3000 jobs at Corus in jeopardy as consortium ditches agreement



The consortium was buying four-fifths of the steel the plant produced.

Corus said it has found orders to keep the plant open until September but could not rule out the possibility that it will be mothballed before the end of the year.

Corus chief executive Kirby Adams said: "We feel great sympathy with our employees and the Redcar community because of the continuing anxiety they are experiencing about their future due to the consortium's termination of the offtake agreement without notice.

"We have kept the plant going for 100 days without any external business and continue to do everything in our power to keep Teesside Cast Products (TCP) in operation despite the consortium's breach of contract and the economic downturn."

Corus is particularly dismayed because the contract with the consortium meant it sold the steel at cost, allowing the four firms to take advantage of a higher market price.

For the last four years they have profited from the contract on the back of booming demand from China. But, now that steel prices have tumbled, they have ditched it for being potentially loss-making, the company said.

Corus said it has filled the plant's order book until the end of August, though largely through internal orders from other parts of the Corus business.

The four consortium members - Marcegaglia of Italy, Dongkuk Steel of South Korea, Duferco Participations of Switzerland and Alvory of Argentina - decided unilaterally to terminate a 10-year contract signed in late 2004 to buy 78 per cent of TCP's production.

Corus initially took legal action but decided to drop it in an attempt to reach a new agreement. It made three proposals to the consortium, all of which were rejected last night. It is now looking for a potential buyer and seeking new customers for the slab steel plant, which is responsible for nearly 25 per cent of Britain's steel output.

The company said: "Unfortunately it was clear from the meeting that the consortium  is unable to guarantee long-term offtake in sufficient volume, and that Corus needs to pursue other solutions.

"Only since the middle of June has Corus been free to explore alternative transactions that might lead to an acquisition of TCP. However, the extended order book will give extra time for the company to pursue a long-term solution for the business."

Liked the story?

  • 0

    Happy
  • 0

    Amused
  • 0

    Sad
  • 0

    Frustrated
  • 0

    Angry