Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Investor Day (May 2013)
124 slides from Bluescope Steel's investor day presentation, May 30, 2013
Slide 1: BlueScope Australia & New Zealand (BANZ) Investor Briefing Day
For personal use only BlueScope Australia & New Zealand (BANZ) Investor Briefing Day 30 May 2013 BlueScope Steel Limited. ASX Code: BSL
Slide 2: Important Notice
Important Notice For personal use only THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE.
Slide 3: Agenda
Agenda For personal use only Introduction: Mark Vassella – Chief Executive, BlueScope Australia & New Zealand CIPA Products and Markets: Andrew Garey – General Manager, Sales & Marketing CIPA Manufacturing: John Nowlan – General Manager, Manufacturing Building Components & Distribution Australia: An
Slide 4: Safety is a core value for BlueScope
Safety is a core value for BlueScope. BANZ continues to have world class performance and is striving for zero harm For personal use only Lost Time Injury Frequency Rate (BANZ) Medically Treated Injury Frequency Rate (BANZ) 2.24 11.34 Medically treated injuries per million man-hours worked 9.65 9.15
Slide 5: Committed to improving environmental footprint of operations
BlueScope remains committed to continuously improving the environmental footprint of its operations For personal use only • The BlueScope Steel Environment Management System comprises the following major elements: 9 Our Bond 9 HSEC Policy 9Environment Principles 9 Environment Standards 9 BSL & Opera
Slide 6: Introduction
For personal use only Introduction Page 6
Slide 7: BlueScope Australia & New Zealand businesses
BlueScope Australia & New Zealand businesses For personal use only BlueScope external operating segment reporting structure1 Building Products Coated & Industrial Building Components New Zealand and Global Building Hot Rolled Products ASEAN, North Products Australia & Distribution Pacific Steel Solu
Slide 8: BANZ business structure and management team
The BANZ business structure was created in July 2011, and the management team was refined in January 2013 to ensure we stay focussed on core business For personal use only BANZ Management Team Page 8
Slide 9: BANZ: Considerable change since established on 1 July 2011
BlueScope Australia and New Zealand (BANZ) Considerable change since established on 1 July 2011 For personal use only Business Changes • On 1 July 2011, BANZ was established by combining three existing businesses into one. The right structure to support better management decisions across one value c
Slide 10: Behavioural changes since 1 July 2011
BlueScope Australia and New Zealand (BANZ) Considerable change since established on 1 July 2011 For personal use only Behavioural Changes – A fundamental change in the way we operate • A ‘one value chain’ approach • A ‘market driven’ approach • Focusing on controlling the actual cost and quality per
Slide 11: BANZ will be a vibrant, sustainable steel business
BANZ will be a vibrant, sustainable steel business. We are good at what we do and proud of it For personal use only TARGET WINNING MARKETS We’re recharging BANZ to deliver long term sustained profitability and cash generation GET LEAN, FIT TRIPLE A AND HUNGRY CULTURE BROADEN VIEW TO CREATE GROWTH $
Slide 12: Snapshot of BANZ strategic initiatives
Snapshot of BANZ strategic initiatives For personal use only • Next generation ZINCALUME® steel with Activate™ technology has commenced production in Australia and is being progressed at NZ Steel • This will become the substrate of next generation of COLORBOND® steel Target winning markets products
Slide 13: Coated & Industrial Products Aust – Products & Markets
For personal use only Coated & Industrial Products Aust – Products & Markets Page 13
Slide 14: Product categories and applications
Product categories and applications For personal use only Product Primary end use markets Applications Slab • Steel manufacturing • Hot rolled coil and plate Plate • Manufacturing, building and construction • Infrastructure projects, mining equipment and structural and mining applications Hot rolled
Slide 15: 1H FY2013 despatch mix
1H FY2013 despatch mix For personal use only 1,248kt Export 345kt Export HRC Plate CRC Metal Coated Painted Domestic 903kt Other Domestic Six months ended Dec-2012 Page 15
Slide 16: Four fundamental drivers of profitability
Four fundamental drivers of profitability For personal use only Domestic Demand Domestic Volume / Mix Market Share CIPA Profitability Global Spread Margins Domestic Value Proposition Page 16
Slide 17: Market channels
Market channels For personal use only Building Component Manufacturers Market Segments (including Lysaght) Residential Non-Dwelling Steel Distribution (including BSD) Steelmaking & Coating Engineering Domestic Manufacturing Pipe and Tube Manufacturing Agriculture & Mining General Automotive & Manufa
Slide 18: Australian external despatch volumes
