Tata Steel's Corus, Europe's second-largest steel company is reported to be close to signing an agreement to sell a majority stake in the Teesside Cast Products steel plant in the North East England for approximately $450 million.
Corus will sell a 75-per cent stake to South Korean steel re-roller Dongkuk Steel Mill Co and Europe's largest independent consumer of steel, Marcegaglia of Italy. While Corus ould retain 25 per cent, the stake sale will lead to the Italian company acquiring a majority stake of 40 to 45 per cent, with the remaining being picked up by Dongkuk.
Corus is reportedly looking to sell even the remaining 25-per cent stake in the plant, which it acquired from British Steel in 1999.
The South Korean steel roller and Marcegaglia had been lifting part of their slab needs from Teesside plant since 2005 under a supply contract signed for 10 years.
For Marcegaglia, the deal is what it had been looking for in the past as it always had ambitions to own a slab steel making plant and the Teesside Steel Plant is ideal as it is efficient, having a huge blast furnace and is ideally located near the sea.
Experts feel that although Teesside Steel Plant has a huge blast furnace, it still requires a dose of investment if the furnace is required to operate beyond 2014.
With Corus axing 3,500 jobs globally, (See: Corus sheds 3,500 jobs) the 2,000-plus workers at the Teesside Cast Products steel plant will now be secure.
Last week, Corus, signed a share purchase agreement to sell two aluminum smelters to Briand Investments B.V., an affiliate of London-based Klesch, one of the biggest private-equity firms in the metals industry for an undisclosed sum at a time when prices and demand for the metal has fallen globally. (See: Corus sells last aluminum smelters to PE firm)
Corus currently employs about 42,000 people, out of whom 2,500 were rendered redundant in the UK and another 1,000 in Europe, though the company said that it will make every effort to restrict the job losses to voluntary redundancies, whilst retaining critical skills in the business.
Last month Corus had announced 400 job cuts to align its production with a demand slowdown in Europe, caused by the global economic downturn, in its distribution and building systems division in its units at Shotton, Wolverhampton, South Wales and Leeds (See: Corus raises production cuts to 30 per cent; axes 400 jobs)
Tata Steel had anounced yesterday that Corus will cut production by 40 per cent from the current month.