Consortium deal pull out may hit 2,000 jobs at Corus
09 May 2009
Tata Steel's UK-based European subsidiary, Corus, says it would cut 2,000 jobs and close down production at its Teesside facilities after the plant's main customer refused to honour a purchasing agreement.
The Corus company, Teesside Cast Products had a 10-year contract to supply slab steel to a consortium of four buyers. However, the consortium has backed out of the deal, and Corus warned that substantial redundancies ahead.
The company has initiated legal proceedings against the consortium comprising Marcegaglia, Dongkuk Steel Mills, Duferco Participations Holding and Alvory in a bid to force them to honour their commitment. The four companies lift around 78 per cent of Teesside's 3.5 million tonnes of the steel it produces every year.
The company has warned today that if the bid failed it would have to mothball the Tesside facility which would lead to very significant number of redundancies.
The Teesside facility produces high quality slab steel for further processing by its customers. Falling demand due to the economic slowdown has already forced Corus to slash 3,500 jobs, including 2,500 in the UK as the company has reduced production. The company formed from what was originally British Steel has a workforce of 22,000 in the UK and is Europe's second largest steel producer.
Chief executive, Kirby Adams said the was extremely disappointed with the irresponsible action of the consortium members who have terminated a legally binding ten-year contract that would bring to an end a fine heritage o steelmaking at Tesside. He added that the company regretted the distress the action would cause to the company's dedicated employees who have worked steadfastly in the interests of the consortium.