February 7, 2024

Steel Market Summary - Australia

Steel Industry Receives $200M In Clean Energy Drive

The Federal Government has announced the allocation of $200 million in total funding to BlueScope Steel and Liberty Steel Australia (parent company of InfraBuild) as part of its Powering The Regions Fund. The grants are the first to be delivered under the government´s Critical Inputs to Clean Energy Industries (CICEI) program. The $400 million CICEI program was developed following the Safeguard Mechanism reforms to support “hard-to-abate” sectors so as to maintain domestic industries which produce inputs essential to the development of Australia’s clean energy industries. The funding announcement was made on January 31st by the Minister for Climate Change and Energy, Chris Bowen, at BlueScope´s Port Kembla steelworks. “Regions like the Illawarra and Whyalla have been industrial powerhouses for generations … and we want to see this continue,” the Minister said. Under the agreement BlueScope Steel has been awarded $136.8 million to reline and upgrade of its No.6 blast furnace at Port Kembla, while maintaining domestic production. It will employ approximately 250 additional workers on site for the project. BlueScope’s Chief Executive Australian Steel Products, Tania Archibald, said


at the announcement: “Both we and the Government recognise that BlueScope operates in an emissions-intensive, hard to abate sector. This Federal Government CICEI grant helps build the essential bridge to BlueScope’s transition to net zero by 2050.” Ms Archibald added that Australian steel is an indispensable ingredient in building Australia’s low emissions future.

Liberty Steel Australia has been allocated $63.2 million towards the purchase and commission of a low-carbon electric arc furnace to replace the existing traditional blast furnace at its Whyalla steelworks. It is estimated that the shift to green iron and steel will increase the company´s workforce by almost a quarter over five years and will help provide retraining for a substantial number of workers. Sanjeev Gupta, the executive chairman of GFG Alliance, which owns Liberty Steel Australia, commented that: “Now is the time to phase out increasingly obsolete equipment and technology that no longer has a place in our world and embrace the installation of new electric arc furnace technology that ensures environmentally sustainable steel production in Whyalla will continue throughout the 21st century.”

Underlining the government´s commitment to emissions reductions, Mr Bowen said: “We want to make sure products vital to our economic future like green steel are made in Australia, but this will require innovation and new ways of processing iron ore that decarbonise our steel industry.” Mr Gupta said the funding signifies the Whyalla steelworks transition to producing greener steel is wholeheartedly supported by a government that understands the importance of retaining an industry that employs Australian workers and underpins Australian communities and businesses.

As regards the general marketplace of steel trading in Australia, little has changed over the past month. The long pipeline of large infrastructure projects will continue to drive strong demand for steel and will thus underpin steel prices in at least the short- to medium-term. Meanwhile, the decision this week by the Reserve Bank of Australia to maintain its cash rate target steady at 4.35% was within market expectations and hasn´t shifted sentiment one way or the other. The OECD (Organisation for Economic Co-operation and Development) is also likely to leave its outlook for Australia´s economy unchanged. Its prediction is that Australia´s GDP will expand by 1.4% this year and by 2.1% next year. The OECD also believes Australia´s inflation rate will fall to 3.5% this year and to 2.8% next year. That said, many market commentators have pointed to a huge wave of business enthusiasm which is itching to be set free by the first interest rate cut – anticipated to arrive around mid-year.