UK steel industry faces threat from Russian investors in Corus

A major Russian shareholder in Corus yesterday called on the steel maker to consider abandoning the UK if it fails to turn around its losses.

The plea from the aluminium tycoon Oleg Deripaska came as a fellow Russian businessman, Alisher Usmanov - the metals entrepreneur who has built up a 13 per cent stake in Corus - put forward a candidate to sit on the board. He believes Corus's British arm is mismanaged and wants to see more Dutch influence on the way it is run.

Mr Usmanov, known as the "hard man of Russia", has proposed Aad Van der Velden, a former manager at Corus, as a non-executive director, to improve performance. Mr Deripaska, a business associate of Mr Usmanov, supports his appointment. It is understood that the backing of Brandes, a 15 per cent US shareholder in Corus, has also been sought.

"We are not very impressed with the performance of the UK business. I can't think of a better environment for the steel industry at the moment - it is the only steel company we have been able to find in the world that has generated such poor results," said David Geovanis, the managing director of Basic Element, which manages Mr Deripaska's assets. He said an exit or sale of all or part of Corus's business in the UK should be considered by the board if there was not a dramatic improvement in results. "If they can't figure out how to make money from it then maybe they shouldn't be doing it. It's not rocket science. It's steel production," Mr Geovanis said.

Five years after British Steel merged with the Dutch company Koninklijke Hoogovens to create Corus, the company is still unprofitable. The merger was supposed to create economies of scale, but since then losses of some £2bn have piled up and it is the company's UK arm that is seen to be dragging down the group while the Dutch division powers ahead. The group last month reported a £208m loss for 2003, despite huge demand for steel from China and India.

The two Russian shareholders, although not acting together, are preparing to grill the board over the performance of the UK business at its annual meeting next week. "Mr Usmanov is concerned that the British arm is not run as efficiently as it could be and value could be unlocked by introducing the Dutch management style," a spokesman for Mr Usmanov in Moscow said yesterday. "He thinks the big picture put forward by the management is blurred. He wants to know what the real financial situation of the business is.

"You can't tell how each division is performing - how much the Dutch are making and how much the British are losing. We do have confidence in the chief executive, but by putting a Dutch representative on the board, Mr Usmanov wants the whole group to share in the experience of the successful Dutch operations." Mr Usmanov yesterday insisted Mr Van der Velden would be an independent board member.

A number of changes have already taken place at the company that have reduced its British influence. Philippe Varin, the chief executive, last month replaced a third of his top 50 executives, resulting in a 12 per cent drop in the number of Britons among its senior team.

Mr Usmanov is said to have no plans to insist on the closure or sale of Corus's UK operations, but Farhad Moshiri, who runs Gallagher Holdings, the investment vehicle that holds Mr Usmanov's Corus stake, said Mr Usmanov did want to see overheads reduced and the company streamlined.

Some analysts believe it would be too costly for the company to exit the UK. But the mystery surrounding Mr Usmanov's investment has raised alarm among unions. Its Teesside plant is thought to be most at risk. Michael Leahy, the general secretary of the ISTC, has written to Mr Usmanov asking for a meeting to discuss his intentions for his investment. Corus made 1,300 redundancies in the UK last year but still employs 25,400 people here.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions