A consortium which almost caused the collapse of 150 years of North-East steel making after pulling out of a contract with Tata Steel has agreed to pay £80m compensation.

The then Tata owned Teesside Cast Products (TCP) plant was partially mothballed in February last year after the consortium pulled out half-way through a ten-year agreement to take 78 per cent of the steel slab it produced until 2014, blaming the effects of the global economic downturn.

Yesterday it emerged the consortium consisting of Marcegaglia, Dongkuk, Duferco and Ternium Procurement agreed on Monday to pay $130m (£80m) compensation.

It followed a ruling in January by a tribunal, held under the auspices of the ICC International Court of Arbitration, that the consortium "did not validly terminate their off take agreements."

In a statement yesterday the steel firm, formerly Corus, said: "Tata Steel UK Limited (TSUK), had on January 5, 2011 received a partial final award in its favour in an ongoing arbitration between TSUK and certain offtakers of the Teesside Cast Products business (TCP).

"Following that partial final award, a commercial settlement to all disputes relating to the offtake agreements was reached and on June 21, 2011 Tata Steel completed a full and final settlement of claims with the consortium of former offtakers.

"As a result of this settlement, Tata Steel has received an aggregate sum of approximately US$130m."

The consortium's decision to pull out half-way through a ten-year supply agreement in April 2009 seemed to have dealt a near knockout blow to Teesside's steel making industry.

Despite efforts to keep TCP open while a buyer was sought, with work transferred from other Tata Steel facilities and high-profile marches led by the unions at the facility, the plant was partially mothballed in February last year.

Following its mothballing more than 1,000 employees left the plant.

New hope came with the announcement in August that Thai firm Sahaviriya Steel Industries (SSI) was proposing to buy TCP after signing a memorandum of understanding with Tata Steel.

In February this year the two firms reached a formal agreement on a

£291m deal which will see 800 jobs created on top of the existing workforce of 700.