Bluescope Steel Limited · ASX:BSL
Bluescope Steel — Corporate Update (May 2023)
54 slides from Bluescope Steel's corporate update, May 23, 2023
Slide 1: BlueScope US Site Visit Day 1
BlueScope For personal use only US Site Visit Day 1 23 May 2023 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058 Level 11, 120 Collins St, Melbourne, VIC, 3000
Slide 2: Important Notice
IMPORTANT NOTICE 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. Reliance should not b
Slide 3: Agenda Day 1
AGENDA DAY 1 For personal use only Session 1 • BlueScope Overview • BlueScope North America Morning Tea Break and Q&A Session 2 • North Star • BlueScope Recycling and Materials Lunch Break and Q&A Site Tours • PPE Fit Out and Safety Briefing • North Star • BlueScope Recycling and Materials 3
Slide 4: BlueScope Overview
BlueScope For personal use only Overview Mark Vassella (Managing Director & Chief Executive Officer) 4
Slide 5: BlueScope: A Different Kind of Steel Company
BlueScope: A Different Kind of Steel Company For personal use only What makes us different? 1 Purpose-led and sustainability focussed 2 Led by Our Strategy with a high-quality asset portfolio 3 Leading product technologies, branding & channels 4 Financial strength & cost competitiveness 5 Deploying
Slide 6: Our Purpose and Our Bond
Our Bond For personal use only Our Customers are our partners Our People are our strength Our Our Shareholders are our foundations Purpose Our Local Communities are our homes We create and inspire smart solutions in steel, to strengthen our communities for the future. 6
Slide 7: Guided by Our Strategy
GUIDED BY OUR STRATEGY For personal use only TRANSFORM GROW DELIVER DELIVER A STEP GROW OUR PORTFOLIO OF DELIVER A SAFE CHANGE IN CUSTOMER SUSTAINABLE WORKPLACE, AN EXPERIENCE AND STEELMAKING AND WORLD ADAPTABLE BUSINESS LEADING COATING, ORGANISATION AND PERFORMANCE PAINTING AND STEEL STRONG RETURNS
Slide 8: Embedding Sustainability in All That We Do
EMBEDDING SUSTAINABILITY IN ALL THAT WE DO For personal use only Five key sustainability outcomes 01 02 03 04 05 Climate action Safe, healthy, Sustainable Responsible Strong and inclusive growth and products & communities workplaces transformation supply chains 8
Slide 9: Accelerating Decarbonisation: New Zealand Steel Electric Arc Furnace
ACCELERATING DECARBONISATION: NEW ZEALAND STEEL ELECTRIC ARC FURNACE BlueScope and NZ Government agree to co-invest NZ$300M in decarbonisation of NZ Steel For personal use only Accelerated feasibility study into new NZS’s unique kiln and melter operation EAF at Glenbrook allow for a smaller modular
Slide 10: A High-Quality Asset Portfolio
A HIGH-QUALITY ASSET PORTFOLIO India China ASEAN For personal use only New Zealand and United States Pacific Islands Australia Key Recycling Steelmaking Metal coating Long products Steel buildings Steel building materials (scrap metal) (flat products) and painting (rebar, wire) and systems and compo
Slide 11: Focussed on Building and Construction; Geographically Diversified
FOCUSSED ON BUILDING AND CONSTRUCTION; GEOGRAPHICALLY DIVERSIFIED For personal use only End-use segment exposure Earnings by region (share of CY2022 despatch volume) (CY2022 Underlying EBITDA) Export NZ & Pacific 9% 8% Asia Automotive 9% 13% 48% North America Manufacturing 16% 62% Building & & Other
Slide 12: Steel Is Critical to the World's Future
STEEL IS CRITICAL TO THE WORLD’S FUTURE A foundation for global decarbonisation; underpins renewable energy transition For personal use only Estimated steel required for renewable energy infrastructure1 (tonnes per megawatt of capacity) 150t/MW 70t/MW 60t/MW 40t/MW Solar Onshore Wind Hydro Offshore
Slide 13: Well Positioned for the Favourable Long Term Outlook for Steel
WELL POSITIONED FOR THE FAVOURABLE LONG TERM OUTLOOK FOR STEEL For personal use only Global green revolution driving demand for steel Steel intensive building and construction well supported Preference for lower density and regional housing Transition to the digital economy driving demand
Slide 14: Leading Product Technologies, Brands and Channels
