Sahaviriya Steel Industries (SSI), Thailand's largest hot-rolled steel producer, is progressing with its proposed purchase of UK based Teesside Cast Products (TCP) from Tata Steel.
The acquisition will cost SSI US$500 and is targeted to be completed by the end of March. It is estimated it will take a further six months to get the plant fully operational again which consists of UK’s largest single blast furnace at Redcar, a BOF steelmaking shop and slab caster at Lackenby, the South Bank coke ovens and a port terminal.
SSI proposes to export slab to its 4Mt/y hot strip mill and its plate mill in Thailand.
At its mothballing in February 2010, TCP had a capacity of 3Mt/y. SSI plans to increase this and has been seeking assurances from the UK government that expansion will not be impeded by any lack of EU carbon permits.
Tata steel, who became owners of the plant on their acquisition of UK-Dutch steelmaker Corus in 2007, say the sale of TCP along with other divestures will reduce its debt to equity ratio from the present 1.5:1 to 1:1.
Since 2004, TCP had been supplying 80% of its output to a consortium of companies consisting of Marcegaglia, Dongkuk Steel Mills, Duferco Participations Holding (through Steel Invest Trading) and Alvory (a subsidiary of Ternium). Despite a 10-year off-take agreement these companies cancelled the agreement during the recession of 2009 causing the mothballing of the plant and the loss of 1700 jobs. This matter between Tata Steel and the consortium is currently under arbitration.
SSI propose to issue equity shared of $200M in the current quarter and a further $150M as loans in Thailand, while Sahaviriya Steel Industries (UK), a wholly owned subsidiary, hopes to raise $650M in loans in the UK towards the purchase and expansion.
In 2009, SSI had a net income of 1273.2M baht ($41.5M) and returned to profit.