Teesside Freeport: Development 'would not have happened' without two property developers

He spoke out amid concerns that hundreds of millions of pounds of public money is being spent on clearing and decontaminating the Teesworks site, but Chris Musgrave and Martin Corney will collect most of the profits when that land is leased to various businesses.

It comes after they were handed a 90 per cent stake in a company called Teesworks Limited, which has options to buy parcels of valuable land on the 4,500 acre site on the bank of the River Tees.

But Mr Houchen said the two developers secured a key piece of land for the project, which aims to create a new manufacturing hub, and they have agreed to cover the cost of remediating the land they acquire.

The pair became involved in the project five years ago, when South Tees Development Corporation (STDC), run by Mr Houchen, was attempting to obtain 1,752 acres of land for redevelopment.

It was home to Redcar Steelworks until 2015, when owner, Thailand-based Sahaviriya Steel Industries (SSI), went into liquidation and thousands of jobs were lost.

After taxpayers’ money was used to mothball the site, STDC attempted to negotiate a deal to buy it with SSI and three Thai banks. Those banks were owed around £800m by SSI and held a charge over the company’s UK assets.

When negotiations broke down, STDC applied for a compulsory purchase order (CPO). But Mr Houchen said it was "clear that we were going to lose", because SSI could show that it had its own redevelopment plan.

However, Mr Musgrave and Mr Corney then approached the Tees Valley mayor on December 19 in 2019 and offered him a deal.

A month earlier, their company DCS Industrial Limited signed a three-year lease for a 70-acre plot of land on the adjacent Redcar Bulk Terminal (RBT) site, for £489,000.

They claimed that SSI had offered them the former steelworks site in exchange for their 70-acre plot, as the terminal would become lucrative if a company called Anglo American delivered its plan to build a 23-mile tunnel to the world’s largest polyhalite mine.

According to Mr Houchen, SSI agreed to stop contesting the CPO application because the developers offered the land on the RBT site. In return, STDC agreed to bring the two men in as development partners on the Teesworks project.

He added: “It would not have happened without Chris and Martin brokering that deal. From all of the advice we were getting it was extremely clear that we were going to lose the CPO.”

After the inquiry, Planning Inspector Phillip Ware ordered SSI to sell the site to STDC in April 2020.

In his ruling, Mr Ware he said SSI withdrew its objection.

However, SSI lawyer Simon Melhuish-Hancock did submit a written statement to the inquiry, which outlined a different version of events and did not mention any proposals for a land-swap deal.

He said Mr Musgrave and Mr Corney had made an “unsolicited offer” for all of SSI’s UK assets, including the site, on December 20 in 2019 and it was “considerably” higher than STDC’s.

After the inquiry, STDC agreed to set up a company called Teesworks Limited with the developers to deliver the redevelopment.

The corporation owned 50 per cent of the company until December 2021, when a share transfer took place. The developers now own 90 per cent.

“Chris and Martin were offered 100 per cent of the steelworks site,” said Mr Houchen. “The idea that we gave away 50 per cent isn't true. They brought STDC into the deal.”

The original plan was to redevelop the site over 25 years. But Mr Houchen said demand spiked in March 2021 when freeport status was granted. It means businesses based get a range of tax breaks.

The mayor said he needed extra funding to accelerate the redevelopment and the developers agreed to cover the cost of remediation in exchange for more shares.

Under the current arrangement, Teesworks Limited pays for each parcel of land it acquires and borrows millions of pounds for the remediation work from the publicly-owned STDC.

The company also gets half the money made from the sale of scrap metal (more than £93m so far) from the site.

So far, there is no public record of the two developers directly investing money in the project.

Remediation work, which costs at least £120,000 per acre, has already been completed on a 90-acre plot of land, which is being leased to SeAH Wind for 40 years so it can build a £450m wind turbine monopile manufacturing facility.

Teesworks Limited, which has agreed to pay £15m for the site, sold the rights to lease it to an investor for tens of millions of pounds.

The investor which bought the land will lease it to STDC’s parent company Tees Valley Combined Authority for £3.65m, which will then itself rent the land to SeAH Wind for £4.3m a year.

An STDC spokesman said the £15m site is listed as a fixed asset in the accounts of its subsidiary – South Tees Developments Limited – for the year ending March 2022 and it will be recorded as a receivable asset on the next set of accounts. That means the money was owed in that year.