Australian external despatch volumes For personal use only 2H FY08 1H FY09 2H FY09 1H FY10 2H FY10 1H FY11 2H FY11 1H FY12 2H FY12 1H FY13 1,800 (No. 5 Blast 63% Furnace Reline) 1,600 64% Construction 65% 1,400 27% (436kt) 27% (389kt) 66% 67% 67% 65% 64% 1,200 28% (391kt) 28% (349kt) 65% 21% (344kt)
Slide 19: Australian residential construction starts slowly improving
Australian residential construction starts slowly improving For personal use only Quarterly number of Australian residential construction starts (total new houses) to December 2012 1 (Number per quarter) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun
Slide 20: Spread is a major determinant of CIPA profitability
Spread is a major determinant of CIPA profitability For personal use only East Asia HRC Price (US$/t) and Indicative Steelmaker HRC Spread (A$/t) Spread: SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal $800 SBB East Asia HRC (US$/t) $700 $600 $500 $400 $300 Indica
Slide 21: Better profitability in coated and painted products
Better profitability in coated and painted products For personal use only Category Summary • Ingredient products, typically substantially transformed into final Hot Rolled Coil goods. Limited Plate product • BSL offer principally differentiated by service offer, supply reliability differentiation an
Slide 22: Progress on challenging unfair trade and dumping
Progress on challenging unfair trade and dumping For personal use only Process Current Duties • Preliminary Affirmative Determination (PAD) issued Oct 2012 • Final recommendation Dec 2012 • Interim Dumping Duties (IDD) rates: – Japan 0- 7.5% Hot Rolled Coil • Trade Measures Review initiated in Feb 2
Slide 23: Next Generation ZINCALUME: Reinforcing status as market leader
Next Generation ZINCALUME®: Reinforcing status as market leader For personal use only • Production of next generation ZINCALUME® steel with Activate™ technology commenced in 2H FY2013 following development and testing over a number of years • Customers will benefit from: ¾ Improved product lifespan
Slide 24: Next Generation ZINCALUME: Activate technology
Next Generation ZINCALUME®: Activate™ technology For personal use only AZ150 AM125 Original Next generation ZINCALUME® steel ZINCALUME® steel with Activate™ technology • The introduction of magnesium into the aluminium-zinc alloy coating improves galvanic protection by activating the aluminium to pr
Slide 25: Next Generation ZINCALUME: market response positive
Next Generation ZINCALUME®: market response positive For personal use only • Multi-channel marketing program well advanced – Targets four key audience groups: Architects, Builders, Developers and all construction professionals • Direct customers are engaged and very positive towards the opportunitie
Slide 26: Coated & Industrial Products Aust – Manufacturing
For personal use only Coated & Industrial Products Aust – Manufacturing Page 26
Slide 27: BlueScope's Illawarra businesses
BlueScope’s Illawarra businesses For personal use only Flat Products Recycling Area (HRC & plate) Iron & Steelmaking Research, Administration & Original Steelworks Site Page 27
Slide 28: Flat products process: raw materials to HRC
Overview of flat products process in Australia: raw materials to HRC For personal use only SINTERING Coal Iron Ore BLAST FURNACE Sintered ore COKE OVEN Coke Molten pig iron Slag CONVERTER (BOS) “Graded” Liquid Steel REFINING STAND CONTINUOUS CASTING Slab REHEAT FURNACE HOT STRIP MILL Hot Rolled Coil
Slide 29: Flat products process: pickling and cold rolling
Overview of flat products process in Australia: pickling and cold rolling For personal use only Coupled Pickle Cold Mill (CPCM) Thickness reduction via cold rolling through Recoiling using five stands carousel reel Scale removal (pickling) using hydrochloric acid Hot rolled coil is uncoiled To Metal
Slide 30: Flat products process: metal coating
Overview of flat products process in Australia: metal coating For personal use only Metallic Coating Line (MCL) Page 30
Slide 31: Flat products process: painting
Overview of flat products process in Australia: painting For personal use only Continuous Paint Line (CPL) Primer Ovens Primer Coater Main Oven Main Coater Inspect & Test Painted coil is recoiled Chemical rinsing, cleaning & pre-treatment Coated Coil from Metal Coating Lines Page 31
Slide 32: Annual capacities
Annual capacities Port Kembla Steelworks (Wollongong, New South Wales, Australia) #5 Blast Furnace For personal use only 2,600 Slab Casters 2,600 Slab Plate Mill Plate 450 Hot Strip Mill HRC 2,900 Coupled Pickled Cold Mill CRC 990 Metal Coating Lines Metal Coated 825 Strip Springhill Coated Works (W
Slide 33: Major changes to match capacity to demand
Major changes over the last two years to match capacity to demand and to improve efficiencies For personal use only Shipping berths • Reduced manning and loading outbound coal at bulk berth; loading outbound coke on No1 Products Berth Cokemaking • Closed one battery; now operating 3 batteries (close
Slide 34: Major changes to match capacity to demand (cont.)
