Corus deal safeguards 1,700 jobs at Teesside steel plant

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The Independent Online

The long-term future of Corus's Teesside steelworks was secured yesterday after the Anglo-Dutch group struck a deal to sell three-quarters of its output to a consortium of overseas steel companies for the next 10 years.

The long-term future of Corus's Teesside steelworks was secured yesterday after the Anglo-Dutch group struck a deal to sell three-quarters of its output to a consortium of overseas steel companies for the next 10 years.

The agreement safeguards 1,700 jobs at the plant which Corus had warned would be under threat if it could not find a partner or long-term customer for its output.

The consortium is made up of three companies - Duferco, an Italian-Swiss steel trader, Marcegaglia of Italy and Mexico's Imsa. A fourth company, the Korean steel supplier Dongkuk, is expected to join before the agreement takes effect in January.

Over the 10-year period, the consortium will buy 78 per cent of Teesside's annual output of 3.3 million tonnes at cost price and then pay Corus $157m (£81m) on top, including an up-front sum of $73m. Corus will take the balance of the plant's output. The consortium has also agreed to fund 76 per cent of Teesside's investment needs, which are expected to reach about $100m over the 10 years.

Corus had originally planned to sell a majority stake in Teesside outright but a spokesman said the deal it settled upon was more advantageous in light of the sharp increase in steel prices and supply shortages.

The spokesman said: "[The deal means] we get the same advantages of a joint venture in terms of an upfront payment and a contribution to capital expenditure but we get to retain ownership of the assets."

The deal largely completes the restructuring of Corus undertaken by its chief executive, Philippe Varin. He has already rationalised its Sheffield-based engineering steels business, sold its American operations and raised fresh capital. The one big remaining task is to find a buyer for its aluminium division.

Michael Leahy, the general secretary of Community, which was formed through the merger of the Iron and Steel Trades Confederation and the textile workers union, said the deal appeared to safeguard the plant and the terms and conditions of the workforce.

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