LEADING PRODUCT TECHNOLOGIES, BRANDS AND CHANNELS A global leader in metal coating and painting for building and construction applications For personal use only Australia ® ® America North ® ® Asia ® ® ® ® ® ® Zealand New 14
Slide 15: Financial Strength Guided by Our Financial Framework
FINANCIAL STRENGTH GUIDED BY OUR FINANCIAL FRAMEWORK Strong returns, a robust balance sheet and a disciplined approach to capital allocation For personal use only Robust Disciplined Returns Focus Capital Structure Capital Allocation • Focus on delivering return on • Maintaining a strong balance • Ma
Slide 16: BlueScope in North America: A Rich History
BLUESCOPE IN NORTH AMERICA A rich history that has established a high-quality asset base For personal use only 2022 2022 BlueScope’s US Net Operating Asset Base (A$Bn) Acquired BlueScope Acquired Recycling & Materials BlueScope 2002 2013 2014 Coated $6Bn Products BlueScope Steelscape and ASC Establi
Slide 17: BlueScope in North America: Key Figures
BLUESCOPE IN NORTH AMERICA Key figures For personal use only Number of Sites Employees Invested Capital 26 ~4,000 A$5.3Bn Sales Volume Revenue EBITDA (CY2022) (CY2022) (CY2022) 3.3mt A$8.6Bn A$1.6Bn 17
Slide 18: Diverse and Talented Team
DIVERSE AND TALENTED TEAM Presenting this tour: For personal use only Also in attendance: • Mark Scicluna, Acting Chief Financial Officer • Divya Thidani, Chief Strategy & Transformation Officer • Sasha Vasilyev, VP Finance, North Star Mark Vassella Kristie Keast Conrad Winkler Hector Marquez • Ashl
Slide 19: BlueScope North America
BlueScope For personal use only North America Kristie Keast (Chief Executive North America) 19
Slide 20: North America Is at the Heart of BlueScope's Growth Strategy
NORTH AMERICA IS AT THE HEART OF BLUESCOPE’S GROWTH STRATEGY For personal use only TRANSFORM GROW DELIVER DELIVER A STEP GROW OUR PORTFOLIO OF DELIVER A SAFE CHANGE IN CUSTOMER SUSTAINABLE WORKPLACE, AN EXPERIENCE AND STEELMAKING AND WORLD ADAPTABLE BUSINESS LEADING COATING, ORGANISATION AND PERFORM
Slide 21: The US Is a Great Place to Make and Sell Steel Products
THE US IS A GREAT PLACE TO MAKE AND SELL STEEL PRODUCTS Driven by a number of trends across supply and demand For personal use only Supply BlueScope well positioned • Expanding highest margin mini- mill in the US against a backdrop of a healthy industry structure Industry Capacity Shift to EAF Ratio
Slide 22: BlueScope Benefiting from End Use Segment Exposure
BLUESCOPE BENEFITING FROM END USE SEGMENT EXPOSURE Supportive trends underpinning robust demand environment For personal use only BlueScope US indicative despatch volume by end-use segment1 Other Manufacturing • Reshoring shift to reduce ~5% dependence on import ~10% supply chains • Large scale buil
Slide 23: Robust Outlook for Steel Products and Solutions
ROBUST OUTLOOK FOR STEEL PRODUCTS AND SOLUTIONS Highlighted by activity forecasts across key end-use segments For personal use only +1.2% US flat steel demand outlook Non-Residential (2021-2030, Mt) Construction 1.21 1.37 1.57 1.31 1.25 1.28 1.30 +1.3% Square Feet Awards (Billion) 83 2021 2022 2023f
Slide 24: BlueScope's US Footprint
BLUESCOPE IN NORTH AMERICA BlueScope’s US footprint For personal use only BlueScope Recycling North Star Steelscape / ASC Profiles BlueScope Coated Products Buildings North America 24
Slide 25: Presence Across the Value Chain
BLUESCOPE IN NORTH AMERICA Presence across the value chain For personal use only Value Chain Recycling & Cold Rolling & Buildings & Phase Steelmaking Metallic Coating Coil Painting Components BSL Businesses Part of the BSL-operated 50:50 JV with Nippon Steel Corporation • Quality product • Customer
Slide 26: BlueScope North America Strategy
BLUESCOPE NORTH AMERICA STRATEGY Our Vision for North America: We are a growth-oriented, integrated steel solutions provider differentiated by our strengths in customer focus, premium branded products, safety and sustainability For personal use only Steelmaking / Cold Rolling & Building Pre-engineer
Slide 27: BlueScope North America Growth Roadmap
BLUESCOPE NORTH AMERICA GROWTH ROADMAP 2021 2022 2023 2027 For personal use only External Supply of BRM (Delta & Waterloo) Secure North Star Raw Materials 40% self-sufficiency Scrap, Pig Iron & HBI BRM (Mansfield) (incl 3rd party processing) as leading, low cost, sustainable North Star Ramp up com