Major changes over the last two years to match capacity to demand and to improve efficiencies (cont.) For personal use only Cold Rolling • Reduced load (no export) Springhill Metal coating • MCL1 converted and capable to produce Next Generation ZINCALUME® steel; MCL3 in process of conversion Paintin
Slide 35: Business improvement initiatives: cost saving
Examples of business improvement initiatives: cost saving initiatives For personal use only 1. Hot rolled coil transported to Western Port by rail – a cheaper and more reliable option than marine transport 2. Iron sands mix (from NZ Steel) used as feed material to the sinter plant – displacing exter
Slide 36: Business improvement initiatives: market facing
Examples of business improvement initiatives: market facing initiatives For personal use only 1. Sale of coke to export. We have deliberately configured our plant to enable export coke and drive additional revenue for the business. Focus on ensuring the appropriate quality and changing our process a
Slide 37: More cost effective iron ore blend
More cost effective iron ore blend For personal use only Iron inputs into Sinter Machine Iron inputs into Blast Furnace Fine iron ores and recycled materials are Sinter and lump iron ore are added to blended and fluxed in Sinter Machine to the Blast Furnace produce Sinter SINTER NZ Iron Sands Recycl
Slide 38: Supply and pricing of iron ore and metallurgical coal
Supply and pricing of iron ore and metallurgical coal to PKSW For personal use only Supplier Term Approximate Volume (p/a) Pricing Basis 10 years from Linked to average monthly index in the month of Iron ore BHP Billiton Up to 4.18Mt1 lump & fines 1 July 2009 shipment New Zealand Steel Short term co
Slide 39: Impact of restructuring
Impact of restructuring For personal use only CIPA1 employee numbers 5,272 4,339 4,224 2 FY11 FY12 FY13 Note: 1) CIPA employee numbers include: CIPA Manufacturing, CIPA Sales & Marketing and CIPA Supply Chain & Processing 2) FY2013 is based on April 2013 position Page 39
Slide 40: Monthly Sales & Operation Planning cycle
The monthly Sales & Operation Planning (S&OP) cycle provides operational and financial integration across CIPA For personal use only Demand Review Supply & Product Logistics Review Reviews Management Review Page 40
Slide 41: Community engagement in the Illawarra
Community engagement in the Illawarra Citizenship For personal use only Life Education Australia - Mobile school education facility program for disabled and able bodied young athletes • High-profile community partnership program established in the Illawarra with WIN Network (headquartered in the Ill
Slide 42: Environmental performance – resource efficiency & GHG measures
BlueScope environmental performance – resource efficiency & GHG measures For personal use only • The reduction in operations at Port Kembla Steelworks, the closure of the Western Port Hot Strip Mill and other associated changes in downstream operations have contributed to significant changes in Blue
Slide 43: Building Components & Distribution Australia
For personal use only Building Components & Distribution Australia Page 43
Slide 44: Overview of segment
Overview of segment For personal use only • The Building Components & Distribution Australia (BCDA) segment, effective from FY2013, brings together BlueScope Steel’s LYSAGHT and Distribution businesses • The Australian solutions businesses (Buildings, Water, Ranbuild, Highline etc) are now part of t
Slide 45: Role of BCDA in BANZ
Role of BCDA in BANZ For personal use only • Aim for positive cash flows and profits, achievement of hurdle rates of return and pull through tonnes to benefit the integrated chain • To achieve this, BCDA must: – Be a low cost steel channel to market – Ensure ongoing access to competitively priced st
Slide 46: BCDA Locations
BCDA Locations Darwin For personal use only Legend 33 • LYSAGHT 1 1 • 58 Distribution 11 20 Brisbane 1 9 2 2 Perth 11 10 Adelaide 4 14 Sydney Sites 91 Melbourne Active Customers >20,000 3 2 Hobart Page 46
Slide 47: BCDA sales by market segment (FY2012)
BCDA sales by market segment (FY2012) For personal use only Construction segment represents 65% of total domestic despatches Agriculture & Mining 17% Auto & Transport Manufacturing 11% 8% Construction - Engineering 6% Construction - Dwelling 33% 26% Construction - Non Dwelling Page 47
