Thailand's Sahaviriya agrees to buy UK slab plant
Corus has signed a memorandum of understanding to sell its Teesside Cast Products plant in the UK to Thai steel producer Sahaviriya Steel Industries. The proposed acquisition, valued at around $500m (£322m), will give SSI ownership of the plant which can produce 3.5m tonnes/year of slab.
SSI says the proposed move will create stability in its raw material supplies. The Thai company is currently finalising its due diligence and arranging financing.
The assets covered by the deal include the Redcar and South Bank coke ovens, sinter plant, the Redcar blast furnace and the Lackenby steelmaking facilities and slab caster.
The Thai company says the acquisition would further its “strategy of backward integration to upstream iron and steel production to support present production.” It also says it will increase its flexibility in production and marketing scenarios, providing “geographic and product diversification benefits.” One of the stumbling blocks in the talks, Steel Business Briefing understands, has been Corus’ insistence on inserting non-competition clauses into any agreement, meaning it would be difficult for SSI to establish a finishing mill at the site.
SSI has a production capacity for hot rolled coil of about 4m tonnes/year, and an affiliated company has 1m t/y of plate capacity. It is entirely reliant on outside sources of slab, and its current suppliers include Japanese and CIS companies.
A sale agreement would also result in Corus and SSI operating Redcar Wharf (TCP’s bulk terminal) as a joint venture, allowing Corus to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements.
TCP has been mothballed since February 2010, and has been endangered since a consortium of offtakers withdrew from a long-term supply contract.
Corus has signed a memorandum of understanding to sell its Teesside Cast Products plant in the UK to Thai steel producer Sahaviriya Steel Industries. The proposed acquisition, valued at around $500m (£322m), will give SSI ownership of the plant which can produce 3.5m tonnes/year of slab.
SSI says the proposed move will create stability in its raw material supplies. The Thai company is currently finalising its due diligence and arranging financing.
The assets covered by the deal include the Redcar and South Bank coke ovens, sinter plant, the Redcar blast furnace and the Lackenby steelmaking facilities and slab caster.
The Thai company says the acquisition would further its “strategy of backward integration to upstream iron and steel production to support present production.” It also says it will increase its flexibility in production and marketing scenarios, providing “geographic and product diversification benefits.” One of the stumbling blocks in the talks, Steel Business Briefing understands, has been Corus’ insistence on inserting non-competition clauses into any agreement, meaning it would be difficult for SSI to establish a finishing mill at the site.
SSI has a production capacity for hot rolled coil of about 4m tonnes/year, and an affiliated company has 1m t/y of plate capacity. It is entirely reliant on outside sources of slab, and its current suppliers include Japanese and CIS companies.
A sale agreement would also result in Corus and SSI operating Redcar Wharf (TCP’s bulk terminal) as a joint venture, allowing Corus to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements.
TCP has been mothballed since February 2010, and has been endangered since a consortium of offtakers withdrew from a long-term supply contract.
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