As part of the Tata Steel Group of Companies, Tata
Steel Europe (TSE) remains committed to the Group’s
vision of being a global benchmark in value creation
and corporate citizenship, in spite of the challenges of
a slow European recovery, high raw material costs and
the pending introduction of the EU Emissions Trading
Scheme (‘EU ETS’) Phase III.
In the year under review, the European market
accounted for 84% of TSE turnover, of which the UK
accounted for 27%. The TSE management has focused
on restoring confidence in the Group and has achieved
a number of milestones as follows:
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In September 2010 Corus was rebranded as TSE,
embracing the benefits of operating within the wider
Tata organisation and closer to Tata Steel Limited.
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As part of managing the TSE asset portfolio, TSE sold
Teesside Cast Products to Sahaviriya Steel Industries
Public Company Limited, Thailand’s largest steel
producer on 24th March, 2011, in a transaction valued
at £290 million, plus the actual value of working
capital transferred at completion. The assets covered
by the sale include the Redcar Blast Furnace, the
Redcar and South Bank Coke Ovens, TCP’s power generation facilities and Sinter Plant and the Lackenby
steelmaking and casting facilities.
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Tata Steel UK Holdings Limited, a subsidiary of TSE,
signed a Senior Facility Agreement in September 2010
with a syndicate of banks for a €3.4 billion term loan
and £690 million revolving credit facility to replace
the previous loan and revolving credit facilities.
-
Implementation of a new operating model started in
the latter half of the financial year. TSE is now being
reorganised to operate a single sales and marketing
team, a supply chain organisation, three steelmaking
operational hubs, speciality businesses and pan-European support functions.
Tragically, there were two fatal accidents during the
financial year and one in April 2011. The first occurred
in April 2010 while an employee was undertaking
crane maintenance in the slab yard at Scunthorpe,
England. The second one took place in August 2010
when a contract haulier at the same site was crushed
by his runaway vehicle in a trailer park. The third took
place in April 2011 in the coke oven plant at IJmuiden,
the Netherlands.
PERFORMANCE The preceding financial year of 2009-10 started with
the depressed market conditions evident at the end of
2008-09 and, whilst some modest recovery was seen
by the third quarter, sales volumes and prices remained
well below those experienced in the first half of 2008-09. Excluding seasonal effects, sales volumes were
reasonably flat for the first three quarters of 2010-11,
before showing an improvement in the fourth quarter,
leading to the highest level of quarterly sales since
2008-09. Selling prices improved steadily through the
year reflecting the significant increases seen in raw
material costs and ended the year 18% higher than
twelve months previously. The turnover for the period
was £10,747 million (2009-10: £8,743 million), 23%
higher than the previous year. Average revenue per
tonne increased by 13% and deliveries by 11%.
The Blast Furnace site
at Scunthorpe, England
23%THE PERCENTAGE OF TURNOVER GROWTH IN FY 2010-11.
VALUE CREATION AND GROWTH In line with the TSL Group vision, TSE’s strategy is aimed
at value creation. The pressing challenge in Europe is
improving the quality of earnings and this challenge
has been identified by the Group. The main priority
in meeting this challenge is the Group’s approach to
dealing with its customers.
In order to improve customer service, TSE is
implementing a major ‘supply chain transformation’
project aimed at reducing inventory levels whilst at
the same time improving customer service levels. In
addition to the customer focus, TSE continuously works
towards higher levels of operational excellence through
improving asset performance in respect of quality,
reliability and cost. In support of this, the steelmaking
operational hubs have embarked on a number of
developments and initiatives such as:
- An investment of £185 million in the rebuilding
of Blast Furnace 4 at Port Talbot, Wales, which will
improve operating efficiency.
- The Group’s site at IJmuiden, the Netherlands, has an
objective and plans to operate its ironmaking and hot strip processing at European benchmark levels.
- Launch of a fund of £100 million for short payback
capital projects to improve operational efficiency
across Europe.
- Announcement in May 2011 of a proposed
restructuring of the Group’s Long Products Europe
hub to target high-value markets and to introduce
greater flexibility into costs and operations.
In implementing its strategy, TSL aims to be a leader
in corporate citizenship, providing a safe work place
for employees, and caring for the environment and
communities in which it operates. During the year,
TSE commissioned a BOS gas-recycling scheme at Port
Talbot, Wales that is saving approximately 250,000
tonnes of CO2 emissions each year. TSE is also a leading
player in the European Ultra Low CO2 Steelmaking
(‘ULCOS’) collaborative project and, under this project,
has completed the construction of a new Hlsarna™ pilot
plant at IJmuiden. If successful, this could result in a 50%
reduction in CO2 emissions in steelmaking.