Tata Steel has been awarded around $130 million in a settlement reached with a consortium of four buyers that pulled out midway through a 10-year agreement with its Teesside Cast Products business in the north of England.
Tata Steel said its subsidiary, Tata Steel UK Ltd, had now reached a ‘full and final settlement of claims' with the consortium on Tuesday. In January, Tata Steel had announced that the division had received a partial final award in its favour from an arbitration tribunal which found that the buyers “did not validly terminate their offtake agreements”.
The consortium, comprising Marcegaglia of Italy, Dongkuk Steel Mills of South Korea, Alvory SA and Duferco Participations Holding Ltd, had a 10-year deal to buy the bulk of the produce at Teesside Cast Products. However, it pulled out in April 2009, less than half way into the deal.
The reneging was a major blow to Tata Steel which last year estimated that it cost the firm as much as $220 million, excluding the cost of mothballing the plant.
The consortium had signed an offtake framework agreement with Corus in 2004, which committed them to purchase around 78 per cent of the plants product for the next 10 years at cash cost.
In early 2009, Tata Steel signed a deal with Marcegaglia and Dongkuk that would have seen them acquire a majority stake in the Teesside Cast Products business, but the whole deal collapsed three months later when the consortium pulled out of the offtake agreement.
At the time Tata Steel Europe — then known as Corus — pledged to use ‘all legal means' to ensure the terms of the contract were fulfilled.
In March, Tata Steel reached an agreement to sell $469 million worth of assets at Teesside Cast Products to Sahaviriya Steel Industries UK, the subsidiary of the Thai group SSI, which aims to begin production at the plant by the end of the year.