Bruce Barnard | Dec 04, 2009 1:13PM EST
London - Teesport, the UK's third largest port, is facing an immediate 20 percent drop in annual revenue after Anglo-Dutch steelmaker Corus announced Dec. 4 it will mothball a nearby steel mill.
The port in northeast England handles between 8 and 9 million metric tons a year of coal and iron ore imports for the plant and exports a further 2.5 million metric tons of steel slabs – a total of more than a quarter of its 40 million metric tons of throughput in 2008.
Corus, the European unit of India's Tata Steel, said it is closing the plant with the loss of 1,700 jobs because an international consortium walked away from an agreement to buy around 80 percent of its output over the next ten years.
Teesport parent PD Ports had already said it would lay off 120 of its 600 workers if Corus shuttered the steel mill.
The Corus announcement came less than two weeks after Australia's Babcock and Brown Infrastructure sold PD Ports to Brookfield Asset Management, a Canadian investment fund, for a token one Australian dollar (93 U.S. cents).
BBI acquired PD Ports in 2006 for around $955 million including debt. It put the company on the market in early 2009 at a reported asking price of $700 million but cut this to around $480 million a few months later on fears Corus might close its plant.
PD Ports planned to open a $500 million container terminal with a capacity of 1.8 million 20-foot equivalent units in 2011 to capture traffic bound for the north of England that currently passes through congested southern ports like Felixstowe and Southampton.
But the company now says the Northern Gateway terminal is unlikely to open before 2014 due to the difficulty of raising financing and the decline in ocean container traffic.
Teesport is primarily a bulk and breakbulk port, handling only around 100,000 TEUs a year.
Contact Bruce Barnard at brucebarnard47@hotmail.com.
