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.