Corus reprieves Llanwern with £35m overhaul

The British steel industry yesterday received its first significant boost for years when assurances were issued over the future of thousands of jobs at one of the country's biggest plants.

The British steel industry yesterday received its first significant boost for years when assurances were issued over the future of thousands of jobs at one of the country's biggest plants.

Ending months of speculation, the steel company Corus registered its intention to press ahead with a £35m overhaul of a blast furnace at the Llanwern complex near Newport in South Wales. The decision should mean that the 3,000 jobs at the plant are safe for the foreseeable future, although the company said the investment would be "the subject of an ongoing business review ... to ensure that it continues to be in the overall interests of the company".

Unions welcomed the announcement on the basis of assurances that the project would go ahead in the absence of a "major economic earthquake". Corus has axed thousands of jobs in recent months, largely because of the strength of sterling.

Nick Cragg, managing director of Corus Strip Products, said job cuts could not be ruled out, but he added that the decision should be seen as good news for the plant. He saidCorus had considered not going ahead with the project to re-line the furnace, which will take about 60 days next summer.

Mr Cragg said the review was necessary because the pound showed no signs of weakening against the euro.

"In these circumstances it is difficult to take a very long-term view, especially on a multi-million pound investment."

Mick Leahy, general secretary of the ISTC steel union, said Corus has made a "brave and bold decision".

He said: "The company still faces problems, not least the value of the pound which remains stubbornly overvalued. We do understand Corus when it says the decision is subject to the ongoing review of their businesses. But this decision is a very positive stride forward."

John Edmonds, general secretary of the GMB, urged Corus to make a definite commitment to the investment. "We welcome the fact that there is a commitment in principle ... but there is a big difference between principles and action."