December 02, 2008

Corus may extend long term slab supply deal

Evening Gazette recently reported that TATA Corus Teesside Cast Products is planning to extend long term slab supply deal.

The report cited Mr Jon Bolton MD of Teesside Cast Products as saying that discussions would be getting under way soon on extending the 10 year agreement to supply a consortium of overseas companies, which breathed new life into the plant in 2004.

Mr Bolton said that “We are hoping progress will be made this year to renegotiate the consortium deal. It is going well and I do not see any reason why it would not be extended. The market is also currently very strong.”

Mr Bolton said that so far, the deal has leveraged GBP 40 million of investment from consortium members to create a dedicated rail link to Teesport. But an GBP 80 million upgrade to the blast furnace due in 2014 has triggered another round of talks, which will effectively commit the consortium to working with Corus well beyond the current agreement. He said that “The investment would also give the blast furnace a further lifespan of 10 years to15 years. The consortium brings with it investment. We are getting to the point where we need to make some decisions.”

Mr Bolton said the long term strategy was to exploit the market for high grade steel before emerging economies caught up. Since the supply agreement, we have introduced 300 new grades and 60 new products. If you can find a route to market for specialist slab, then Teesside has a future.

Duferco, Marcegaglia, Dongkuk and Imsa buys the bulk of steel produced on Teesside. With 75% of output now going abroad, the agreement helped push Teesside Cast Products to world number one in the export rankings for slab in 2007.