Port Kembla Steelworks & Springhill Analyst Site Visit

Transcription

1 22 nd January 2003 Port Kembla Steelworks & Springhill Analyst Site Visit Noel Cornish May 2008 File Reference: u:\guidelines - BlueScope Lysaght PowerPoint Template

2 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 BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BSL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR. TO THE FULLEST EXTENT PERMITTED BY LAW, BLUESCOPE STEEL LIMITED AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS. 2

3 Introduction 3

4 Internal business restructure to focus on strategic priorities and execution Australian & New Zealand Steel Manufacturing Businesses Managing Director and CEO Paul O Malley Legal (Michael Barron) CFO (Charlie Elias) People and Organisation Performance (Ian Cummin) Aus/NZ Steel Manufacturing Businesses Australian Coated and Industrial Markets Australian Distribution and Solutions Corporate Strategy and Innovation; North America, Noel Cornish Paul O Keefe Mark Vassella (2) (1) (3) Brian Kruger TBA Bob Moore Asia China Oversees all manufacturing facilities in Aus/NZ; responsible for driving safety, process excellence and meeting production schedule at lowest cost PKSW Springhill Western Port Western Sydney Acacia Ridge Glenbrook NZ Note: (1) Mark Vassella will be succeeding Brian Kruger as President of the North American businesses (2) Mark Vassella s current responsibilities TBA (3) Corporate Strategy and innovation - TBA 4

5 Australian & New Zealand Steel Manufacturing Businesses Noel Cornish Chief Executive ANZSMB Sharon Wingate Personal Assistant Oscar Gregory General Manager Iron & Slab Gabe Meena General Manager Mills & Coating Ross Murray President New Zealand Steel & Pacific Islands Aimee Allen General Manager Western Port Chris Fogarty General Manager Finance Alan Thomas General Manager Eng g, Technology & Environment Barb Bridger General Manager People & Org Performance John Nowlan Chief Manufacturing Officer BSL 5

6 Topics Safety & Environment Community Port Kembla Steelworks Process and Production Costs and Raw materials Capital No. 5 Blast Furnace reline Sinter Plant upgrade Coated Businesses Markets Process and production Costs Western Sydney Update Blueprint initiatives Summary 6

7 Safety & Environment 7

8 Port Kembla Steelworks - Safety Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate /00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/ /00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/

9 Springhill - Safety Lost Time Injury Frequency Rate Medically Treated Injury Frequency Rate /00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/ /00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/08 9

10 Water Conservation further reducing fresh water consumption Total process water use Recycled Water 2% Fresh Water 2% Salt Water 96% 50% REDUCTION IN FRESHWATER CONSUMPTION 10

11 PKSW Cogeneration plant technology led solution to abate greenhouse gas emissions Feasibility study expected to be completed in 2H calendar year 2008 Total investment in the range of $700m - $1,000m Net NSW reduction approximately 800,000 tpa CO 2 equivalent One of the largest GHG reduction projects in Australia - equivalent to taking 185,000 cars off the road A workable Government policy for trade exposed industries is a critical part of assessing this major investment We will continue to look for projects that will reduce CO2 emissions Surplus process gas from iron & steel making Port Kembla Steelworks Co-Generation Plant Process Steam Electricity 120Mw base load up to 220Mw peaking 11

12 Community Engagement $500,000 in sponsorships Support 30+ Illawarra organisations Policy of supporting education, youth, arts and culture Active participation in variety of community initiatives e.g. youth unemployment committee $80,000 in donations towards charities, schools, sport, employees and their families 12

13 BlueScope s Illawarra Businesses 13

14 Port Kembla Steelworks overview Fully integrated plant with steel making capacity of 5.3mtpa. Optimal unit size. Situated on 760 hectares and employing 3,400 permanent employees (plus 1,500-2,500 contractors on any given day). Amongst world s most technically advanced producers of quality carbon steel products. Excellent technical and operational skills and experience. Focus on: - Safety - Productivity - Customers - Quality - Environment - Costs - Community - Flexibility 14

15 Process 15

16 Port Kembla Steelworks production Million Tonnes /00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/ Slab HRC Plate 16

