Corus deal saves steel jobs

SOME 1,700 jobs at Corus's Redcar, Yorks, plant are safe today following a new 10-year supply deal. Workers at the plant breathed a sigh of relief after the company announced a major new customer that will take the vast proportion of output from the site, effectively lifting a threat to hundreds of jobs there.

The Redcar plant, which will now be supplying a consortium of overseas companies as part of the deal with three re-rolling companies, was earmarked for closure after a restructuring last year.

Under the deal, which takes effect in January, about 74% of the operation's output will go to the Italian and Swiss-based steel trader and producer Duferco.

The consortium will pay Corus £76m as an upfront payment in 2005/06 and is expected to contribute around 72% of the £50m required for site improvements.

The Redcar agreement was announced as Corus said its recovery continued to be aided by a positive steel market in the second half of 2004.It now expects operating profits of around £600m this year, compared with £160m in the first half of 2004.

In September, Corus announced profits for the first time after refocusing its troubled UK operation on the sites of Port Talbot, Scunthorpe and Rotherham.

The turnaround followed a traumatic start to life for the company - formed from British Steel and Dutch firm Hoogovens in 1999. After the merger, Corus racked up losses totalling £1bn and axed thousands of jobs.

As well as the restructuring by new chief executive Philippe Varin, Corus has benefited from surging demand in Asia and a steady rise in global prices.

In a trading update to the Stock Exchange today, Corus said there had been strong demand from its domestic market but that growth in mainland Europe continued to lag.

And while growth in China had been slower in the second half, the company said this had been balanced by strong demand in North America and the rest of Asia.