Steel mothballing

Steel-maker Corus is considering mothballing its Teesside Cast Products (TCP) plant in north-east England.

The situation has arisen because of a failure by four international slab buyers to fulfil their obligations under an offtake framework agreement (OFA). The OFA was signed with Corus in 2004 and committed the buyers to purchase just less than 78 per cent of the plant’s production for 10 years.

Owing to that fact, the company has commenced discussions with employees and their representatives about what can be done to mitigate the impact of mothballing the plant on the 1,920 TCP employees. Any decision to mothball is likely to lead to a significant number of redundancies.

The signatories to the OFA, which include Marcegaglia, Dongkuk Steel Mills, Duferco Participations Holding and Alvory SA2, agreed to buy their share of TCP’s output at cash cost. Last month, however, the consortium unilaterally initiated moves to terminate the contract, thereby making the TCP operation unviable.

Corus is using all legal means to ensure that the terms of the 10-year OFA are fully enforced and that the four consortium members live up to their contractual obligations. Alongside these actions, Corus will explore alternative options that might secure a viable future for TCP and its employees.

'I am extremely disappointed that the consortium members have seen fit to take this irresponsible action,' said Corus chief executive officer Kirby Adams. 'Their unilateral termination of a legally binding 10-year contract could bring to an end a fine heritage of steel making at Teesside.'

Terry Pye, the national officer of the Unite union, added: 'The failure of the consortium to live up to its obligations is potentially disastrous news for these workers at Corus's Teesside plant. The unions will be meeting with Corus early next week, where we will be urging the company to do everything possible to protect the jobs of the workers at the Teesside plant.

'Our members have worked extremely hard for this consortium and they will be outraged by its decision to pull out of this legally binding agreement and jeopardise the livelihoods of so many workers,' he said.