Slide 28: Delivering on the BlueScope North America Strategy
DELIVERING ON THE BLUESCOPE NORTH AMERICA STRATEGY Building on our strategic intent: For personal use only ̶ Delivering North Star expansion and de-bottlenecking ̶ Securing BRM’s low-cost supply into North Star ̶ Integrating BCP; executing single-bill, branded opportunity ̶ Reviewing further value
Slide 29: North Star
North Star For personal use only Conrad Winkler (President North Star) 29
Slide 30: North Star Overview
NORTH STAR OVERVIEW Industry leading hot rolled coil producer; competitive advantage in safety, quality, service and delivery For personal use only Facility overview North Star’s competitive advantage • Industry leading hot rolled coil producer, established in Quality 1996 in Delta, producing around
Slide 31: Financial and Operating Performance
FINANCIAL AND OPERATING PERFORMANCE Strong EBITDA and cash generation through the cycle; industry leading margins; consistently full utilisation For personal use only US$M EBITDA and spread (100% basis) EBIT margins3 (%) 1,400 U.S. mini-mill spread1 1,352 24% 1,300 EBITDA (100% basis) 17% Cash flow
Slide 32: BlueScope North America Strategy
BLUESCOPE NORTH AMERICA STRATEGY Our Vision for North America: We are a growth-oriented, integrated steel solutions provider differentiated by our strengths in customer focus, premium branded products, safety and sustainability For personal use only Steelmaking / Cold Rolling & Building Pre-engineer
Slide 33: North Star Strategy
NORTH STAR STRATEGY For personal use only TRANSFORM GROW DELIVER Transform the business for its Continue along the existing strong Continue to deliver a safe and post-expansion, modern growth trajectory, through: resilient business with strong manufacturing future, through: returns, through: • Succe
Slide 34: Products and Customers
PRODUCTS AND CUSTOMERS Serving a diversified range of end-use segments and products, predominantly through service centre channels For personal use only Product range Local customer base End-use segment exposure • 25-30 grades of HRC, produced at • Product sold to over 100 customers, Other (incl Mfg
Slide 35: US Steel Industry Structural Shifts
US STEEL INDUSTRY STRUCTURAL SHIFTS US steel industry consolidation and rationalisation has supported an improved industry structure; proliferation of EAF production has increased supply flexibility For personal use only US hot strip mill capacity consolidation (%, mt) US flat steel production mix (
Slide 36: Regional Supply / Demand Outlook
REGIONAL SUPPLY / DEMAND OUTLOOK Supply and demand in the region in which North Star operates is expected to be in balance in 2025 For personal use only Regional flat rolled supply and demand balance (million metric tonnes) ~5.0 1% annual demand ~0.5 increase assumed ~(2.5) ~35 on pre-COVID ~4.5 ~0
Slide 37: Expansion Progress
EXPANSION PROGRESS Ramp up progressing well, expecting to reach full run-rate in early 2024 For personal use only Project progress 18-month indicative ramp up profile (mt, annualised) • ~US$735M project to increase 3.0 capacity by 850kt (metric) • Added a third EAF, second caster Expansion 2.5 volum
Slide 38: North Star Debottlenecking Project
NORTH STAR DEBOTTLENECKING PROJECT Assessment of the 500ktpa incremental debottlenecking opportunity to begin as we progress through the ramp up period of the expansion project For personal use only • New furnace and slab caster provides North Star mill schematic showing possible debottlenecking tas
Slide 39: Raw Materials Strategy
RAW MATERIALS STRATEGY Diversifying metallics supply to provide flexibility and security for ongoing growth For personal use only North Star Metallics Strategy Scrap Pig Iron DRI / HBI • BlueScope Recycling ramping • Revised metallics mix to reduce • Multi-year agreement with Cliffs up supply volume
Slide 40: Case Study: Utilising Technology to Optimise Raw Material Sourcing
CASE STUDY VIU model? Utilising technology to optimise raw material sourcing and usage mix For personal use only • North Star currently operates “Value in Use” models to analyse the best mix of raw materials based on cost and metallurgy • Currently bringing together a number of digital technologies,
