British Steel PLC - Chairman's AGM Statement

RNS No 7291n
BRITISH STEEL PLC
21 July 1999


AGM - 21 JULY 1999

Statement by Sir Brian Moffat, Chairman

You will no doubt be aware that we announced on 7 June that we had reached
agreement on a proposed merger with Koninklijke Hoogovens, a major European
steel and aluminium producer based in the Netherlands.  It is a company well
known and respected throughout our industry in terms of quality and
performance, and we believe we will be able to work together to create a
leading metals group.  It will have a strong customer base, and have the
operational, financial and management resources to pursue profitable growth
opportunities.

Since we announced the proposed merger, our enthusiasm has increased and good
progress has been made with the  legal documentation and the regulatory
consents required.  The European Commission has now approved the merger
without qualification and in the USA we have also obtained the necessary
approval.  In the Netherlands, where the legislation requires it, the
Hoogovens' Works Council has also endorsed the proposals.

The reaction from both workforces has been very positive, with the new
opportunities which will be available to the Company and to individual
employees becoming more apparent.   The response from customers also has been
most encouraging, especially in those areas where we see the globalisation of
customers and an increasing requirement for more than just a basic product.

It is planned to circulate documentation for shareholder approval in early
August, and completion is anticipated in early October.  

Turning now to the current trading position.  In my statement in the Annual
Report and Accounts I said that the competitive position of British Steel was
seriously disadvantaged by the strength of sterling and that the renewed
strength so far through 1999 is a matter of concern to us and to the UK
manufacturing sector.  Recent interest rate cuts have been welcomed, but we
believe more still needs to be done to bring sterling back to a more
competitive level.

I am pleased to say that steel demand is generally firm around the world, with
some Asian economies now showing encouraging signs of recovery from the low
point of early 1999.  We are not content to rely on external factors to
improve our fortunes, however, and accordingly we continue to pursue cost and
efficiency improvements through our manpower and supply base initiatives and
through our business improvement programme.  I am confident that further
significant benefits will be achieved from this strategy.

Unfortunately however despite these initiatives and some increases in selling
prices the Group continues to incur losses, albeit at lower levels than the
final quarter of last year, due to the impact of the strength of sterling,
particularly against the Euro.

There has been much comment in the press about the proposed energy tax.  As a
Company, and indeed as an industry, we have played a very full role in
reducing UK energy consumption within our manufacturing processes, and we will
continue to do so. Since 1970 the amount of energy required to make each tonne
of steel has been reduced in British Steel by some 40%, with a 6% improvement
since 1990.

We, along with many other high energy users in the manufacturing sector, have
been pressing very hard on Government and Ministers that this tax should be
fair on UK manufacturing and in particular not prejudice our competitive
position, especially against those companies and countries who either do not
levy such a tax or are dealing with energy consumption in different ways.  An
unfair and onerous tax would put at risk many thousands of UK jobs, something
which we, and I believe Government, would not wish to see happen.

You will have seen in the Annual Report and Accounts that Sir Giles Shaw
retires at the conclusion of this meeting.  Sir Giles joined the Board as a
non-executive director in May 1990 and since then has been a most helpful and
valuable member of the Board.  His knowledge and experience of Government has
proved to be of great benefit to the Company, and his wider contribution,
particularly to matters relating to the Environment, have both stimulated and
clarified thought within the Company.  He has served on the Remuneration
Committee and the Nominations Committee, and has been the Chairman of the
Board Environment Committee since 1994.  We shall miss his wise counsel, but
wish him and Lady Shaw a happy and well earned retirement.

On the premise that the merger with Hoogovens is completed in October this
year,today's Annual General Meeting will be the last one for British Steel plc
in its present form.  Much has been achieved in the 11 years since the Company
was privatised, due in no small way to a very dedicated and co-operative
workforce and management, to whom I express on behalf of the Board and indeed
shareholders our thanks and appreciation.  The steel industry is tough, it
always has been and probably always will be, but within the Company we are
looking forward to the future in the merged Group with enthusiasm and
determination.  I hope we will be seeing many of those present today at the
first Annual General Meeting of the new merged company which is likely to be
in September 2000.   


END


CAGARAWKKWKBUAR