17 Cokemaking 17

18 Cokemaking process overview 3.0Mtpa BLENDED COAL GAS PROCESSING SULPHATE TAR BTX (Benzene) 39Kt 86Kt 23ML 1 tonne of coke solids is equivalent to 1.30t coking coal Export coke BlueScope approach is to sell excess production on a spot basis. Generally offered in 30-45kt cargo sizes. COKE PLANT Current expected sales of coke in FY08 260k tonnes 2.3Mtpa COKE SOLIDS COKE SCREEN 5% BREEZE (< 10 mm) 2% NUT (10 25 mm) COKE OVENS GAS 19,000TJ 7% TATA (20 50 mm) 86% LUMP (25 80 mm) Coke usage Blast furnaces Sinter plant Export Interworks energy (boilers, furnaces) Types of coke solids produced Lump Tata Nut Breeze 1.9Mtpa 0.2Mtpa 0.2Mtpa 2.3Mtpa 18

19 Sinter Plant 19

20

21 21

22 Hot Strip Mill 22

23 Plate Mill 23

24 Port Kembla Steelworks relentless cost control Total cost $ $ FY2003 FY2004 FY2005 FY2006 FY2007 FY2008(E) S&A Conversion Costs Despatch & Freight Raw Materials (1) (1) Raw material includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel. 24

25 Expected raw material usage - FY 2008 Iron Ore: approximately 7.7mtpa current indicative mix 20% lump, 50% fines and 30% pellets principally sourced from BHP Billiton. Other suppliers include OneSteel, Savage River, IOC (Rio) and Vale (CVRD) contract volume term most contracts up for renewal during FY 2009 (renewal term expected to be 3/5 years) annual pricing review, with price effective from 1 July (for approx 90%) Coal: approximately 3.7mtpa (3.0mtpa coking coal and 0.7mtpa PCI coal) principally sourced from local BHP Billiton Illawarra mines (coking coal) and Xstrata Hunter Valley mines (PCI coal) long term contract (30 years from July 2002) typically annual pricing review, with price effective from 1 July Scrap: approximately 1.0 mtpa 40% sourced externally 25

26 Raw material costs Historical global iron ore (fines) and coking coal prices (financial year): US$/wmt Iron Ore Fines $17.97 $17.54 $19.12 $22.68 $38.88 $46.27 $50.66 % change 4.3% -2.4% 9.0% 18.6% 71.5% 19.0% 9.5% Coking Coal $42.75 $48.10 $46.20 $57.20 $ $ $98.00 % change 7.5% 12.5% -4.0% 23.8% 76.6% 14.9% -15.5% Reported for FY % increase in iron ore costs Finalised price with CVRD Prices to be finalised with other suppliers 205% increase in coking coal cost Price to be finalised but will be reflected of this increase 26

27 Port Kembla Steelworks productivity Employee Numbers 10,000 8,000 6,000 4,000 2,000 0 Employees Productivity (Tonnes per person per year) 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/08* 1,750 1,500 1,250 1, Productivity (Crude Steel Output, Tonnes/Employee/Year) * Annualised 27

28 Port Kembla Steelworks Capital Expenditure Commissioning Project Capex (A$m) 1996 No. 6 Blast Furnace mtpa Project Coke Side Emission Control Sinter Plant Emission Hot Strip Mill Expansion 100 Mid year 2009 No. 5 BF Reline 370 Mid year 2009 Ore Preparation Upgrade Project 134 Feasibility study Steelworks Cogeneration Plant (SCP) (estimate) 28

29 Port Kembla Steelworks No.5 Blast Furnace reline 28 29

30 Port Kembla Steelworks No.5 Blast Furnace reline Every blast furnace in the world needs to be relined periodically, typically every years History No. 5 BF Built in 1972, relined in 1978 Most recent reline took place in 1991 Currently produces approximately 2.6mtpa of hot metal Scope of work Extends to replacement / upgrade of associated equipment items Unlikely to result in a material increase in capacity Take approximately 105 days Cost approximately $370m Target remains to undertake the reline in the March to June 2009 period, subject to furnace performance 30

