AN iron and steel company is creating 100 jobs in the region after securing a £120m contract.

VAI UK, whose blast furnace division in Thornaby, Teesside, led a European consortium to win the contract in South America.

Along with German company Ferrostaal and Paul Wurth, of Luxemboug, it will supply a blast furnace to Brazilian-based Companhia Siderurgica de Tubarao (CST), which supplies semi-finished products to the global steel industry.

VAI, which produces iron, steel and aluminium manufacturing equipment, said it will design, supply, build and supervise the start-up of the blast furnace in Brazil, which is part of an expansion project for CST, increasing its annual steel production from five million to 7.5 million tonnes.

The contract is worth about £80m to VAI, and the project will be co-ordinated from VAI's Brazilian subsidiary base.

Ken Taylor, VAI UK director of ironmaking sales, said the project was important for the North-East because it was guaranteeing employment for at least the next two years for VAI's 120 staff as well as providing employment for another 100 people on Teesside.

He said: "It means a lot for the engineering resources of the area.

"This is also a tremendous success for VAI and its partners, combining the best of European blast furnace technology with the extensive knowledge and experience of the Brazilian market, developed by our own local companies.

"For the UK, the project adds to a long list of major blast furnace contracts won by VAI, and further confirms our dominance in this field."

The company has had to take over part of a neighbouring building in its Thornaby base to house the workforce for the project.

The Brazil contract is the latest in a series of high-profile contracts for VAI, with recent wins including a contract for a plate mill in China and another contract at China Steel Corporation, in Taiwan.

Mr Taylor said that Brazil was a potentially promising market for the steel industry because of its rich mineral reserves.