Welsh steel dragon roars again

By Will Smale Business reporter, BBC News, Port Talbot, Wales

The Corus plant dominates the Port Talbot skyline

The vast steelworks stands over the town of Port Talbot like a giant metal dragon breathing fire.

With global steel prices at record highs, the Corus facility on the south Wales coast has never been busier.

Pouring out red-hot raw steel 24 hours a day, the sprawling 24 sq km (11 sq miles) site and its 3,500 staff are working at full capacity to keep up with soaring worldwide demand led by China.

For a facility that saw some very lean times in the 1990s, Port Talbot is now producing more steel than it did in the boom years of the 1960s.

From the endless cargo ships unloading mountains of iron ore and coal from as far afield as Mozambique and Australia, to the trainloads of finished product rolling out, the site now produces five million tons of steel per annum.

Yet while China is leading the global appetite for steel, it is to Asia's other fast-developing power house that Port Talbot and the wider Corus group now looks - India.

'Light touch'

It is now just over a year since Anglo-Dutch Corus was bought by India's Tata Steel for $12bn (�6bn).

Tata didn't buy Corus just to close the plants down, the technology transfer was the biggest thing behind the takeover Peter Fish, director of steel consultancy MEPS

The takeover created the world's fifth-largest steelmaker.

For the doom-mongers, Tata was simply after Corus' expertise and customers, and that the closure of Corus' UK and Dutch plants could only be a matter of time.

Such commentators said it was inevitable that all production would eventually be relocated in India to take advantage of the greatly cheaper labour costs.

Yet 12 months later, the mood at Port Talbot appears more upbeat than ever.

Alongside the boom in production, the Corus name remains, with Tata said to allow it substantial autonomy under a "light touch" approach.

Tata has also indicated its long-term commitment with the announcement of �74m investment at the Port Talbot works to improve production and reduce emissions.

And with Tata now also owning UK carmakers Jaguar and Land Rover - which Corus already supplies with steel - Port Talbot and the company's other British facilities seem well placed.

'Apprehension'

Corus communications manager Robert Dangerfield, who is based in Port Talbot, admits there was "certainly some apprehension" when the Tata deal was first announced.

Global demand for steel is being led by China's scorching economic growth

"Yet at the same time it has to be remembered that Corus has been looking for a buyer for two years," he says.

"And Tata was its selected partner.

"Corus could see that we urgently needed access to additional raw materials and developing markets. Tata offered this.

"And in return, Tata was certainly interested in our technical knowledge and environmental management."

CORUS FACTS Three main UK steelworks - Port Talbot, Scunthorpe, Teesside Other sites include Trostre, Shotton, Llanwern, and Hartlepool UK workforce of 23,700 Annual revenues of �11bn

The main steel union, Community, also appears far from displeased with Tata's first year in control of Corus.

"We also recognised that Corus had to become part of a bigger group," says Community's spokesman Ken Penton. "And so far, so good."

"The proof of the pudding will be Tata's ongoing commitment to investing in its UK operations.

"Corus is already the most productive steelmaker in the world, and our members want to contribute to its future success."

Technology grab?

However, some steel analysts remain cautions about Tata's long term plans for Corus.

The Corus name remains a year after the takeover

"Tata didn't buy Corus just to close the plants down, the technology transfer was the biggest thing behind the takeover," says Peter Fish, director of Sheffield-based steel consultancy MEPS.

"The idea is to get all the information they need from Corus to push Tata's products back in India more upmarket.

"We are talking about how to make a better quality of steel, to how best to interact with your customers, things like that.

"But at the end of the day, the threat to Corus production in Europe is likely to be there in the long-term, simply because it is much cheaper to produce steel in India."

For Mr Dangerfield the important factor to stress is that steel is such a cyclical industry, it is very difficult to speak of the long-term.

"I am confident that Corus has the best possible future under Tata," he says.

"Are we talking a long-term future? I don't think any company can answer that question in this day and age, but we are very confident."

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