It will be cold comfort to many Australians that higher mortgage repayments is the pain the Reserve Bank of Australia (RBA) inflicted upon them this week in order to avoid the even greater pain of rising inflation. At least, that was the logic behind the RBA´s decision on Tuesday to increase rates by 25 basis points to 3.85%. Insofar as it impacts the steel industry, higher rates can be linked to less home building, which would mean fewer sales of TRUECORE® and COLORBOND®. Such is the landscape facing Tania Archibald, who officially took the helm at BlueScope Steel on Monday as its new managing director and chief executive officer. Despite the headwinds, in an upbeat statement to the Australian Stock Exchange, Ms Archibald said the BlueScope portfolio is well positioned. Population growth in Australia, she said, is driving steel demand across all sectors including housing and infrastructure; steel demand in the United States remains robust; Asia is doing well; and the new EAF in New Zealand has reset the operating model and cost base. “Our current $2 billion investment program is now entering the final phase. We’re poised to deliver strong cash flows. And I intend to capitalise on it for the benefit of shareholders. As the investment phase ramps down, the delivery phase ramps up,” she said.

Ms Archibald outlined four initiatives in the coming year which will enhance the company´s value. First, she commented that BlueScope is nearing completion of its $200 million cost and productivity program and is well underway on its $500 million annual earnings growth target. Next, she hinted at job losses by saying: “BlueScope will streamline the leadership and functional teams across the organisation to deliver a simpler, leaner, more agile BlueScope”. The company will also push ahead with realising value from the 1,200 hectares of surplus land it holds. And finally, Ms Archibald intends to evolve BlueScope´s balance sheet settings and rebase shareholder returns substantially higher.

In her statement, the new managing director reiterated the Board’s rejection of the unsolicited takeover bid made by SGH Holdings and Steel Dynamics, noting, “The Board rejected the proposal, and I supported that rejection. It very significantly undervalued this company. It sought to transfer value away from our shareholders by buying BlueScope on the cheap”. However, she also said the Board remains open to any proposal that genuinely reflects BlueScope’s fundamental value.

The Whyalla Steelworks debacle has taken a turn with news that OneSteel Manufacturing, the former owner of the plant, owed the South Australian Government $18.5 million in state royalties before going into administration in February last year. The ABC says the figure can be found in documents obtained under the Freedom of Information Act by former South Australian senator, Rex Patrick. OneSteel Manufacturing was part of the GFG Alliance conglomerate, which is privately owned by the British industrialist, Sanjeev Gupta, and his family. In response to the news, the South Australian Treasurer, Tom Koutsantonis, told the ABC: “It was not unusual for GFG to fall behind on royalty payments at any point in its ownership of the steelworks, dating back through previous Liberal and Labor governments”. It is surprising, however, to learn that OneSteel Manufacturing sought and received additional funding from the South Australian Government whilst in arrears with its royalty payments. Indeed, it was only in July 2024, when the company failed to meet its royalty obligations altogether, that the state government began the process which forced the steelworks into administration six months later. It was at that time that trade and other creditors were found to be owed more than $1 billion by OneSteel Manufacturing. 

Mr Patrick told the ABC the state government had known for two years that OneSteel Manufacturing was having difficulties and that the government should have placed the steelworks into administration months earlier. “Many people in Whyalla suffered, many businesses suffered, and the company got itself into a worse position which has made it much harder for the administrator,” Mr Patrick said. The saga continues.

Another story Australian Steel News has been following in recent months is that of Tahmoor Coal, a subsidiary of Liberty Primary Metals Australia (LPMA), which is owned by Sanjeev Gupta. The coking coal mine, south-west of Sydney, has been non-operational since February last year after exhausting its cash reserves. Around 500 workers, including contractors, were placed on minimum pay. But by November roughly half were informed they would no longer receive wages. LPMA subsequently went into voluntary administration. As part of that process, Tahmoor Coal is now up for sale.

On February 4, the ABC reported that a local consortium involving the mine’s main contractor, RStar, recently made an offer of $350 million for the business, however, the offer was rejected. The Mining and Energy Union (MEU) said it supported the bid. “We understand the offer would have paid out all of the creditors 100%, including the royalties to the state government, and have enough to restart the mine,” said MEU South West District president, Bob Timbs. A spokesperson for GFG Alliance, the ultimate owner of LPMA and thus Tahmoor Coal, said the administrators’ process was the only pathway towards a sale. “The formal process for the sale of Tahmoor Coal is being run by the deed administrators, William Buck, with the support of GFG Alliance,” the spokesperson said.

In that process, expressions of interest opened in mid-January and will close on February 11. Michael Brereton of the joint administrator, William Buck, said: “We previously disclosed we had received six expressions of interest before Christmas, and since then we’ve been approached by additional parties”. Short-listed bidders will enter a four-to-six-week due diligence process, with the administrators aiming to complete a transaction by March or early April.