Corus to sell Teesside steel unit to Thai co for $500 m

After months of negotiations, Corus has finally agreed to sell the mothballed steel unit at Teesside in the UK to Thailand’s Sahaviriya Steel Industries for about $500 million, bringing to an end year-long efforts by Tata Steel that were occasionally marred by interference from British political parties and trade unions.

Corus, the international subsidiary of Tata Steel, will sell its steelmaking assets and power generation facilities to revive the Teesside unit after a key client walked away from a contract in 2009 making operations at the unit unviable.
Tata Steel later said the loss from the reneged contracts amounted to about $233 million, about 80% of Teesside’s business. It also put at risk over 1,000 jobs and sparked off strong political and labour opposition.

“The deal is expected to create significant number of new jobs at the plant in addition to Teesside’s existing workforce of over 700 people,” Corus said in a statement.

Although three buyers had expressed interest in the Teesside unit in the past year, Tata Steel’s talks with Sahaviriya Steel Industries strengthened after the Thai steelmaker showed interest in the Corus technology for construction-grade steel. SSI doesn’t have the technology.

Sahaviriya Steel Industries is one of the biggest steel producers in Thailand. President of the company, Win Viriyaprapaikit, said: “We have great respect for the tradition of steelmaking at Teesside and for the highly skilled Teesside workforce, having previously purchased slab from Teesside Cast Products.”

In May last year, Tata Steel gave a financial assistance of about £425 million in phases, with about £200 million to pay off debts and for improving the balance sheet.

According to people familiar with the development, Sahaviriya Steel Industries is exploring options of relocating vital plant and machinery from Teesside to Thailand. The company would then be able to export to markets closer home and also cater to customers within Thailand, the people added.

The plan to ship the machinery is also in line with a recent proposal to develop an offshore wind farm business on the site at Teesside. Earlier, there were unconfirmed reports that Tata Motors, another group company, would set up a car making unit at the Teesside site


Process of Hardening and Tempering.

Hardening and Tempering is a thermal process that strengthens steel through a controlled heating and cooling process.

This process will result in improved mechanical properties and give a tougher more durable product. The hardening process involves heating the steel to above the critical temperature for the given grade and then rapidly cooling. Whilst this process achieves the highest mechanical stengths and hardness’s, steel in this condition is extremely brittle and therefore requires further treatment in the form of tempering. This consists of reheating the steel to a lower temperature and holding the steel at the given temperature for a given period of time. As with traditional annealing (used to soften steels) this process is conducted in an inert atmosphere to avoid oxidation.

The exact temperature and processing times vary with given grades of steel and the process is very specialized.

Steel production to reach 100 mn tonne in ’14: Ratan Tata

Tata Steel held its 103rd annual general body meeting today in Mumbai. Speaking at the event, Ratan Tata said steel production would reach 100 million tonnes by 2014 from the current 57 million tones.
The Tata Group Chairman however raised the red flag on rising raw material prices, reports CNBC-TV18’s Swati Khandelwal Jain.

Excerpts from Reporter’s Diary on CNBC-TV18 Watch the full show »
Addressing the shareholders, Tata said that the environment is very conducive for steel. However he pointed out the international operations were badly hit in FY10.
Drawing up the road map he said that the company will launch 2.9 million tonne steel plant in Jamshepur will be launched in 2011. He said that the Orissa plant will go in stream in three to four years and work is in process to launch Chattisgarh plant.
He raised concerns on the hike in iron ore and coking coal price. On funding he said that all efforts are being made to deleverage the balance sheet.


No steel price revival for next two quarters.

The proof that the world has more steel capacity than demand is in many mills idling large capacity. Production in the developed world is yet to be back to the pre-crisis level. World capacity use has remained a tad higher than 80 per cent, mainly due to good show in Asia and the West Asia. The industry has made much progress over the corresponding time of 2009 when governments around the world in their battle against a crippling recession put in place massive fiscal stimulus programmes.

Caparo chairman Lord Swaraj Paul says nobody at this point will give a clean bill of health to the world’s major economies which are on a recovery struggle from the deepest recession since the Great Depression. Lord Paul’s uneasiness about the state of the economy is because the fear of a double deep recession remains much in the air as consumer confidence in many countries in the West is coming close to credit crisis levels.

In any case when it comes to economic forecasting there cannot be any Oracle of Delphi. As for steel, Lord Paul citing the example of Caparo’s buying of the metal in the US and Europe says, “When so much capacity is idle, steelmakers will have to live with a buyer’s market. Nobody wants to switch off a blast furnace. So you always find rivals in the steel industry betraying desperation to get business.” Not many experts are, therefore, hopeful of any strong steel price revival in the remaining two quarters of 2010.

Source: Business Standard – India

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