Not yet contacted by UK government on Teeside plants: Tata

Everybody hopes that the Teeside plants will not be shut down but it is a matter of market dynamics and Tata Steel cannot continue losing hundreds of millions of pounds to keep the plants operational, says JJ Irani, director, Tata Sons

The Tata Group on Tuesday said that the British government has not yet contacted it on the possible options to avoid closure of Corus steel plants in Teeside that could result in 1,700 job losses, reports PTI.

"We haven't heard anything from the British government so far. There is some political activity in England to keep it (the plant) going. As far as I know, we have not been contacted by the British government," Tata Sons director JJ Irani said today.

Due to mounting losses, Tata Steel Europe announced last May the suspension of some of the facilities belonging to Corus' Teeside Cast Products business in north-east England.

Fearing 1,700 people would be rendered jobless, British prime minister Gordon Brown on the New Year even promised to talk to Tata Group chairman Ratan Tata as a last-ditch effort to cancel the closure.

"Everybody hopes that it will not be shut down but it is a matter of market dynamics. We cannot continue losing hundreds of millions of pounds to keep the plants going," Mr Irani said.

The Tata Group plans to mothball the plant by the end of this month. "It will be (re-)started at a future date. The plant is not going to be dismantled or sold or anything like that, it will be mothballed," Mr Irani said.

In 2007, Tatas had acquired Corus for £6.2 billion.

The collapse of the Teeside plant, Mr Irani said, was because the four firms, which bought 80% of the products, walked away after cutting short a 10-year contract.

"In 2006-07, prices were at their peak, so as soon as the steel prices fell, these off-takers found difficulties in selling our semis (semi-finished products), so these people walked away from the contract although it was for a 10-year period. We are of course fighting a legal battle with them but the outcome will take some time," Mr Irani said.

The global steel industry has been hit by a collapse in orders from the auto and construction sectors which have suffered during the economic downturn. Corus has already cut about 6,000 jobs in Britain and the Netherlands since the start of 2009.
 

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