Corus has come closer to selling its mothballed Teesside Cast Products (TCP) plant after Sahaviryia Steel Industries Public Company (SSI) signed a Memorandum of Understanding, which sets out the scope of a potential transaction in which SSI would buy the facility for £320m.
It confirms rumours that SSI has been in talks with Corus over the sale of the plant for a while, which MRW reported in May this year.
The deal would see SSI take over the Redcar and South Bank coke ovens, TCP’s power generation facilities and sinter plant, the Redcar blast furnace and the Lackenby steelmaking facilities. A sale would mean Corus and SSI would operate Redcar Wharf – TCP’s bulk terminal – as a joint venture. This would leave Corus free to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements on Teesside.
Corus managing director and chief executive Kirby Adams said: “We are pleased to announce this significant progress in our long-held objective to sell the TCP assets to a strategic industry investor.
“This is the first of several steps required to reach a definitive sale agreement in the coming months which, with the anticipated co-operation of the Government, employee representatives and the north east community, should result in the restart of steelmaking on Teesside in the first half of 2011. Having known SSI for the past 10 years, I am confident that our collaborative efforts in the period ahead will provide a more sustainable business for the people of Teesside.”
Corus and SSI will now continue negotiations and hold talks with trade unions and the Government, with the aim of finalising the terms of a sale agreement as soon as possible.
If successful the deal will create a significant number of new jobs in the plant in addition to the existing 700-man workforce. When the plant was mothballed at the end of 2009, 1,700 people were made redundant.
SSI president Win Viriyaprapaikit added: “We have great respect for the tradition of steelmaking on Teesside and for the highly skilled Teesside workforce, having previously purchased slab from TCP. For the past year we have held constructive negotiations with Kirby Adams and the Tata Corus team, and we look forward to engaging with all stakeholders in the same spirit of co-operation to secure a final agreement.
“This transaction will enable SSI to fulfil its long-standing objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities.”