IRISH Steel is to spend £4 million reclaiming land, adding extra cranes and improving the plant's system of sorting scrap metal. The move is expected to save the company up to £800,000 a year as it will make the system of mixing steel more efficient. Irish Steel has been taken over by Ispat International, an Indian owned steel group and it will break even this year, Irish Steel chief executive, Mr Richard Arm stead told The Irish Times.

Mr Armstead said he believed the legal challenge by British Steel to the sale of the Irish plant would fail, although it probably would go to court. Britain threatened to veto the deal, which needed EU approval.

Mr Armstead said Ispat had expected British Steel to adopt the attitude it did and it was very clear that they had been "outside the door" when Britain had been negotiating with Ireland about limiting the Cork plant's output.

Under the deal worked out with Britain and the EU, Irish Steel's output will rise from 320,000 tonnes this year to 361,000 in five years, after which there will be no cap on production. Last year the plant only produced 258,000 tonnes.

Mr Armstead believed that, despite the curbs, Irish Steel would profit.

Mr Arm stead moved to Cork from Ispat's steel operation in Mexico, which he had joined in 1992. The Mexican government had restructured it in 1991 and broken it up into different components.

Mr Arm stead said the company was making significant losses and had $175 million of debt which Ispat had to pay off over 10 years.