Thousands of steel jobs may go if Alchemy buys Rover

Steel producer Corus may make thousands of workers redundant and close at least one UK plant if Alchemy Partners succeeds in buying Rover, analysts predict. The Llanwern strip steel plant near Newport, south Wales, with 3,500 workers, is believed to be most vulnerable.

Rover is one of Corus’s largest customers, accounting for about 5% of the British/Dutch group’s annual UK strip steel output.

Alchemy’s plans to cut production at Rover from more than 200,000 cars a year to less than 100,000 would halve its steel requirements.

And its plan to base models on an aluminium chassis would reduce demand for steel further. Corus also manufactures aluminium, at former Hoogovens plants in the Netherlands.

Patrick Cleary, steelmaking manager at research group CRU, said: `You are really looking at south Wales, and Llanwern has higher costs than Port Talbot with the additional problem of having no access to a port.’

He said Corus was increasing its strip steel capacity in the Netherlands and could produce there cheaper than in the UK.

Corus may consider cutting capacity in the UK once its share of the market falls below 50% – it is now about 53%.

* Crude steel production in the UK will fall to 3.85m tonnes in the third quarter of this year, down from 4.07m tonnes in the same period last year, according to World Steel Outlook, published by industry analysis group MEPS.