Sahaviriya Steel Agrees to Purchase Tata's Teesside Unit for $500 Million

Sahaviriya Steel Industries Public Co., Thailand’s largest steel producer, plans to buy Tata Steel Ltd.’s Teesside Cast Products unit in the U.K. for about $500 million as it seeks to turn around the unprofitable business.

Tata Steel’s U.K. unit Corus signed a memorandum of understanding with SSI and aims to complete the terms of a transaction as soon as possible, Corus said today in a statement. The proposed sale includes coke ovens, power generation facilities and the Redcar Blast Furnace.

Corus said in February it lost about 150 million pounds ($233 million) running its Teesside plant in northeast England after four steel buyers, accounting for about 80 percent of Teesside’s business, reneged last year on a 10-year contract. Italy’s Marcegaglia SpA, South Korea’s Dongkuk Steel Mill Co., Luxembourg-based Ternium SA and Swiss-Italian steelmaker Duferco Participations Holding Ltd. walked away from taking deliveries of slab steel, which they process into other steel products.

“This is the first of several steps required to reach a definitive sale agreement in the coming months which, with the anticipated co-operation of government, employee representatives and the northeast community, should result in the restart of steelmaking on Teesside in the first half of 2011,” Corus Chief Executive Officer said in the statement.

SSI said in a separate statement that it’s completing due diligence and arranging financing for the deal.

The plant can produce 3.5 million metric tons of steel slabs a year.

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net.

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