Bluescope Steel in a nutshell

Bluescope SteelFactsheet: (22-23 Aug 2011)

1. Workforce reduction of around 1,000 people, with approximately 800 at Port Kembla and 200 at Western Port.
   It said the impending carbon tax[1] was not a reason for the decision.
2. Blamed the high dollar and soaring imput costs for a $1 billion loss in 2010-11
3. No longer exports steel
4. Exports business was losing money before the GFC[2] hit, before Australian dollar flirted with US$1.10.
5. Restructure includes closure of the No.6 Blast Furnace at Port Kembla (NSW) and the Western Port Hot (VIC)Strip Mill ; Closure of No. 4 cokemaking battery, No. 3 BOS steelmaking furnace and No. 1 slab caster ; mothballing of a metal coating line (MCL5). (22 Aug 11)
6. Export failures due to (1) rise of the price of iron ore and coking coal (2)Australia does not ahve a competitive coastal shipping industry (3) Australian wages are higher than those of workers in Chinese steel mills.   

   " Mr O’Malley said the Company is experiencing an unprecedented combination of economic challenges in the form of a record high Australian dollar, low steel prices and high raw material costs and these challenges are compounded by low domestic steel demand in the wake of the GFC. "- Bluescope ASX Media Release (22 Aug 11)
7. 
   

   Reported a Net Loss After Tax (NLAT) of A$1,054 million for FY2011[3] (underlying NLAT of A$118 million, in line with previous guidance)  

Possible financial compensation via :

1)Carbon Tax – Steel Transformation Plan

"The announcement of the Government’s Steel Transformation Plan (STP) on 10 July 2011, effectively shields BlueScope from any material cost of the Carbon Tax for the first four years of the scheme.

2) BlueScope Australia & New Zealand (BANZ) Restructure

"Following the announcement to restructure the Australian and New Zealand businesses on 10 March 2011 from three businesses into one consolidated business (BANZ), the design and implementation of the restructure is now well advanced and will deliver a more efficient and effective customer interface.

 3) Further Fixed Cost Reductions

"In FY2011, the Company has been able to achieve a further $38 million in fixed cost reductions, whilst successfully maintaining the cumulative savings of $696 million ($340 million in permanent savings and $356 million in temporary savings), based on FY2008 base levels.

Definitions:

[1]A carbon tax is an environmental tax that is levied on the carbon content of fuels. It is a form of carbon pricing. A carbon tax can be implemented by taxing the burning of fossil fuels—coal, petroleum products such as gasoline and aviation fuel, and natural gas—in proportion to their carbon content.

[2] Global Financial Crisis, GFC

[3] FY= financial year

Voluntary redundancies: Acceptance of the termination of employment by an employee on the basis of terms offered by the employer.