Corus, Tata Steel’s European unit, Friday announced that it had reached an agreement with Thailand firm, Sahviriya Steel Industries for the sale of Corus’ Teesside Cast Products facility in the UK. The investment acquisition will cost the Thailand firm around $500 million. In a statement issued Friday announcing the deal, Tata Steel, one of India’s foremost steel manufacturers, said that its UK based arm, Corus UK Ltd and Sahaviriya Steel Industries Public Company Ltd signed an agreement for a potential transaction.

Further to that, the statement noted that the agreement sets out the scope of a prospective investment in which the Thailand firm, SSI will acquire the Teesside Cast Products business from Corus at an investment valued at $500 million. Back in May, Corus UK Ltd said it had hired Citi to help it dispose off the Teesside facility.

Corus UK Ltd’s Teesside facility is considered one of the biggest employers in the region. That became apparent when Corus initiated a partial closure of its facility in the region after failing to get a long term partner for the site’s output back in February. However, Tata Steel reiterated that if the investment deal with the Thai firm is successful, it will result in a considerable number of new jobs at the facility. That would bolster the existing Teesside Cast Products’ workforce that stands at more than 700 and thus is expected to provide a significant boost to the region’s economy.

Corus UK Ltd chief executive officer and managing director, Kirby Adams, said the assets covered in the memorandum of understanding for the deal include the Redcar and South Bank coke ovens, Teesside Cast Products’ power generation plants and sinter facility, the Redcar Blast Furnace and the Lackernby Steelmaking facility. Adams reiterated the significance the transaction portends for the progress the firm has been seeking terms of securing a strategic industry investor for the sale of the Teesside Cast Products’ assets.

On his part, SSI president, Viriyaprapaikit, said the Thai firm has had constructive negotiations for the past year with Kirby Adams and the Tata Corus team for the acquisition investment. A sale agreement would also result in Corus and SSI operating Redcar Wharf (TCP's bulk terminal) as a joint venture, giving Corus the flexibility to use Teesside to serve its other steelmaking operations, while also meeting SSI's requirements on Teesside, it added.

29 Aug 2010.