BlueScope has sounded the alarm over Australia’s energy crisis, warning that unsustainably high gas prices are pushing domestic manufacturing to a “tipping point”.
The steelmaker has reported a full year profit of $84 million, a 90 per cent drop from the $721 million reported a year ago.
Speaking after the company’s AGM, BlueScope CEO Mark Vassella said energy costs in Australia are now three to four times higher than in the US and risked undermining the country’s Future Made in Australia vision.
Mr Vassella said BlueScope had submitted a detailed response to the federal government’s Gas Market Review including suggested immediate and long-term changes.
“LNG spot cargos going offshore should come back to the domestic market, exporters not buying domestic gas and re-exporting, and then longer term we need structural reform,” he said.
The steelmaker, owner of the Port Kembla Steelworks, reported a 90 per cent drop from its $721 million profit last year. (ABC Illawarra: Justin Huntsdale)
BlueScope’s neighbour Squadron Energy is planning to impart gas through its Port Kembla Energy Terminal, but Mr Vassella ridiculed the idea of Australia needing to import gas.
“In what world does exporting LNG in massive quantities only to reimport to supply a shorted domestic market make any sense?” he said.
“Without immediate intervention there will be no Future Made in Australia.”
Mr Vassella said Australia still needed more reliable and affordable renewable energy after the last remaining proponent of the proposed Illawarra offshore wind project abandoned it this month amid a global investor retreat.
BlueScope had previously lodged a submission in support of the project.
Offshore wind hits turbulence amid global headwinds
“We need more energy, we need it to be renewable, we need it to be reliable, we need it to be affordable,” Mr Vassella said.
“And we were supportive of the wind industry. Our products go into the wind farm industry.”
He acknowledged the challenges facing developers but stressed that all energy projects come with a cost, and even so should be judged on whether they represent the “least-cost option”.
Tariffs ‘moving feast’
The sharp downturn in profits was mainly due to a $439 million write-down in its US coated products business.
CEO Mark Vassella described tariffs as a “moving feast” for the steel industry.
Mr Vassella said a recently proposed 50 per cent tariff on Brazilian pig iron, which was later reversed, highlighted the volatility of trade policy.
Steel at Bluescope Steel’s plant at Port Kembla. (Supplied: Bluescope)
He said while some tariffs negatively affected Australian exports, BlueScope benefited from its multi-domestic strategy, particularly in North America, where local production shields it from price swings.
“There’s a lot of movement, lots of volatility and variability,” he said.
“It has affected demand as people try to understand the implications before committing to inventory.”
‘Challenging’ Whyalla problem
While energy costs dominated the national conversation, BlueScope was also eyeing opportunities closer to home, including the future of the Whyalla Steelworks.
A worker inspects products at Whyalla Steelworks. (ABC News: Lincoln Rothall)
Mr Vassella expressed cautious excitement about the steelmaker’s offer to step in and support the steelworks.
BlueScope has assembled a consortium with global steelmakers including Nippon Steel, JSW Steel, and POSCO to bid for the facility.
The consortium aims to transform Whyalla into a hub for low-emissions steel production, aligning with Australia’s broader industrial strategy
“This is a wicked problem, and one we are not [yet] committed to doing anything at all,” he said.
“We’ve got optionality, we’ve got the right partners.
“There’s a bunch of work to determine what future or structure steelmaking might look like in Whyalla.”
