Tata Steel holds off plan to sell Teesside plant in UK

21 May 2009

Tata Steel will not sell a stake in its Teesside Cast Products (TCP) unit in northeast England to Italy's Marcegaglia and South Korea's Dongkuk Steel, J J Irani, director of Tata Sons, the holding company of Tata Steel, informed reporters at a steel conference in Mumbai on Wednesday.

"Operations are on just now at Teeside as before. There is no question of selling the plant to them now," Irani said.

In January, Corus, the European subsidiary of India's Tata Steel, Marcegaglia and Dongkuk signed a memorandum of understanding, with a view to Marcegaglia and Dongkuk jointly acquiring a majority stake of 80 per cent in TCP which was valued at an estimated $600 million, while Corus would retain a minority holding. The validity of the MOU expires in June.

Tata Steel, the world's sixth largest steel maker, said it is looking for the prospective buyers with a longer-term view on the Teesside unit.

Both Marcegaglia and Dongkuk Steel were part of the four-member consortium which executed a large contract with Corus, for the purchase of products from the Teesside plant, but failed to honour it under the changed market conditions.

The other two members of the consortium were Alvory SA, a subsidiary of Ternium SA – a steel producer with operations in North and South America – and Duferco Participations Holdings, a European steel trading and production company.

Earlier in May, Tata Steel's European arm Corus announced the possibility of an indefinite suspension of its Teesside operations as the consumer consortium cancelled the contract to buy the Teesside plant output. (See: Consortium deal pull out may hit 2,000 jobs at Corus)