BURNLEY firms using scrap metal are being hit hard by shortages of the material which is now being exported to China and India, according to the town's MP.

Burnley MP Peter Pike highlighted the problem in a Commons debate.

He spoke out after speaking to two manufacturers in his constituency who use scrap iron and nickel in their processes.

Both Lupton and Place and Lupton Smallshore have been hit hard by the export of scrap metal. They said aluminium was now attracting such high prices that British smelters could no longer afford to buy the scrap. The price of scrap iron had risen from £85 per ton to £142 per ton in 12 months.

The price of nickel, a key component for many manufacturers, had actually doubled from £8,000 per ton to £16,000 per ton.

Not only does this hit manufacturers because of high prices but it also means that the Chinese and Indian companies can undercut them for the finished manufacturing products because their labour costs are lower.

Government Minister Gerry Sutcliffe - who worked in a foundry when he was 19 - said he was concerned about the problems but said that the availability of scrap metal, particularly scrap iron, was subject to a market where people in the most need, pay the most money.

But he accepted that the sheer pace of growth in Chinese demand was causing problems for all scrap users.

After the debate Mr Pike said: "This is an important issue. Costs of smelters scrap metal and other problems are having a major impact on manufacturing industry.

"We cannot become dependent on other countries for raw material, and we must ensure that we do not lose our remaining manufacturing base.

"More needs to be done to ensure that developing countries do not use cheap labour to undercut our costs and carve us out of industries that have been part of the back bone of this country."