31 Port Kembla Steelworks No. 5 Blast Furnace reline Total capital cost A$370m ($140m committed to end Mar 08). The project is scheduled to take approx. 105 days. Expected lost slab production (shutdown and ramp up) is approx 680kt, reflecting part offset from increased No.6 BF production and higher scrap use in basic oxygen steelmaking. A number of export customers will be affected during this exercise. Have contacted our customers who will make alternative arrangements during the reline project. Domestic external sales are not expected to be materially affected. Major raw materials impact: expect to purchase approx 700kt less iron ore (principally fines and pellets) than the 7,700kt purchased in 2007 and expected in 2008; approx 65kt of additional scrap purchased; and present intention is not to change coal consumption and to export excess coke (approx 240kt). However, if coke margins don t meet our requirements at the time then we would reduce our coking coal purchases by up to 300kt. 31

32 Reline experience Many of the Project Team and Key personnel have been key resources in : o 1996 No.6 BF construction o 1993 No.4 BF Reline o 1991 No.5 BF Reline o 1989 No.2 BF Reline o 1987 No.4 BF Reline o 1978 No.5 BF Reline o 1976 No.3 BF Reline Technical collaboration with Nippon Steel Corporation - design and operational issues Technical collaboration with Posco on blow-in & uprating plans Many overseas steel plant and equipment supplier visits by several key personnel on design, operational and equipment performance issues. Several hundreds of years combined blast furnace related team experience 32

33 Activities during the No. 5 Blast Furnace reline Operation continues until the raw materials inside the furnace are consumed. Furnace is shutdown and isolated from rest of the plant. Holes are cut in the shell to gain access to rake out remaining material and refractory lining including cooling staves Install protection and working platforms inside furnace; clean out hearth Install taphole shell plate; Install hearth plug refractory Remove & replace bosh shellplate; install bosh staves; install tuyere staves Install hearth sidewall, tuyere and bosh area refractories Remove platforms and close up furnace; pressure test Charge raw materials, heat up hot blast main; blow-in 5 days 16 days 12 days 17 days 28 days 25 days 12 days 9 days Additional activities; Repair /Replace/Upgrade ancillary equipment:- Furnace Top, Downcomer, Dustcatcher, Gas Cleaning Plant, Water Treatment Plant, Hot Blast & Bustle main rebrick, Casthouse Floor structural and refractory rebrick, Slag Granulation system, Electrical and Control systems NB: Some activities are in parallel 33

34 Cut in - access through shell (No.5 BF reline 1991) 33 34

35 Hearth demolition (No.5 BF reline 1991) 34 35

36 Internal working & protection platforms (No.5 BF reline 1991) 35 36

37 Installation hearth sidewall refractory (No.5 BF reline 1991) 36 37

38 Installation hot blast main refractory (No.5 BF reline 1991) 38 38

39 Granulator stack & downcomer installation (No.5 BF reline 1991) 39

40 Reline Complete (No.5 BF reline 1991) 40

41 No. 5 BF reline - implementation risks Two major unknown conditions at blow-out (1) : (a) Remaining untapped liquid hot metal (salamander) requiring blasting and (b) Condition of the bosh shellplate, can add additional time to schedule Skilled labour and contracting firms to undertake this intense activity with many interface challenges (peak 1200 personnel on site) Efficient and safe use of very large cranes on a complex and vertically intense site Complex commissioning activities Industrial collaboration between several different unions and many contractors Efficiency of labour force over 3 months Commissioning and uprating performance (1) Blow-out - terminology to indicate a halt in blowing "hot blast (the wind that is blown through the furnace that creates the conditions for the reduction process) through the blast furnace (see supporting information for further details pg 64). 41

42 No. 5 BF ramp up plan 6BF Plan 5BF Plan Actual 6BF BF Uprate Plan First service post reline Tonnes/day Days Note: 7000 tonnes per day by day 11 and 7700 tonnes per day by day 44 this is equal to an annual capacity of 2.8mtpa however this will be reduced to 2.6mtpa (nameplate capacity) due to standard scheduled maintenance. 42

43 Port Kembla Steelworks - Sinter Plant upgrade Sinter process Iron Ore Fines Lime stone Fines Coke Breeze Sinter Fines STRAND Water Mixing & Rolling Drum Dry Electrostatic Precipitators Main Fans Sinter to Blast Furnaces Waste Gas Mains x2 Dust recycled 43