Slide 41: Relationships to Benchmark
RELATIONSHIPS TO BENCHMARK Updated to reflect contemporary operating parameters For personal use only Spread ($/t) = 1 x HRC Price less 1.1 x Raw Material Cost Hot Rolled Coil Scrap (~80% of mix) • Priced second week of each month • ~50:50 prime (incl. HBI) to obsolete • Third party reference price
Slide 42: Health, Safety and Environment
HEALTH, SAFETY AND ENVIRONMENT Finding opportunities to learn, reduce risk, and enhance our Health, Safety and Environment performance For personal use only Approach to Health and Safety Sustainability focus • Continuous communication and feedback with daily incident reporting • Key focus on water,
Slide 43: BlueScope Recycling and Materials
BlueScope For personal use only Recycling and Materials Hector Marquez (President BlueScope Recycling and Materials) 43
Slide 44: Business Overview
BUSINESS OVERVIEW A full-service, ferrous and non-ferrous scrap metal recycler, primarily focussed on supplying North Star’s scrap requirements For personal use only Business Overview Footprint • Operates ~600kt of annual shredding capacity across three sites: Delta, OH – Delta, Ohio (~250ktpa ferro
Slide 45: BlueScope North America Strategy
BLUESCOPE NORTH AMERICA STRATEGY Our Vision for North America: We are a growth-oriented, integrated steel solutions provider differentiated by our strengths in customer focus, premium branded products, safety and sustainability For personal use only Steelmaking / Cold Rolling & Building Pre-engineer
Slide 46: Scrap Categories and Grades
SCRAP CATEGORIES AND GRADES BRM predominantly sources obsolete scrap; strong focus on beneficiating obsolete grades to reduce copper content and monetising co-products in the metals recycling process For personal use only BRM indicative processing volume by category and grade #2 Shred Higher than 0.
Slide 47: US Scrap Industry Overview
US SCRAP INDUSTRY OVERVIEW The US generates ~80mt of predominantly obsolete scrap per annum, ~15% of which is exported; highly fragmented industry, with a number of parties in the value chain For personal use only US scrap generation and export outlook US scrap industry value chain • The US generate
Slide 48: BRM's Growth Opportunity
BRM’S GROWTH OPPORTUNITY BRM has a range of growth and productivity opportunities underway, seeking to grow both the quantity and quality of scrap feed to North Star For personal use only The Opportunity BRM Growth Initiatives • The greatest opportunity for BRM and North Star Processing Capacity Adv
Slide 49: BRM's Role Supplying North Star
BRM’S ROLE SUPPLYING NORTH STAR Self-managed scrap generation, processing and delivery provides significant value to North Star For personal use only Value of integrated supply chain BRM Supply to North Star (indicative, mt) Efficiency of knowing the mix ~40% North Star’s Scrap • Composition of each
Slide 50: For personal use only
For personal use only
Slide 51: Progress on Acquisition Business Case
PROGRESS ON ACQUISITION BUSINESS CASE Most significant challenges have been the scrap industry downcycle and IT transition For personal use only Successes Challenges • Talent / people capability • Legacy IT systems – Strong operations and commercial team – Systems have capability limitations not ena
Slide 52: Health, Safety and Environment
HEALTH, SAFETY AND ENVIRONMENT Rolling out BlueScope’s health and safety approach across all sites CASE STUDY Profitably reducing landfill For personal use only Initial safety focus areas • Automotive shredder residue • Key process safety risks (ASR), is inevitable waste after end-of-life vehicles a
Slide 53: Q&A
For personal use only Q&A Mark Vassella (Managing Director and Chief Executive Officer) Mark Scicluna (Chief Financial Officer) Kristie Keast (Chief Executive North America) Conrad Winkler (President North Star) Hector Marquez (President BlueScope Recycling and Materials) 53
Slide 54: BlueScope US Site Visit Day 1
BlueScope For personal use only US Site Visit Day 1 23 May 2023 BlueScope Steel Limited. ASX Code: BSL ABN: 16 000 011 058 Level 11, 120 Collins St, Melbourne, VIC, 3000