BlueScope is touting a strong result in Australia despite a 2 per cent decline in profits for the first half of the 2024 financial year, as it signals continued expansion plans.
The Australian steelmaker has announced a half-yearly profit of $439 million, a $29 million increase on the second-half profit for the 2023 financial year.
Managing director and chief executive Mark Vassella said North America and New Zealand delivered “softer” results while Asia returned a “solid” result up 17 per cent on the previous six months.
Shareholders will receive a fully franked interim dividend of 25 cents per share and an extension to the share buy-back program.
“From our perspective when you think about the housing shortages in Australia, the migration numbers and the population growth we are seeing we have got a really positive outlook for residential housing in Australia,” Mr Vassella said.
“Any softness in that space from our point of view we think is temporary.”
He said the company’s “robust balance sheet” underlined their future investment strategy with major new projects underway in New South Wales, despite an ongoing tightness in the labour market.
“We’re investing more than $2 billion in NSW in major projects, across the blast furnace reline in the Illawarra which is a really significant project for us and a whole bunch of talented people needed to run a project like that,” Mr Vassella said.
“We’re almost through the construction of the pipe and tube mill in the Illawarra, we are building a new metal coating line in western Sydney so markets are tight from a project perspective but we get the people that we need.”
Carbon reduction plans
BlueScope has defended $136 million grant it received under a federal government renewable transition fund due to the money going to maintaining the existing blast furnace or high carbon emissions technology.
Federal Climate Change and Energy Minister Chris Bowen recently said grant was to “give BlueScope the time to continue their investments in decarbonisation”.
“Green steel isn’t yet commercial anywhere in the world,” Mr Bowen said.
Mr Vassella said the money would make the new relined blast furnace more efficient.
“There’s a whole range of technologies that we are installing in the blast furnace to make it as efficient as it can be,” he said.
“So there’s recovery units at the top of the blast furnace, there’s heat retention facilities that we’ve got in the blast furnace that are all about reducing the amount of energy we use in that process and making it as carbon efficient as we can.”
BlueScope is also seeking to make progress on its “decarbonisation journey” reaching an agreement with BHP and Rio Tinto to investigate Electric Smelter Furnace technology using Pilbara ores, but is yet to confirm where and when the technology would be deployed.
Mr Vassella said Port Kembla would make sense as the location, but equally “other states like South Australia and Western Australia who are talking to us are very keen for that facility to be built in those regions as well”.
The scenario of green steel would need to be powered by green electricity possibly from offshore wind turbines, but the company’s commitment to this scenario remains cautious.
“I don’t care where [the green electricity] comes from as long as it is renewable, affordable and dispatchable,” Mr Vassella said.
“We have a vested interest in wind farms because our plate goes into those wind farms so we like that technology, we like the fact that it’s renewable, but that’s not really our choice,” he said.
Future property management
BlueScope has revealed how it plans to diversify the use of 1,200 hectares of land it owns around Wollongong in New South Wales, Western Port in Victoria and Glenbrook in New Zealand.
The company has already completed a master plan for land at Port Kembla and signed a Memorandum of Understanding with TAFE NSW to house a “Super TAFE”.
BlueScope’s chief financial officer David Fallu said the company was working through ways to increase the value of adjacent landholdings.
“Any progressive rehabilitation requirements, rezoning or planning that we need to do, that’s the work we’ll be doing in parallel but quite clearly it’s a substantial asset that’s of value and should only increase from here,” Mr Fallu said.
Mr Vassella said the plan was about the future.
“This is not just necessarily about flogging off pieces of land, this is about what is the highest and best use for us in terms of our ongoing business operations,” Mr Vassella said.
Get our local newsletter, delivered free each Thursday