Only 18 months ago, the writing was on the wall for Corus' Teesside steel plant, but yesterday's deal, which secures the site for the next decade, heralds a remarkable turnaround in fortunes. Business Correspondent Paul Willis reports.

WHEN Corus dropped the bombshell 18 months ago that it would be cutting loose its Teesside operation in 2006, many predicted the end was nigh for steelmaking in the North-East.

The Anglo-Dutch group said the plant would no longer supply steel to other Corus operations. Instead, it would have to sell its products on the global market.

Financial expert Anthony Platts, of Tees Valley stockbrokers Wise Speke, said: "There was not enough demand in the UK to make it viable long-term, so it was told to go out and find its own markets.

"When Corus made the announcement, it was a real test for the Teesside business. It was being put out on a limb and told to either sink or swim. And the closer the deadline of 2006 came, the more ominous the signs looked for the business."

But the steel business is notoriously unpredictable.

During the 1980s, global prices plummeted and steel producers around the world were fighting for business.

However, towards the end of the 1990s, a new phenomenon appeared on the economic horizon: the growth of China.

As China rushed to modernise, its demand for steel increased and drove the price through the roof.

With a well-deserved reputation for quality, the Redcar plant, by now re-named Teesside Cast Products (TCP), has benefited from the boom.

In the past 18 months, rumours have circulated about potential buyers for TCP.

Rob McMullen, Tees Valley area manager for the North-East Chamber of Commerce, said yesterday's deal helped put an end to a long period of uncertainty and speculation.

He said: "On the face of it, this is perhaps the best possible Christmas present to be given to more than 6,000 people who work for Tesside Cast Products and the wider supply chain."

However, while the deal means steelmaking in the region is safe, at least for the next ten years, questions still remain over much-needed renovations at the plant.

About £50m is needed for infrastructure improvements.

The consortium will pay 70 per cent of that, but the remaining £15m has still to be found.

There are also questions about how the pricing levels will be fixed, given the recent fluctuations in the price of steel.

But for the moment, steelworkers are happy to toast the future.

Mr Platts said: "I expect the beer to be flowing in Redcar this weekend."