Corus UK Limited, a subsidiary of Tata Steel, is selling its Teesside Cast Products (TCP) business in a transaction valued at approximately $500 million (GBP320 million), to Sahaviriya Steel Industries Public Company Limited (SSI), Thailand’s largest steel producer. Both companies have signed a Memorandum of Understanding (MoU). Tata Steel bought Corus in 2007 for £6.7 billion.
The assets covered by the MoU include the Redcar and South Bank coke ovens, TCP’s 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 (TCP’s bulk terminal) as a joint venture, giving Corus the flexibility to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements on Teesside.
The deal, if successfully concluded, is expected to create a significant number of new jobs at the plant in addition to TCP’s existing workforce of over 700 and will provide a considerable boost to the local economy, said a release from Corus.
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.”
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 fulfill its long-standing objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities.”
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, added the release.
Gordon Brown’s government pledged £60 million to help Teesside recover from the mothballing, but the unions argued the money would have been better spent keeping the steelworks open, said a report from Telegraph newspaper. However, with the hung parliament and uncertainty over industrial policy, even those subsidies could be on the line.
Steel has been produced on the Teesside site for 160 years, but its survival was thrown into turmoil when a consortium of international investors suddenly pulled a 10-year contract. Corus has already cut about 6,000 jobs in Britain and the Netherlands since the start of 2009, the report says.
Corus is Europe’s 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.
The combined Corus and Tata Steel enterprise has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.