Corus is to mothball its Teesside Cast Products Plant at the end of January 2010, after efforts to find a long-term solution to rescue the plant failed.
The plant, which employs 2,300 people, will make 1,700 people redundant after the announcement today that it will be closing TCPs Redcar blast furnace, Lackenby steelmaking and South Bank coke ovens. Initially, it was thought that another 600 people would also lose their jobs however, these will now be saved. Additionally, Redcar Wharf, Redcar coke ovens and some power generating capacity will be kept open and there are no plans to mothball any of the other facilities.
Mothballing costs through redundancies and closing other contractual agreements will leave Corus £80M out of pocket.
The decision comes after four international slab buyers who had committed to buying around 78 per cent of the plant production in a 10 year contract with Corus in 2004, terminated it after just three years. Corus is currently seeking legal action against the group of firms.
In a press conference call today, Corus chief executive Kirby Adams said he had told workers the news in person this morning.
He said: I didnt join Corus to close plants and the only thing worse than closing a plant is having a fatality. Its a very sad day for all of us here.
Adams said that the TCP plant had been surviving by finding enough orders on a month by month basis but it has made £130M losses from April to September and Corus has lost £700M over the same time period. He added: In the current global steel environment the International slab market is now too weak and the competition too severe for Corus to support a plant of TCPs size, risk and need for ongoing capital. As a result, the TCP plant has become an unsustainable business for Corus alone.
Adams said that those grades currently produced at the Teesside plant will be made at its other facilities and it will be building stocks of this in January.
A scrap metal merchant in the area commented: Corus has been taking reduced tonnage for the last three to four years, so there will not be such a dramatic affect on the industry as it would have five years ago.
There wont be a huge affect on the scrap market because over the last 12 months Corus has been coming in and out of the market. Therefore, those scrap traders supplying it will have already established new routes for their scrap because they wouldnt be able to rely on Corus alone however, it will be devastating for the area. There was always a possibility of it happening but sadly there was still a hope that it wouldnt.