Industry: Thailand firm in £320m deal for steel plant

The Corus plant on Teesside was partially closed when a four-nation international consortium suddenly walked away from a long-term contract to buy its products.

More than 1,000 workers at the Teesside Cast Products (TCP) site lost their jobs and there were fears of thousands more losses across the region in firms which supplied Corus with goods and services.

After months of behind-the-scenes talks, it was announced yesterday that plans were under way to sell the factory to SSI, the biggest steel producer in Thailand for 320m, raising the prospect of a "significant" number of new jobs and returning the plant to full production.

The Government, unions and local politicians hailed the announced as "fantastic news" for the North-East, which relies heavily on the steel industry for employment.

The site used to employ 2,200 before the consortium pulled out, with 700 still working at the plant and hundreds of others leaving voluntarily or switching to jobs at other Corus plants.

Talks to finalise the deal will continue in the coming months and will include talks with unions and the Government over employment details as well as the prospect of financial aid.

The president of SSI, Win Viriyaprapaikit, said: "We have great respect for the tradition of steel-making on Teesside and for the highly skilled Teesside workforce, having previously purchased slab from Teesside Cast Products.

"This transaction will enable SSI to fulfil its long-standing objective of becoming a fully integrated steel producer with both melting and rolling facilities."

He said it was too early to say how many jobs would be created, but believed it would be in the hundreds.

He also declined to say if the Government would be asked for grants or other forms of aid, but said he was looking forward to discussions with Ministers about a "wide range" of issues.

He revealed that SSI planned to produce 3.5 million tonnes of slab steel from the plant – its full capacity – and export it all to Thailand, whereas previously around four fifths of the site's output was exported to Europe, South America and Korea.

Corus chief executive Kirby Adams said: "We are very 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 Government, employee representatives and the North East community, should result in the restart of steel-making on Teesside in the first half of 2011."

The general secretary of the Community union, Michael Leahy, said: "This long overdue announcement is great news for Teesside.

"SSI have a well-earned reputation that should reassure the community that steelmaking is at the top of their agenda. The resumption of production on Teesside will rejuvenate the local area, get people back into work and ensures a strong future for the British steel industry.

"The trade unions have worked tirelessly for a resolution to this situation, and are now looking to tie up any loose ends and bring this matter to a conclusion. For our members on Teesside who have survived on a knife edge since May 2009, the sale of TCP will mark the beginning of a new and challenging era of steelmaking."

Crisis as consortium abandoned deal

The news brings the prospect of a happy ending to a saga which started last year when the consortium of Marcegaglia of Italy, South Korea's Dongkuk, Switzerland's Duferco and Alvory of Argentina walked away nearly five years into a 10-year deal to buy most of the plant's output.

Corus chief executive Kirby Adams said the company was continuing to take legal action against the four-nation consortium that pulled out of the contract last year, and he expected a successful resolution in the next six months.

He also complained that criticism he had faced this year over the future of the Teesside site was "unfair", saying the plant sale process had been complex.