Financial lifeline for steelmaking in Wales

Corus Welsh spokesman Simon Jenkins said it was an additional boost for the group in Wales which had already taken cuts and was now striving to meet its financial targets.

He said the company had announced a significant first step towards establishing a world-class operation and had to secure investment to raise output by one million tonnes a year at Port Talbot.

That would be an increase of 25% and take overall slab steel production to 4.5m tonnes.

Port Talbot would become the hub of the Corus operation, supplying slab to the Llanwern plant at Newport.

Mr Jenkins said Corus no longer had to import it into Wales and had a self-contained operation.

Corus said it had a "range of challenging targets to meet", and were meeting some, and falling short on others.

Mr Jenkins said: "Everyone here has the enthusiasm to work together to make things succeed."

The Anglo-Dutch group has over 8,000 employees in Wales and the financial lifeline from company's bankers will give it breathing space to allow it to plan its UK restructuring programme.

As well as Port Talbot and Llanwern, its other Welsh plants are Trostre at Llanelli, and Shotton in Flintshire. Group chief executive Philippe Varin has confirmed that he would be happy to be able to launch the restructuring programme by the end of the year.

Corus chief executive Philippe Varin is planning restructuring in UK

That programme would see heavy job losses and the closure of one of the company's UK plants.

Corus will release further details of the restructuring programme along with its interim results in September.

It has cut more than 13,000 jobs and closed down 20% of its UK capacity since 1999, including its Ebbw Vale works.

Corus was formed that year with the merger of British Steel plc and the Netherlands' Royal Hoogovens NV.

Losses have escalated in the four years, registering �2bn, although the company say business is improving with losses of �141m in the second half of last year being cut to around �40m in the first half of 2003.

The new banking deal would give Corus breathing space and the financial flexibility over the next 18 months to carry out its restructuring, although the company is still in secret talks to find additional cash to plug losses in its UK operation.

But according to a Corus Wales spokesman, the operation in Wales is more than contributing to the group's attempt to turn the business around.