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Broken Contract Leads to Mothball of Teesside Plant

12/07/2009 - Corus says that an international consortium has broken a binding contract that has led to the partial implementation of a proposal announced in May 2009, mothballing some of the facilities belonging to the Teesside Cast Products business in northeast England.

Corus says that an international consortium has broken a binding contract that has led to the partial implementation of a proposal announced in May 2009, mothballing some of the facilities belonging to the Teesside Cast Products (TCP) business in northeast England.
 
TCP’s Redcar Blast Furnace, Lackenby steelmaking and the South Bank Coke Ovens will be mothballed at the end of January 2010. Corus intends to keep open a number of operations, including the Redcar Wharf, Redcar Coke Ovens, and some of the power generating capacity. 
 
The partial mothballing will result in the loss of about 1700 jobs, around 600 fewer than originally thought.
 
Corus will continue to have a presence in the Teesside area, employing more than 2000 people at operations in Hartlepool, Skinningrove, the Teesside Beam Mill and Teesside Technology Centre.
 
The decision to partially mothball TCP follows Corus’ efforts over the past eight months to secure a long-term future for the plant after four international slab buyers failed to fulfill their obligations under a 10-year contract that they signed with Corus in 2004. The contract called for the consortium to buy about 80% of the plant’s production for 10 years.
 
Since the consortium broke this legally binding agreement, from which it made an estimated $800 million profit, Corus says that is has diverted internal orders to TCP. The company also says that it has been securing external orders on an ad hoc basis in a bid to keep the plant open while an alternative solution was sought, reportedly costing the company about £130 million.
 
Operating a 3 million tonnes per year merchant slab plant is not sustainable without a long-term strategic partner, according to Corus.
 
“We are acutely aware that this will be devastating news for our employees, our contractors, their families, and the local community,” said Chief Executive Kirby Adams. “We extend our sincere gratitude to all of them, as well as to the management team and the trade unions on Teesside, who have all worked night and day to try and avoid this outcome. This is the last thing we wanted, and we feel deeply about what is happening.”
 
Corus says that it will work with government agencies to help the affected employees get access to the support and assistance they need.