BlueScope Steel Ltd. warned it may shutter its Australian and New Zealand steelmaking operations after prices plunged amid increased exports from China.
The company, which has a century-long history of steelmaking in Australia, said it needs government support to keep operating its two remaining primary plants at Port Kembla and Glenbrook. This is even though it’s targeting more than A$200 million ($145 million) in cost savings as part of a review.
“We are committed to the delivery of the targeted savings,” Chief Executive Officer Paul O’Malley said Monday in a statement. “If this target is not achievable, we will have no option but to move to external supply of quality hot-rolled coil and billet steel feed with mothballing or closure of steelmaking.”
China’s finished steel exports doubled to a “run-rate” of 100 million metric tons a year since the three years ended 2013, O’Malley said. That’s equivalent to 20 times the annual output of BlueScope’s Port Kembla plant in New South Wales state. That makes it more economic to import than keep operating its blast furnaces, the company said.
BlueScope, which also said it’s reviewing iron sands exports from New Zealand, said underlying earnings before interest and tax this half will be similar to the A$131 million in the half ended June 30. The company reported full-year net profit after tax of A$136.3 million.
The company’s shares climbed 12 percent to A$3.79 at 10:45 a.m. in Sydney, trimming the decline for the year to 32 percent.