Corus Fails to Reach Alternative Solution with Teesside Offtake Consortium
07/24/2009 - Corus meets with the four members of the steelmaking consortium that were to have taken almost 78% of the output from Teesside Cast Products to discuss alternatives that could help to preserve operations at Teesside.
Corus met this week with the four members of the steelmaking consortium that were to have taken almost 78% of the output from Teesside Cast Products (TCP) to discuss the agreement. The consortium was Teesside’s single largest customer.
The offtake consortium — comprising Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd (through Steel Invest Trading SA) and Ternium Procurement SA — unilaterally terminated their contract with Corus on April 7, 2009, jeopardizing Teesside Cast Products’ and its 1940 employees’ hopes for a sustainable future. The offtake agreement, which came into effect in January 2005, was not due to expire till the end of 2014.
Marcegaglia and Dongkuk had signed a non-binding Memorandum of Understanding to buy TCP in January 2009, but later (June 2009) relinquished their exclusivity under the MoU.
Corus has been investigating options to keep the plant open since receiving the consortium’s termination notice, and presented the consortium with a number of options during its meeting this week. At the conclusion of the meeting, however, Corus concluded that the consortium would be unable to guarantee long-term offtake in sufficient volume to preserve operations.
“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,” said Corus CEO Kirby Adams. “We have kept the plant going for 100 days without any external business and continue to do everything in our power to keep TCP in operation despite the consortium’s breach of contract and the economic downturn.”
While negotiating with the consortium and other potential slab buyers, Corus maintained operations by loading the plant with internal orders, managing to stretch TCP’s order book until the end of August. The company has also been generating external enquiries for TCP’s high-quality slab products, and said it is likely that the September order book would be filled within the next few days.
Corus had recently announced workforce reductions affecting up to 366 employees at its Scunthorpe facility (July). This news followed a late June announcement of a workforce reduction that was to affect up to 2045 employees, and a late January announcement that was to affect up to 3500 employees.
Corus had recently announced workforce reductions affecting up to 366 employees at its Scunthorpe facility (July). This news followed a late June announcement of a workforce reduction that was to affect up to 2045 employees, and a late January announcement that was to affect up to 3500 employees.
Corus, Europe’s second-largest steel producer, supplies steel and related services to the construction, automotive, packaging, mechanical engineering and other markets worldwide. It is a subsidiary of Tata Steel, one of the world’s top ten steel producers. Following the acquisition of Corus in 2007, the combined enterprise has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.
