May 10 2009
Corus regrets to announce that it has been forced to open consultations that might result in a decision to mothball its Teesside Cast Products (TCP) plant in northeast England.
This development has become unavoidable 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 consortium to buy just under 78% of the plant's production for ten years.
The company has today begun 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 and what future action may be needed. Any decision to mothball is likely to lead to a very significant number of redundancies.
The signatories to the OFA, which include Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd1 and Alvory SA2, agreed to buy their share of TCP's output at cash cost. Over the duration of the contract so far the consortium members have benefited tremendously. Despite this, last month the consortium unilaterally and unreasonably initiated moves to terminate the contract, thereby making the TCP operation unviable.
Corus is using all legal means to ensure that the terms of the 10-year OFA are fully enforced and that the four consortium members live up to their contractual obligations. Alongside these actions Corus will explore alternative options that might secure a viable future for TCP and its employees.
"I am extremely disappointed that the consortium members have seen fit to take this irresponsible action," said Corus CEO Kirby Adams. "Their unilateral termination of a legally binding 10-year contract could bring to an end a fine heritage of steelmaking at Teesside. We regret the distress their action will cause TCP's dedicated employees, who have worked steadfastly in the interests of the consortium."