Corus announces major investment at Scunthorpe Steelworks

• £130 million of investment at Scunthorpe  Steelworks
• Plan to significantly strengthen Corus’ manufacturing capability and competitiveness in rail, structural sections and wire rod

Corus today announced further major investment of £130 million at Scunthorpe, one of its main steelmaking sites in the UK.  This strategic investment will strengthen the Company’s competitive position in the structural sections, rail and wire rod markets by improving operational efficiency, product range and customer service. 

The investment, which will build on the Company’s Restoring Success programme, includes :

• Installing a new steel casting machine to replace an existing caster and intermediate rolling mill, with associated quality and efficiency improvements 
• Establishing a world class rail production facility at the existing section mill, and an on-site service centre to improve customer service and offer longer rail lengths, up to 120 metres, in response to market demands
• Developing the rod and section mills to enhance rolling capability, flexibility, quality and service to customers 

Contract placement will begin next month, and the rail and sections development programme at Scunthorpe will be completed by November 2006.  The Company expects the new caster and rod mill developments to be fully commissioned by August 2007.

After investigating a number of options, including investment to produce longer rail at Workington, it was concluded that the Scunthorpe development represented the solution that would maximise business potential in this sector.  As a consequence, Corus proposes to transfer rail production from its current UK manufacturing facility at Workington in 2006.  During the consultation period with Trade Unions, Corus will examine alternative long term options for the site. 

The developments and change in process routes at Scunthorpe are expected to result in a net reduction of 161 jobs, primarily due to the closure of the intermediate rolling mill. Corus will do as much as it can to mitigate the effects of the job losses.

Paul Lormor, Executive Director, Long Products Division commented, ’’This major investment  will significantly improve our long products manufacturing capabilities, providing world-class processes that enable us to meet customers’ future expectations in the market place.  The development  represents a major step forward for the Division, and is part of Corus’ long products strategy to improve the competitiveness of its core products, add value and provide a platform for future growth’’  

Note to Editors

The rail manufacturing facility at Workington employs 256 people and Corus also operates a process engineering business at Workington that has 301 employees.  The process engineering business will be unaffected by the investment

Corus Group plc (LSE/AEX: CS; NYSE: CGA) is one of the world’s largest metal producers with an annual turnover of £8 billion and major operating facilities in the U.K., the Netherlands, Germany, France, Norway and Belgium. Corus’ four divisions, comprising Strip Products, Long Products, Distribution & Building Systems and Aluminium, provide innovative solutions to the construction, automotive, packaging, mechanical engineering and other markets worldwide. Corus has around 48,500 employees in over 40 countries and sales offices and service centres worldwide. Combining international expertise with local customer service, the Corus brand represents quality and strength.

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