Corus UK Limited,the European arm of Tata Steel,has signed an agreement with Sahaviriya Steel Industries Public Company Limited,Thailands largest steel producer,to sell its Teesside Cast Products (TCP) business in a transaction valued at around US$ 500 million (GBP 320 million). The deal,if successfully concluded,is expected to create a significant number of new jobs at the plant in addition to TCPs existing workforce of over 700 and will provide a considerable boost to the local economy. The assets covered by the MoU include the Redcar and South Bank coke ovens,TCPs power generation facilities and sinter plant,the Redcar Blast Furnace and the Lackenby Steelmaking facilities. A sale agreement would also result in Corus and SSI operating Redcar Wharf (TCPs bulk terminal) as a joint venture,giving Corus the flexibility to use Teesside to serve its other steelmaking operations,while also meeting SSIs requirements on Teesside.
Corus MD and CEO Kirby Adams said: We are very pleased to announce this significant progress in our long-held objective to sell the TCP assets to a strategic industry investor. This is the first of several steps required to reach a definitive sale agreement in the coming months which,with the anticipated co-operation of Government,employee representatives and the North East community,should result in the restart of steelmaking on Teesside in the first half of 2011.
Having known SSI for the past ten years,I am confident that our collaborative efforts in the period ahead will provide a more sustainable business for the people of Teesside, Adams said. Corus and SSI will continue their negotiations,as well as holding talks with trade unions and the Government in coming weeks and months with the aim of finalising the terms of a sale agreement as soon as possible.
Win Viriyaprapaikit,President of SSI said: We have great respect for the tradition of steelmaking on Teesside and for the highly skilled Teesside workforce,having previously purchased slab from Teesside Cast Products. For the past year we have held very constructive negotiations with Kirby Adams and the Tata Corus team and we look forward to engaging with all stakeholders in the same spirit of co-operation to secure a final agreement.
This transaction will enable SSI to fulfil its long-standing objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities, he said. Corus is Europes second largest steel producer. With main steelmaking operations primarily in the UK and the Netherlands,Corus supplies steel and related services to the construction,automotive,packaging,mechanical engineering and other markets worldwide.
Italys Marcegaglia SpA,South Koreas Dongkuk Steel Mill Co,Luxembourg-based Alvory SA and Swiss-Italian steelmaker Duferco Participations Holding walked away from the 10-year contract for supply of slab steel from the plant. Corus had earlier said that it had incurred a loss of about US$ 233 million running its Teesside plant in northeast England,even though it was finding it difficult to produce or sell its products.