The steel giant Corus is set to sell its mothballed Teesside Cast Products (TCP) plant to Sahaviriya Steel Industries (SSI) of Thailand for $500m (£323m), ending months of uncertainty and potentially creating hundreds of skilled jobs.
More than 150 years of steel-making on Teesside came to an end in late February when TCP's blast furnace was taken offline after the four international steel companies contracted to buy the majority of its output walked away from the 10-year deal in April 2009.
But a memorandum of understanding signed by Corus and SSI yesterday offers the industry in Redcar a new lease of life as the two companies enter a period of exclusive negotiations to thrash out the details of the sale.
Both sides are keen to stress that the deal is not yet done but, if all goes well, TCP could reopen in the first half of next year. "This is great news for re-employment and economic growth in part of the North-east of England that desperately needs it," Kirby Adams, the chief executive of Corus, said.
Under SSI, TCP would return to full capacity, producing 3.5 million tonnes of steel "slab" for export to SSI's rolling plants in Thailand. The sale would also create a joint venture between SSI and Corus to operate Redcar Wharf.
Alongside talks with Corus, SSI will start discussions with the Government and trade unions. The president of SSI, Win Viriyaprapaikit, said talks with the Government would focus on "a range of issues" and it was "too early to say" whether they would include the option of financial support.
The Thai group is keenly aware of the long history of steel-making in the region. "The people of Teesside have 150 years' tradition of steel-making. Everyone is very passionate about steel-making and we have been very impressed by that and by the quality of the products they have made," Mr Viriyaprapaikit said.
He confirmed that the 700 staff left at TCP would be offered the same employment terms and conditions as in their current roles but was unable to say whether the several hundred new staff SSI would need would be offered the same terms.
Vince Cable, the Business Secretary, gave the move his full backing yesterday. "I warmly welcome this development, which may see the restoration of steel-making on Teesside and a huge economic boost to this region," he said. "We have made both parties aware that the Government stands ready to help as discussions on a potential purchase continue."
The deal was also applauded by trade unions representing the region's steelworkers. Michael Leahy, general-secretary of the Community union, said: "The resumption of production on Teesside will rejuvenate the local area, get people back into work and ensures a strong future for the British steel industry."
Corus claimed the memorandum of understanding was evidence that it had been unfairly criticised for mothballing TCP. It said keeping the plant open was unaffordable but it had remained committed to selling it, keeping on some 700 staff at the site's coke-making and power plant operations, which remained open, and absorbing many of the other redundant workers at other Corus plants in the region.
There had been only 30 compulsory redundancies among TCP's workforce of 2,200, Mr Adams said.