ENVIRONMENTAL problems at a North-East shipyard could prevent it from being brought back into operation.

The Cammell Laird yard, on the banks of the river Tees, at South Bank, near Middlesbrough, has been mothballed since April after the company went into liquidation.

Earlier this month, Southampton repair and conversion firm A&P Holdings bought the company for an undisclosed sum.

The new owner has an option on the Teesside yard, but local MP Vera Baird fears the cost of a chemical clean may hamper its chances.

The river has pollutants known as Tributyltin (TBTs), which will have to be dredged and taken to a landfill site.

TBTs are a heavy metal compound normally used in paint to protect ships from barnacles. However, it is believed to cause neurological and immune system damage in humans. British and Dutch tests have also shown TBTs can cause mutations in marine shells.

Ms Baird said the company was aware of the problem and was "surprised" at the cost of resolving it. It has refused to disclose the cost.

Ms Baird told board director Brian Slade that the yard had another prospective buyer - former yard owner Eric Welsh - who planned to employ 150 people within 18 months by recapturing markets it once served.

She said later: "Mr Slade told me that at this stage A&P had ruled nothing in and nothing out."

She has discussed the possibility of a partnership to deal with the pollutants, which could include herself, the company, Redcar and Cleveland Borough Council and the regional development authority, One NorthEast.

A spokesman for A&P said the company had no further comment.