Port Kembla Steelworks Blast Furnace Reline

In BlueScope's half year results announcement today, we advised the company is considering options for the future configuration of the Port Kembla Steelworks, once the No.5 Blast Furnace comes to the end of its current operating campaign, which is now expected to occur in the late 2020s, with an indicative range of 2026 to 2030. The furnace is operating well, and the business is planning to continue to operate it for as long as it is efficient, reliable and safe to do so. However, given the critical nature of iron making to the Port Kembla operations, to safe-guard supply, an alternate source of iron may need to be available from 2026. 

Understanding our decarbonisation pathway and technology plan from our scenario analysis are central to our approach. Emerging ‘green steel’ technologies, whilst promising, are not yet ready for large scale implementation in the timeframes required. In addition, alternative established lower carbon technologies such as EAF steelmaking are not economically viable for large scale flat steel production in Australia at this time given the Australia’s high cost of energy and due to insufficient availability of cost effective, quality scrap steel to support three million tonnes of flat steel production at Port Kembla. 

At this point, a reline is likely to be the most technically feasible and economically attractive option for Australian steelmaking while longer-term breakthrough low-emission technologies are developed. Evaluation of measures to reduce carbon emissions intensity of iron and steelmaking are a key part of the process, as evidenced by the establishment of the role, and the appointment, of a new Chief Executive for Climate Change. Given the strong earnings and cash flow capability of our Australian Steel Products business, there is significant flexibility and optionality to adopt new technologies and iron making configurations in the medium to longer term, as and when they are technically and commercially ready. 

Our initial focus is on the option to reline the currently mothballed No.6 Blast Furnace. The scope, cost and timing are being developed. This option may enable the project to be conducted over a longer period to minimise operational disruption, optimise the asset and spread the capital expenditure. 

We have commenced a pre-feasibility assessment (with an expected cost of around $10M) in accordance with BlueScope’s rigorous multi-stage capital investment evaluation process; the highly indicative capital cost is around $700 million to $800 million.