Mumbai : Thailand's largest steel producer, Sahaviriya Steel Industries (SSI), plans to acquire Tata Steel's Teesside Cast Products (TCP) unit in the UK for $500 million. In a statement, Tata Steel's UK subsidiary Corus, which is Europe's second largest steel producer, said that it has signed MoU with TCP to complete the transaction.

TCP, which can produce 3.5 million metric tonne of steel slabs a year, was partially mothballed in February 19, 2010, after a consortium of four international steel slab buyers reneged on a binding 10-year offtake agreement. Corus had earlier said in a statement that these buyers were responsible for almost 80% of TCP's sales and had made an estimated $800 million in profit from the agreement by the time they decided to abandon Teesside.

TCP's losses had mounted to œ150 million since April 2009 and were becoming unsustainable. Corus MD & CEO Kirby Adams said: "This is the first of several steps required to reach a definitive sale agreement in coming months which, should result in the restart of steelmaking on Teesside in the first half of 2011."

According to Win Viriyaprapaikit, president of SSI, the company has held constructive negotiations with Kirby Adams and the Tata Corus team for the past year. The transaction will enable SSI to fulfil its objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities. The deal, if successfully concluded, is expected to create new jobs at the plant in addition to TCP's existing workforce of over 700 and will boost the local economy.

The assets covered by the MoU include the Redcar and South Bank coke ovens, TCP's power generation facilities and sinter plant, the Redcar Blast Furnace and the Lackenby Steelmaking facilities.