Bluescope confident but cautious on economy


Bluescope Steel says there are signs the iron and steel industry is bouncing back, but waits for sustained improvement

November 13, 2009

BlueScope Steel says it is in a strong position coming out of the economic downturn but maintains it will continue to act conservatively to ensure its "strong balance sheet" remains in tact.

Speaking at the company’s Annual General Meeting (AGM), BlueScope Chief Executive Paul O’Malley says the domestic markets are recovering well and the increasing demand from overseas means some furnaces will continue running at capacity throughout the year.

However, he expects the company to remain cautious in the near term until it sees signs of sustained improvement in the global economy.

"Domestic markets have been recovering in recent months. Export demand, particularly from external customers in Asia, and from the company’s offshore affiliates in Asia and North America is improving," O’Malley says.

"December half export sales are in line with our expectations, and enquiries for the March quarter remain strong. Subject to this demand continuing, we intend to maintain operation of both Port Kembla Blast Furnaces at 100 percent into the third quarter of Financial Year 2010.

O’Malley also took the opportunity to raise concerns about the Ruddl Government’s proposed Carbon Pollution Reduction Scheme.

He says it is likely to hurt the steel industry unless modifications are made.

"Imposing such costs in Australia, ahead of major competitors will affect the international competiveness of our Australian operations, making investment in these assets more over time – and making it very difficulty to invest in environmental abatement projects," he says.

"No one at BlueScope wants to see world-class assets like Port Kembla or Western Port lose their low cost position which is core to their existence."

O'Malley says the CPRS needs to be amended to ensure it does not negatively impact the international competitiveness the Australian iron and steel industry.

Bills to be introduce the CPRS will be debated when parliament resumes next week. The Rudd Government wants the scheme approved before negotiations begin next month in Copenhagen to develop an international agreement to address climate change.

Under the CPRS, an emissions trading scheme will be established whereby companies will need to buy permits to pollute.


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