen the loss of 2,500 jobs," Stuart Sansome, Community's national executive councillor, said in a statement.

Tata Steel has been forced to slash costs since 2007 when it bought Anglo Dutch producer Corus for $13 billion. It currently employs around 17,000 people versus some 25,000 in 2008.

The UK steel sector currently employs about 20,000 people directly, down from as many as 200,000 in the 1970s.

The government, in its bid to diversify the economy away from financial services, has implemented numerous measures to help heavy industry, but both Tata Steel and the unions believe they are not enough.

“Now is the time for government to act. Foundation industries like ours urgently need a competitive business environment and a government willing to strengthen UK manufacturing supply chains,” said Koehler.

Roy Rickhuss, general secretary of Community, called on the government to support energy intensive industry.

“It is clear the UK steel industry is in a perilous state and Tata Steel is particularly affected. We have been saying for years that uncompetitive UK energy costs are damaging the UK steel industry,” he said. - Reuters