British Steel to spend pounds 97m on US plant

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BRITISH Steel is creating its first wholly-owned steel making operation outside the UK with its biggest single investment project for four years, writes Russell Hotten.

The company will spend pounds 97m upgrading a factory in Alabama so that it can produce a million tons of steel a year for the US market.

Brian Moffat, chief executive, said recently that he wanted a better spread of assets overseas, though most observers assumed that he was looking towards the emerging Far East markets.

British Steel's existing factory, at Tuscaloosa, rolls about 500,000 tons of steel each year from slabs sourced from the UK. New furnaces, and other equipment from British Steel's defunct Ravenscraig plant, will be installed to enable the site to make and press its own steel from raw materials from the US and UK.

Annual sales from Tuscaloosa are dollars 190m. Although the factory is doubling its capacity, British Steel would not forecast future sales. Construction work on the new plant will begin in early 1995 with a start-up date planned for late 1996. The present workforce of 290 should rise by another 130.

The company has been investing heavily in developing new products, particularly high- strength steels for the motor industry. The material coming out of Tuscaloosa will be of higher quality, targeted at key clients such as automotive manufacturers.

Last month British Steel's bid to become a more global player took a step forward when it announced plans for a joint venture company with the Malaysian construction group Zelleco to set up a steel roll mill in Kuala Lumpur.

British Steel recently opened an office in Vietnam. The company's strategy has been to set up a series of joint ventures in Asia, but it is also talking to potential partners in Germany and France.