BlueScope Steel has announced it will return $438 million in surplus cash to shareholders in an unfranked special dividend of $1.00 per share. The dividend is due to be paid on February 24. In a statement to the ASX, BlueScope´s managing director and chief executive officer, Mark Vassella, said: “This special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders. With a clear line of sight to the completion of our current capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further with the enhanced earnings of the business”. The move to pay the dividend follows the decision by BlueScope´s Board to reject a $13.2 billion takeover bid made on December 11 by a consortium comprised of Kerry Stokes´s SGH Limited and the US-based Steel Dynamics. The all-cash offer had valued BlueScope Steel at $30 a share. Mr Vassella said the $438 million would arise from three key initiatives. First, the sale for $167 million of BlueScope’s 50% interest in the Tata BlueScope joint venture. Also, the agreement to sell 33 hectares of land at West Dapto for $76 million. Third, the expected release of around $200 million from BlueScope Properties Group during the next two financial years.

In addition to these cash flows, the statement said BlueScope’s free cash generation is set to ramp up over the next 12-18 months. This cash boost will be delivered as the company works through the balance of its major investment program, with a reduction in capex of at least $500 million expected in FY2027 relative to FY2026.

SGH Ltd (formerly Seven Group Holdings) is majority owned by Mr Stokes, and Steel Dynamics is the third largest producer of carbon steel products in the United States. When making its offer, the consortium said its plan would be to break up the Australian steelmaker along geographic lines – SGH taking the Australian operations and Steel Dynamics getting the North American unit. The takeover process would see SGH acquire all of BlueScope’s shares and then offload its North American businesses to Steel Dynamics. The offer was made public on January 5. However, on January 6 it was flatly rejected, with BlueScope Steel´s Chair, Jane McAloon, saying, “Let me be clear – this proposal was an attempt to take BlueScope from its shareholders on the cheap. It drastically undervalued our world-class assets, our growth momentum, and our future – and the Board will not let that happen”. In a statement to the ASX and in a separate letter directly to shareholders Ms McAloon said the BlueScope team was well recognised for delivering value for its shareholders and customers. “Since its restructure was completed in financial year 2017, BlueScope has invested over $3.7 billion in growth projects, delivered over $3.8 billion of shareholder returns and achieved an 18% average return on invested capital,” she said. “Under the experienced leadership of the incoming managing director and chief executive officer, Tania Archibald, the Board is highly confident that management will continue to deliver superior shareholder value,” she added. Ms McAloon said the consortium’s takeover proposal also comes at a time of lower steel spreads in Asia. She commented that, if steel spreads and FX rates reverted to historical average levels, this would be expected to generate an additional $400 to $900 million of EBIT per annum relative to FY2025. AustralianSuper, BlueScope’s largest investor, backed the rejection, saying the offer did not reflect underlying value.

When BlueScope announced the special dividend on January 14, market analysts were quick to point out it is only the fifth dividend since BlueScope went public more than two decades ago, it´s the first since 2021, and it is five times larger than the previous record special distribution in 2005. The Melbourne-based company said the special payout was “independent of any prior or potential future proposals for the company”. However, its timely nature caused some commentators to describe it as a ploy to attract a higher bid from SGH and Steel Dynamics. They said that, by paying the dividend and publicly declaring the company´s fiscal health and optimism for the future, BlueScope was obviously making the case that the company is worth much more than $30 a share. Meanwhile, the Australian Financial Review has reported that BlueScope Steel’s biggest shareholders have already held meetings with Ms McAloon and her management team, in which they called on BlueScope to formally test buyer interest in the company´s sprawling North American business. So, stay tuned, there´s lots more to come.

To finish, some fascinating statistics from our largest trading partner. In 2025, steel exports from China rose 7.5% above their 2024 level to an all-time high of ‍119.02 million metric tonnes (Mm/t), according to the country’s General Administration of Customs. This was despite an increasing number of countries throwing up trade barriers on Chinese steel. China’s steel exports hit a record monthly high ‌in December, when 11.3 Mm/t were sent abroad. It´s believed this was fuelled by front-loading following Beijing’s announcement of an export licence requirement for shipments from 2026 onwards. Meanwhile, imports of iron ore to China also reached a record in 2025. The 1.26 billion metric tonnes imported was a 1.8% increase on 2024. Imports in December rose 8.2% from the month before to 119.65 Mm/t, the highest ever for a month. It´s believed that low in-plant inventories and improved steel margins had encouraged mills to book more cargoes. Global iron ore supply is forecast to grow by 2.5% in 2026, and shipments to China are expected to increase by 36-38 Mm/t. All of which augurs well for Australian iron ore miners and the Australian Government, in the form of tax revenue.