TWO of the world's biggest steelmakers are preparing to go head-to-head in a battle which could secure more than 2,500 North-East jobs.

They both want to buy a controlling stake in the Corus slab steel plant on Teesside.

Swiss firm Duferco has confirmed it is interested in taking over an 80 per cent stake in the Redcar works as part of a consortium with two other global steelmakers, one of which is South Korean-Dongkuk.

Industry insiders say Duferco is conducting "due diligence" - financial investigations required before a purchase can be made. An offer could be tabled within weeks.

The Lugano-based company wants to sell slab steel - raw steel which must then be processed elsewhere - from the factory on the world markets and supply slabs to its US works.

Other parties in the consortium are understood to need the slab for their own internal operations.

But a second steelmaker, Brazilian CSN, is also reported to have begun due diligence at Corus. When the investigations for both parties are complete, Corus is expected to start negotiations exclusively with one or the other.

Corus workers have faced an uncertain future since the company's management decided it no longer needed the slab steel products and wanted to sell off the factory as part of a massive restructure. It warned that if no buyer could be found, the factory would close.

But Duferco's chairman and owner, Bruno Bolfo, said: "We hope to complete outline discussions over the deal by mid-September and make a binding offer soon after."

Corus, which would keep a 20 per cent share in the plant, was remaining tight-lipped about the plan last night and about the CSN interest. Corus spokesman Craig Evans said: "There is a lot of interest in Teesside. We are in discussions with a number of companies. It's all very sensitive at the moment and for that reason we can't name names."

Tony Poynter, chairman of Teesside's multi-union steel committee, said he expected a deal to be struck before the end of the year.

"If there are that many people interested in our Teesside operation it must be well worth buying into. A year ago we were written off but our performance is as good as any in Europe.

"The markets have improved rapidly and there is a massive demand for steel. There are a lot of interested parties but the indication now is that it's getting down to the more serious ones."

He said Corus had not decided on a preferred buyer yet but would consult with the unions when it did.

"Whoever comes must maintain our terms and conditions and, of course, the workers must remain in the British Steel pension scheme," he added. "That's been our position for the last year and the company is well aware of that position."

Last night, one worker said he was delighted at the news. "We've always known the Teesside operations are world class," he said.

"It's fantastic to hear that hard work has being recognised. If a deal can be concluded there will be a lot of very happy folk."

Redcar MP Vera Baird said the plant had transformed its position over the past year.

"It has really gone from being the ugly duckling to the sought-after bride," she said.

"I'm very glad that there seems to be a bidding war which means with shrewd management we'll get the best deal for everybody."