Thursday, December 17, 2009

Tata ready to discuss Teesside with British PM

S Kalyana Ramanathan / London December 18, 2009

The closure would lead to loss of 1,700 jobs

Hopes to stop the mothballing of Corus’ Teesside Cast Products (TCP) plant in northeast Britain were revived as a local Member of Parliament opened a fresh channel of communication between Tata Group Chairman Ratan Tata’s office and 10, Downing Street, official residence and office of the UK’s prime minister.

Ashok Kumar, MP for Middlesbrough South and East Cleveland, in a debate in the House of Commons yesterday, said he had spoken to representatives of Ratan Tata on the mothballing of TCP and was assured the latter would be willing to meet Prime Minister Gordon Brown if the invitation came from Brown’s office.

The objective of the proposed meeting is whether and how the UK government can help Corus avoid mothballing a large section of the steel works that would lead to loss of 1,700 jobs in Corus and another 1,300-1,500 job in sub-contractors’ plants that work for Corus.

“There is a 10 per cent chance that we can still avoid mothballing of this plant. Every day we delay (discussing it), the chances of keeping the plant running is diminishing,” Ashok Kumar later told Business Standard.

On December 4, Corus had announced it would proceed with the decision to mothball the TCP, some months after a consortium of steel buyers from Europe, Latin America and Asia prematurely terminated a buying contract. The consortium that includes Marcegaglia SpA, Dongkuk Steel Mills, Duferco Participations Holding and Alvory SA had in May walked out of a deal that should have seen them buy 80 per cent of TCP’s output over a 10-year period ending in 2014. After several attempts to find alternative buyers, Corus finally gave in and decided to mothball the plant by the end of next month.

Apart from budgeting £80 million for the redundancy package (on account of the mothballing), Corus claimed it had already lost close to £130 million in trying to keep the plants running while looking for alternative buyers.

“Tata has gone the extra mile to keep the plant running. They still want to keep it open,” Kumar said. He said the UK government can definitely help the Tatas overcome the current crisis in its northeast operations. “The government can help Corus find new partners from the Pacific Rim, Europe or the Far East. It can do more than just offer tea, sandwiches and sympathies,” Kumar said.

Pressure on Corus has also been mounting from the unions on account of the carbon credits the group holds. Some members of the union said Corus would actually stand to gain by mothballing parts of the TCP plant ,as it would release carbon credits worth ¤90 million that can be sold in the open market. In a response to an email from Business Standard, a Corus spokesperson said any allegation of this nature is false and without foundation.

Corus is Europe’s second largest steel producer, with its main steel-making operations primarily in the UK and the Netherlands. Corus was acquired by Tata Steel in January 2007 for $12 billion. The combined Tata Steel enterprise has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.

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