Slide 48: Distribution: Overview
Distribution: Overview For personal use only • Over 58 locations and approximately 1,200 employees Australia wide, providing quality steel solutions to the residential, non residential, engineering construction, automotive, transport, manufacturing, mining and agriculture market segments • Supplies
Slide 49: Distribution business plan & focus areas
Distribution business plan & focus areas For personal use only Get lean, fit & Target winning Optimise value Broaden view to hungry markets chain create growth Productivity Customer & Sales Reduction of waste enhancement excellence Branch excellence Steel efficiency Product Facility utilisation revi
Slide 50: Distribution: Vision
Distribution: Vision For personal use only “to deliver sustainable, profitable growth by positioning BlueScope Distribution as the preferred business partner to customers throughout the value chain” Page 50
Slide 51: Distribution: Core products
Distribution: Core products Steel & Tube Sheet & Coil For personal use only Plate Hot Rolled Hot Rolled Structural Cold Rolled Tube Galvanised Merchant Bar ZINCALUME® steel Pipe, Valves & Fittings TrueCore® steel Reinforcing & Rural COLORBOND® steel Aluminium Page 51
Slide 52: Distribution: Processing solutions
Distribution: Processing solutions For personal use only Value added processing services provided include: • Plate profiling • Slitting • Drilling • Shearing • Cutting & Sawing • Recoiling • Routing Page 52
Slide 53: Distribution: Restructuring program
Distribution: Restructuring program For personal use only • During FY2012 Distribution implemented a comprehensive restructuring program • Focus was on lowering costs and better aligning BSD to customer demand • Continue to strive for Zero Harm through engaged workforce participation • Restructure p
Slide 54: LYSAGHT: Overview
LYSAGHT: Overview For personal use only • Over 30 locations and close to 900 employees around Australia, providing a unique service capability unsurpassed by our competitors • Manufactures and markets an extensive range of roll formed steel products for the building industry with specific offerings
Slide 55: LYSAGHT business plan & focus areas
LYSAGHT business plan & focus areas For personal use only Get lean, fit & Target winning Optimise value Broaden view to hungry markets chain create growth Deliver on customer Reconnect with Differentiated Expand footprint promise customer base products and into emerging services markets Deepen One b
Slide 56: LYSAGHT: Vision
LYSAGHT: Vision For personal use only Australian Service Half Round Gutter Klip-lok ® Quality LYSAGHT The trusted experience in steel Technical Heritage Expertise Custom Blue Orb ® Custom Orb ® Heritage Red TM Dune TM Page 56
Slide 57: LYSAGHT: Channel to Residential and Non-Residential Segments
LYSAGHT: Channel to Residential and Non-Residential Market Segments For personal use only MARKET SUB-SEGMENTS Residential Building Construction Industry Commercial • Roofing Contractors Building LYSAGHT • Building Contractors Roll formed Product • Fencing Contractors Sheds • Shed Manufacturer’s • DI
Slide 58: LYSAGHT: Core products and brands
LYSAGHT: Core products and brands For personal use only • Roofing for the residential and commercial segments in profiles such as CUSTOM ORB®, TRIMDECK® and KLIP-LOK® 406 • A walling range that gives flexibility to suit any architectural style or environment with brands such as MINI ORB® CUSTOM ORB®
Slide 59: LYSAGHT: Recent Innovations
LYSAGHT: Recent Innovations For personal use only • LYSAGHT has a strong pipeline of product development with expected range enhancements across the segments we service. • Recent and imminent releases include: – Patented four panel fence structure using less posts for better aesthetics and quicker i
Slide 60: New Zealand & Pacific Islands
For personal use only New Zealand & Pacific Islands Page 60
Slide 61: Overview of New Zealand & Pacific Island sites
NZ&PI assets, products & markets: Overview of New Zealand & Pacific Island sites For personal use only Glenbrook Integrated Steel Mill Waikato North Head Mine Taharoa Mine Page 61
Slide 62: Glenbrook overview
NZ&PI assets, products & markets: Glenbrook overview For personal use only Raw Material Yards Iron & Steel Making Coating & Finishing Rolling Mills Page 62
