Thai Steel Company Approves Acquisition of Teesside Cast Products

The board of directors of Thailand-based Sahaviriya Steel Industries (SSI) has approved a resolution to acquire certain assets and businesses of Teesside Cast Product (TCP) from Tata Steel UK Ltd. through its subsidiary, Sahaviriya Steel Industries UK Ltd. The company also approved a plan to obtain financing to complete the acquisition. SSI has valued TCP at $469 million.

According to a TCP news release, the agreement completes the company’s close to two-year search for an alternative future for the facility after the withdrawal by a consortium of offtakers from a 10-year supply agreement. The next step will be the completion of the transaction, which is expected to place by the end of March 2010.

“I am very encouraged that after all our efforts we have been able to reach this agreement, which is good news for the highly skilled and dedicated Teesside workforce,” says Karl-Ulrich Köhler, MD and CEO of Tata Steel in Europe.

“I commend SSI, the government and the trade unions for their roles in bringing about this agreement, and in particular the people of Teesside for the spirit and fortitude they have shown throughout the last, difficult two years,” Köhler adds.

“Owning Teesside Cast Products will enable us to achieve our long-standing ambition of becoming a fully integrated steel producer. This transaction will give us a strong platform for future growth, increase our resilience to industry cycles and give us opportunities to diversify into new markets and products,” says Win Viriyaprapaikit, president of SSI.

Assets included in the proposed sale are the Redcar blast furnace, the Redcar and South Bank coke ovens, TCP’s power generation facilities and sinter plant and the Lackenby steelmaking and casting facilities.

Additionally, the deal will result in Tata Steel and SSI entering into a joint venture to operate Redcar Wharf (TCP’s bulk terminal), giving Tata Steel the ability to use Teesside to serve its other steelmaking operations, while also meeting SSI’s Teesside requirements.

Tata Steel will continue to operate two large-diameter tube mills in Hartlepool, the Skinningrove special sections mill, Teesside Beam Mill and Teesside Technology Centre.