BRAVE claims underpinning behind a £3bn merger between steelmaker Corus and Brazilian steel group CSN were given a cautious welcome last night.

Under the deal Corus, formed in 1999 from a merger between British Steel and its Dutch counterpart, will own 62.4 per cent of the enlarged company, and CSN, a steel and iron ore producer, the remaining 37.6 per cent.

Corus chief executive Tony Pedder said costs would be cut, but jobs would not be at risk.

Michael Leahy, general secretary of ISTC - The Community Union, said: "On the information that we have so far, I am able to give a cautious welcome to the proposed merger. There are obvious benefits from the merger.

"However, I will be seeking assurance from Corus that the merger poses no threat to UK steelworkers' jobs."

Mr Pedder said: ''This is not a jobs story. It is about growth and development and we feel very positive about what's going to be achieved. I think this is an exciting development for Corus,'' he said.

Corus, which has cut thousands of UK jobs in recent years, has about 53,000 staff worldwide, of which 27,000 are in the UK.

The company still employs about 3,000 people on Teesside, but last year cut 6,000 of the 10,000 jobs it plans to axe nationwide.

Mr Pedder said the deal was about "quality and value" rather than size, and was not a forerunner for similar mergers.

Annual cost savings were expected to be about £159m.

A significant percentage of the savings will arise from the group sourcing a substantial proportion of its iron ore at a cheaper price from CSN's Casa de Pedra iron ore mine in Brazil, which will expand.

Completion of the merger is subject to shareholder approval and regulatory clearance, and is expected during the first quarter of next year.

Analysts said the deal would push Corus up from the number six slot in terms of steel production in the world, to number four, and Yasuhiro Yamaguchi, steel analyst at UBS Warburg, said he thought the cost synergies could be achieved without cutting back production in the UK.

He said he understood the group was not assuming any plants would be closed following the deal.

Analysts said the group already sourced from countries such as Brazil and Australia, but the deal would give it its own mine, lowering costs.

The move is bound to rekindle fears that Corus will eventually move its operations out of the UK.

In 2000 there were fears the company could move some steel production to Poland. This latest merger may resurrect those fears.