Slide 63: Annual capacities
NZ&PI assets, products & markets: Annual capacities For personal use only Glenbrook Steelworks Steelmaking 670 Slab casters 670 Slab Hot strip mill Hot rolled coil 750 Coupled pickled cold mill Cold rolled 380 coil Metal coating lines Metal coated 230 strip Paint line Painted strip 65 Heavy Plate mi
Slide 64: Unique process to directly reduce iron sands
NZ&PI assets, products & markets: Unique process to directly reduce iron sands For personal use only Page 64
Slide 65: Steelmaking raw materials
NZ&PI assets, products & markets: Steelmaking raw materials For personal use only Iron Sand Concentrate (Waikato North Head Mine) y Iron sand mined and concentrated on site – 58.5% Fe y Sufficient resource for long term steel making operations y Concentrate is slurry pumped 18km underground to Glenb
Slide 66: Key product categories and applications
NZ&PI assets, products & markets : Key product categories and applications For personal use only Product Primary end use markets Applications Plate • Manufacturing, building and construction • Infrastructure projects, mining equipment and structural and mining applications including welded structura
Slide 67: NZ market at a glance
NZ&PI assets, products & markets: NZ market at a glance For personal use only Total market size within New Zealand CY2012 (Kt) End use segments (NZS domestic despatches) Long Imports Infrastructure 29 16% Pacific Steel 250 New Zealand 53% Building & 120 Manufacturing / (long) Steel (flat) Agricultur
Slide 68: 1H FY2013 despatch mix
NZ&PI assets, products & markets: 1H FY2013 despatch mix For personal use only 261kt Main export markets: • Australia Export • North America Export 136kt • Pacific Islands HRC Plate CRC Metal Coated Painted Other Domestic Domestic 125kt Six months ended Dec-2012 Page 68
Slide 69: Better profitability in coated and painted products
NZ&PI assets, products & markets: Better profitability in coated and painted products For personal use only Category Summary Hot Rolled Coil • Ingredient products, typically substantially transformed into final Limited goods Plate product • Import parity pricing (IPP). NZS offer principally differen
Slide 70: Taharoa mining and expansion 2012
NZ&PI assets, products & markets: Taharoa mining and expansion 2012 For personal use only Mining and Processing • Mining land and mineral title owned by a Maori trust • Mining free-flowing sands via dredge and floating concentration plant • Typical magnetic content of mined sand 40% to 50% • Fresh w
Slide 71: Waikato North Head – different mining methodology
NZ&PI assets, products & markets: Waikato North Head – different mining methodology given different sand structure For personal use only • Consolidated rather than free flowing sand. Dry mining method via bucket wheel excavator • Deposit is very different to the Taharoa deposit – Lower valuable mine
Slide 72: Iron sands shipment model
NZ&PI assets, products & markets : Iron sands shipment model For personal use only Taharoa iron sand legacy model Iron sands exports (Mt) • Dedicated slurry vessels • 40 to 50 day cycle time Waikato North Head 1.7 • System constrained by vessel Taharoa 0.3 • Port expansion to accept 175,000 DWT 1.2
Slide 73: Uses of iron sands
NZ&PI assets, products & markets: Uses of iron sands For personal use only • Iron sands are common geologically, but uncommon on the seaborne trade • Demand for low cost Fe units is increasing • An increases in the number of pellet plants in China is also driving demand Lump 6mm – 31 mm Fines Iron o
Slide 74: Business improvement initiatives: cost saving
Examples of business improvement initiatives: cost saving initiatives For personal use only • Recycling of previously dumped par processed raw materials • Use of alternative imported coal sources • Recycling of previously by-products in steelmaking • Redesign of maintenance team with significant rol
Slide 75: Business improvement initiatives: market facing
Examples of business improvement initiatives: market facing initiatives For personal use only • Export sales of iron sands from Waikato North Head • Dynamic costing models developed to allow assess best option of HRC sales vs. iron sands sales • Introduction of new COLORSTEEL® Maxx product range, ru
Slide 76: NZ&PI business plan & focus areas
