Australian steelmaker BlueScope Steel is to buy the assets of Fletcher Building's Pacific Steel in a $NZ120 million ($A112.16 million) deal.
AAP reports that the deal will result in the closure of Fletcher's steel mill in the Auckland suburb of Otahuhu next year.
The companies are hoping to complete the deal by the middle of this year. However, the transaction first must be approved by New Zealand’s Commerce Commission.
Bluescope said that it will spend about $NZ50 million on the new billet caster at the Glenbrook mill south of Auckland. In the meantime, Fletcher will continue to operate the Otahuhu mill and supply BlueScope with billet on commercial terms.
The deal also includes Pacific Steel's Fijian rolling mill and its Steel's rolling mill and wire drawing facilities at Otahuhu. When Bluescope's billet caster is running, NZ Steel will supply billet to the rolling mills at Otahuhu and in Fiji.
Commenting on the deal BlueScope chief executive Paul O'Malley said he believed it well help improve the sustainability of the New Zealand steel industry.
As TVNZ reports, the Engineering, Printing and Manufacturing Union claimed the deal will result in over 70 redundancies from the Otahuhu mill.
"These job losses are another indictment of the government's failure to support jobs and manufacturing in New Zealand," EPMU national secretary Bill Newson told TVNZ.
Labour Party leader David Cunliffe was also unhappy with the deal. “...too many of our local companies have been snapped up by overseas buyers and the profits are flowing into the hands of overseas investors," he said.