BlueScope Steel keen on Whyalla’s iron ore resource
BlueScope Steel acknowledges its interest in Whyalla Steelworks extends beyond the beleaguered group’s main South Australian facilities, but will be disciplined in exploring a potential takeover.
Chairman Jane McAloon said BlueScope did not expect an early resolution to the Whyalla saga and others would deal with the troubled steelworks, which employ 1,100 workers and indirectly support more than 2,000 others.
Ms McAloon told the company’s annual general meeting at its base in the steel town of Wollongong on the NSW south coast on Tuesday: “I can assure you we will not do anything that is not in the interests of BlueScope.”
He noted that the company had a financial framework it established as it emerged from its “darkest times” from 2013 to 2015, prohibiting investments unless returns were generated on investor capital.
“This is a really important principle for us,” he said.
“Because as we talked about before, when we’re at the bottom of the cycle, cash flow is the highest priority.”
Ms McAloon said Whyalla was “not just a steel mill”.
The site, which dates back to 1941 and produces most of the structural steel used in Australia, also includes iron ore mines, structural rails and “lots of stuff”.
BlueScope CEO Mark Vassella added that Whyalla’s ore resource was “potentially interesting” in terms of future decarbonisation opportunities at BlueScope’s Port Kembla Steelworks or Whyalla.
In August, BlueScope submitted a non-binding expression of interest for the Whyalla assets as part of a consortium that includes Japanese, Indian and Korean steelmakers Nippon Steel Corporation, JSW Steel Limited and POSCO.
The SA Labor government placed the Whyalla steelworks into administration in February, taking the business from British billionaire Sanjeev Gupta after it had been unable to pay creditors for some time.
Manager KordaMentha was appointed to search for a buyer and appointed BlueScope as technical advisor.
“We definitely sent some of our best people there to advise the managers,” Ms. McAloon said.
“Administrators said the site continues to operate with the technical guidance and assistance of our employees.”
BlueScope also announced Tuesday that it expects first-half earnings before interest and taxes, due in February, to be in the lower half of the $550 million to $620 million range it provided in August.
BlueScope’s Australian business continues to face cost increase pressures and is hurt by soft pricing in both domestic and export markets.
BlueScope shares fell more than two percent to $22 in afternoon trading on the news.
Ms McAloon, Mr Vassella and CEO-elect Tania Archibald also paid tribute to a contractor in his mid-20s who was killed by a falling steel beam at Port Kembla Steelworks on Monday.
Mr Vassella said BlueScope was focused on supporting his family, colleagues and the wider community during this difficult time.
“We are not satisfied with our performance and as CEO I can assure you that nothing is more important to me and the management team,” he said.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