NZ&PI business plan & focus areas For personal use only Get lean, fit & Target winning Optimise value Broaden view to hungry markets chain create growth Market Innovation Delivery Supply Chain Back 2 Basics performance efficiency Product Innovation Leading through Quality products & Energy Iron Sand
Slide 77: Pacific Lysaght growth
NZ&PI business plan & focus areas: Pacific Lysaght Growth continues as we look to broaden product range and territories For personal use only New Caledonia Vanuatu Fiji • New facility in North opened in Feb • Continue to build market for low • New territory exploration for JV 2013 – performing ahead
Slide 78: Product and systems innovations and value chain management
NZ&PI business plan & focus areas: Product and systems innovations and value chain management For personal use only Concept Develop Product Manufacturing Proving Proving Market Launch No. of Projects 12 8 3 3 4 Warmframe TM Vintage Patina Box Section COLORSTEEL® Systems Bounce™ Page 78
Slide 79: Residential construction approvals trending higher – Christchurch rebuild
Markets: Residential construction approvals trending higher – Christchurch rebuild underway For personal use only Monthly number of New Zealand residential construction approvals1 (Number per month) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar 02 03
Slide 80: Continued growth in iron sands and non-steel businesses
NZ&PI business plan & focus areas: Continued growth in iron sands and non-steel businesses For personal use only Iron sands expansion: Iron sands exports (Mt) • New mining methodology being introduced to mine existing 1.7 geology and allow for expansion Waikato North Head • Expansion scheduled compl
Slide 81: Summary & Questions
For personal use only Summary & Questions Page 81
Slide 82: Summary
Summary For personal use only • Market factors still seemingly at ‘bottom of the cycle’ (construction activity, A$ and spreads); we are acting on matters in our control – Made the necessary changes to business mix and strategy – Working smarter – lean, fit and hungry culture – Targeting winning mark
Slide 83: Appendices
For personal use only Appendices Page 83
Slide 84: Appendix: Financials for BANZ Segments
For personal use only Appendix: Financials for BANZ Segments Page 84
Slide 85: Segmental financials
Segmental financials For personal use only 1H FY2013 FY2012 CIPA BCDA NZS Interseg Total CIPA BCDA NZS Interseg Total Steel despatches (kt) 1,248 364 261 3,544 758 580 Revenue 1,668 720 319 (338) 2,369 4,280 1,486 755 (710) 5,811 EBITDA (underlying) 79 2 27 (4) 104 (151) (27) 113 3 (62) EBIT (underl
Slide 86: CIPA: breakdown of 1H FY2013 revenue
CIPA: breakdown of 1H FY2013 revenue For personal use only CIPA revenue 1H FY2013 Steel despatch volume 1H FY2013 $1,668m 1,248kt Non-steel Export prices are business generally sensitive to • Export coke Export 345kt regional steel prices • Cold ferrous • By-products Export HRC Plate CRC Metal Coate
Slide 87: CIPA: breakdown of 1H FY2013 underlying cost components
CIPA: breakdown of 1H FY2013 underlying cost components Non-steel business costs For personal use only relate to: • Export coke sales A$1,674m • Cold ferrous feed to Arrium Conversion & Overhead (scrap pool) Non-steel business Components (in order of value): • By-products (eg. Tar, BTX, costs • Dire
Slide 88: BCDA: volume and costs
BCDA: volume and costs For personal use only Product mix 1H FY2013 (by volume) Components of underlying costs in order of size • Steel feed / purchases • Labour • Freight • Facilities / leases • Depreciation • Other Metal Coated Reinforcing Plate HRC Painted Other Tube Structural Merchant bar Page 8
Slide 89: NZ&PI: breakdown of 1H FY2013 underlying cost components
NZ&PI: breakdown of 1H FY2013 underlying cost components For personal use only A$317m Conversion & Overhead components (in order of value): • Direct labour • Utilities • Services Conversion & • Consumables overhead • Selling, general & administration Raw Materials (in order of value): Depreciation •
Slide 90: Key earnings drivers
Key earnings drivers For personal use only Coated & Building New Zealand Industrial Components & & Pacific Steel Products Distribution Products Australia Australia • Selling prices • Despatch volumes • Selling prices of steel • Material costs – • Product and • Material costs – mainly including iron
Slide 91: Appendix: CIPA Markets & Logistics
For personal use only Appendix: CIPA Markets & Logistics Page 91
Slide 92: Logistics and supply chain
Logistics and supply chain Darwin For personal use only Cairns National Logistics Network National & Metropolitan Road • National rail network – serving major cities Transport • Network of warehouses / distribution centres • Road delivery to metro and regional in local markets to service customers c
Slide 93: Examples of product applications
Examples of product applications For personal use only Page 93
Slide 94: Appendix: CIPA Manufacturing
For personal use only Appendix: CIPA Manufacturing Page 94
Slide 95: BlueScope Australia and New Zealand History
BlueScope Australia and New Zealand History For personal use only 1915 BHP commenced steelmaking in Newcastle 1979 John Lysaght becomes fully owned by BHP 1918 John Lysaght (Australia) founded 1989 BHP acquires 71% of New Zealand Steel 1925 BHP acquires Port Kembla Steelworks 2000 Long products divi
Slide 96: Background: overview of main steel production processes
Background: overview of main steel production processes For personal use only STEEL PRODUCTION SEMI’s FLAT PRODUCTS Steel Scrap ? Hot rolled strip Cold rolled Wide coil Narrow strip Cut lengths mill strip mill Slab Scrap Electric Arc Ladle Furnace Electrical coil Metal Coated Painted coil Laminated
Slide 97: Background: overview of main steel production processes
Background: overview of main steel production processes For personal use only Integrated “Conventional” Slab Casting – 3 to 5 Mt/a 1-2m/minute Gas cutter RougherCoil box Finisher Run out table – 500 to 800 m cooling Cooling 1-10mm thick 200-300 mm thick Coiler Reheat furnace 500-800 m 20-40 metric t
Slide 98: Cokemaking process
Cokemaking process For personal use only GAS BTX PROCESSING SULPHATE TAR (Benzene) BLENDED COAL COKE OVENS GAS Interworks energy (boilers, furnaces) COKE PLANT COKE SCREEN Cokemaking: • Pyrolysis of coking coal: coal heated to >1000ºC in absence of air LUMP • Largely carbon plus some hydrogen, nitro
Slide 99: Cokemaking
For personal use only Cokemaking Page 99
Slide 100: Iron ore fines
Iron ore fines For personal use only • Typically 58-63% Fe; South American exception at 66% Fe • Generally the cheapest, due to lower %Fe and higher gangue • Not suitable for direct charge to blast furnaces (too fine, gets blown out as dust) • Requires agglomeration into larger solid forms such as s
Slide 101: Iron ore lump
Iron ore lump For personal use only • Typically 61-64% Fe • As received from the Mine, has <6mm material which are screened out and treated as Fines (“secondaries”). Yield normally 72% Lump (>6mm) • Remaining lump ore (>6mm to 60mm) is direct charged to BF • However difficult to control chemistry –
Slide 102: Ironmaking
Ironmaking For personal use only 5 BF 6 BF Sinter & raw materials handling PCI Page 102
Slide 103: Sinter plant at Port Kembla
Sinter plant at Port Kembla For personal use only 103Page 103
Slide 104: Blast furnace process
Blast furnace process For personal use only Raw materials: sinter, lump ore, coke & fluxes charged • Function of a blast furnace is to: through top of furnace – Remove oxygen from iron oxide – Remove gangue from the iron ore to form slag Excess hot gases flow from top of furnace to gas cleaning • Ac
Slide 105: Port Kembla blast furnaces
Port Kembla blast furnaces For personal use only No.5 Blast Furnace (in operation) No.6 Blast Furnace (not operating) No.5 No.6 Built 1972 1996 Relined 1978, 1991, 2009 - Inner Vol – m3 3,427 3,208 Work Vol – m3 3,000 (88%) 2,749 (86%) Output 2.6 Mtpa 2.6 Mtpa Page 105
Slide 106: Basic oxygen steelmaking (BOS) process
Basic oxygen steelmaking (BOS) process For personal use only Molten iron (260t) Oxygen blowing Scrap steel (approx 50t) Indicative ‘recipe’ of raw materials per output steel tonne: • 1.24t iron ore fines (sintering) • 0.26t lump ore (into BF) • 0.57t hard coking coal (into BF) • 0.15t PCI (into BF)
Slide 107: Slabmaking process
Slabmaking process For personal use only Steel ladle Revolving Steel ladle turret Tundish Mould Oxy Cutter Continuous Slab Casters Max. width = 2200mm Max. length = 12.5m Max. thickness = 300mm Page 107
Slide 108: Hot rolling process
Hot rolling process For personal use only PKSW hot strip mill (HSM): • Commissioned 1955, upgrades 1972, 1985-1987 & 2000-2006 • 2.9 million tonnes per annum capacity Product flow Slabs ex Slab Coil box Casters Reheated to 1225°C Six Stand Finishing Mill min. gauge 1.48mm Dual reheat Roughing- furna
Slide 109: Plate mill
Plate mill For personal use only PKSW plate mill: • Commissioned 1963 Slabs ex Slab • 5mm-180mm thick x 1200mm-3400mm wide Caster • 0.45 million tonnes per annum capacity Reheat Furnaces Roughing Mill Finishing Mill Hot leveller Descaling Box Shearing, stencilling & inspection Product flow Page 109
Slide 110: Summary of steelmaking steps: inputs and conversion costs
Summary of steelmaking steps: inputs and conversion costs For personal use only Process Raw material inputs Main conversion costs Maintenance, labour, refractories & consumables, services (eg labs, Cokemaking Metallurgical coals cleaning, coal handling), depreciation; (Note: utilities is a net neutr
Slide 111: Western Port History
Western Port History For personal use only Why Western Port ? • Deep water port • Energy from Bass Strait/Latrobe Valley • Key southern states customers: – automotive, white goods, drum makers and building industry Milestones • 1968: Feasibility study undertaken for a new steel site • 1970: Joint ve
Slide 112: Western Port operations overview
Western Port operations overview For personal use only Water Treatment Hot rolled coils arrive HRC Coil Plant via rail from PKSW Pickle Line Storage Five Stand Mill Technical Bldg No.6 Galvanising Line Coil Annealing Maintenance No.5 Zincalume Line Services Bldg No 2 Paint Line Coil Temper Mill No.4
Slide 113: Appendix: New Zealand & Pacific Islands
For personal use only Appendix: New Zealand & Pacific Islands Page 113
Slide 114: New Zealand Steel History
New Zealand Steel History For personal use only • 1965 Company established • 2002 Brand changed to New Zealand Steel • 1968 First production of Galvanised Coil • 2003 Company renamed BlueScope Steel Limited • 1969 Production of Steel Billets • 2011 Executed long-term supply contract to double • 1972
Slide 115: Brands
For personal use only Brands Page 115
Slide 116: Products: Overview
Products: Overview For personal use only Iron sand concentration Hollow sections Metallic coated coil Hot rolled coil Cold rolled coils Page 116
Slide 117: Waikato North Head process schematic
Waikato North Head process schematic For personal use only Page 117
Slide 118: Taharoa existing process schematic
Taharoa existing process schematic For personal use only 118 Page 118
Slide 119: Taharoa new process schematic
Taharoa new process schematic For personal use only Buried Feeder (Dozer trap) Spiral Separation Plant Concentrate Stockpiles Ship Loading – Stockpile to CD tank Ship Loading Pumps SPM Buoy Ship Loading Undersea Pipelines 119 Page 119
Slide 120: BSL 55% hedged for iron ore once Taharoa 2.4 Mtpa achieved
Once Taharoa 2.4 Mtpa rate achieved, BSL 55% hedged for iron ore For personal use only Portion of iron ore consumption economically hedged1 within BlueScope 2011 Today Future Before CIPA Restructure, combined 1.2 Mtpa iron sands exports from Expected 2.4 Mtpa iron sands exports with 0.8 Mtpa iron sa
Slide 121: Electricity is a key cost which is highly volatile
Electricity is a key cost which is highly volatile and complex to manage For personal use only NZS Energy Sources $/MWh 2013 Electricity spot prices 250 Wind Other Geo-thermal 200 2% 8% 2% Coal 7% 150 100 55% Hydro 50 26% Gas 0 16 Feb 23 Feb 5 Jan 2 Feb 9 Feb 16 Mar 23 Mar 12 Jan 19 Jan 26 Jan 2 Mar
Slide 122: Community involvement
Community involvement For personal use only Engagement with the community through participation in various committees and fostering good working relationships with key community stakeholders • Community Environmental Committee Formed in the 70’s with representatives from local government, health, cu
Slide 123: NZ&PI is committed to reducing our impact on the environment
NZ&PI is committed to reducing our impact on the environment For personal use only • 60% of electricity generated from waste gas • 99% of process and storm water is reused or recirculated • 100% of process steam generated from waste heat • 100% sale of Iron oxide sold into water treatment & magnet p
Slide 124: BlueScope Australia & New Zealand (BANZ) Investor Briefing Day
For personal use only BlueScope Australia & New Zealand (BANZ) Investor Briefing Day 30 May 2013 BlueScope Steel Limited. ASX Code: BSL