44 44 44

45 Port Kembla Steelworks Sinter Plant upgrade Exit End Rebuild cooler Increase Width Increase Fan Power Relocate Lowering wheel and extend building New cooler feed chute Entry End New Ignition Furnace New Strand Feeder Strand Increase Height Increase Length Precipitators Refurbish zones 2, 3 & 4 - R&M New Zone 1 Modern Electrics Two new major conveyor systems and several chute modifications will be installed in raw materials handling yards 45

46 Port Kembla Steelworks Sinter Plant upgrade Main shutdown planned for April May 2009 (approx. 35 days) To coincide with No.5 BF reline, when demand for sinter is reduced. Total capital cost A$134m. No.3 Sinter machine at PKSW is single source of 5.3 mtpa of sinter for No. 5 & No. 6 blast furnaces currently the typical blast furnace burden mix is: 57% sinter (fines based); 25% pellets; 18% lump Outcome post upgrade from FY2010 onwards: increased sinter production by 1.1 mtpa to 6.6 mtpa (nameplate capacity is currently 5.5 mtpa) this will require mtpa of fines BUT would displace 1.0 mtpa of pellets (Presently fines to pellet price differential is approx US$50/t). Increased Pulverized Coal injection rates (cost saving as use more thermal and less coking coal) due to blast furnace permeability being improved by higher quality sinter. 46

47 Springhill & Western Sydney Coated 47 47

48 Springhill Coated Springhill s Coupled Pickle Cold Mill 990kt Packaging Cold Mill/Pickle Line 135kt Metal Coating Lines (3 lines) 790kt Springhill Paint Line 200kt CRM Paint Line 50kt Closing within 12 months 48

49 Markets and Supply Chain Western Port Building & Construction Illawarra Direct Domestic Export Distribution & Solutions Australia Manufacturing Distributors Pipe & Tube 49

50 Markets Building Markets - Branded product price increases implemented in February with further increases announced for July - New COLORBOND steel colour launch planned for last quarter Non dwelling demand will underpin strong sales for building products through 08/09 - Dwelling, remains subdued, however NSW being most negatively affected Manufacturing and Automotive Markets - Manufacturing sector customers face strong competition from imports and strong dollar - BlueScope growing volume in this sector via import replacement - Substantial price increases on steel purchases in line with global steel price trends Distribution Markets - Buoyant demand in commercial and resource sectors - Strong global demand has reduced import volumes - Substantial price increases in recent months in line with global steel price trends 50

51 Springhill - material flow Port Kembla Steelworks HR Coil Coupled Pickle Cold Mill 990 kt/a Uncoated Strip Descaling of strip via acid bath Strip thickness reduced by up to 80% by cold reduction Packaging Cold Mill 135 kt/a Hot dip metallic coating of Zinc or Zinc/Al alloy Note: Capacities represent nominal annual volumes Metal Coating Lines 790 kt/a Acacia Ridge Service Centre paint line at Port Kembla Paint Line 200 kt/a Organic coating applied through use of applicator rolls Oven cured Metal Coated Strip Painted Strip 51

52 Springhill - cold rolling Hot rolled coil is uncoiled COUPLED PICKLE COLD MILL (Springhill Site) Scale removal (pickling) using hydrochloric acid Coupled Pickle Cold Mill Thickness reduction via cold rolling through five stands Recoiling using carousel reel Technical Capabilities CPCM Thick mm Width mm To Metal Coating or Pack & Despatch Process: Hot rolled coil is pickled in hydrochloric acid to remove iron oxide to prepare the strip for cold rolling. Cold rolling reduces steel thickness by passing the hot rolled pickled strip through a series of five rolling stands. High roll force and strip tension allows the strip to be progressively reduced at each stand without changing the width. The CPCM is a continuous pickling operation coupled to the cold reduction process. Output: Sold as cold reduced uncoated steel, or sent to metal coating lines for further processing. Capacity: 990 kt/a 52

53 Springhill - cold rolling (packaging) Technical Capabilities PICKLING and COLD ROLLING (Packaging site) Pickle Line Thick mm Width mm Cold Mill Thick mm Hot rolled coil is uncoiled Hot rolled pickled coil is uncoiled Width mm Pickle Line Scale removal (pickling) using hydrochloric acid Five-Stand Cold Mill Thickness reduction via cold rolling To Metal Coating or Pack & Despatch Process: The Pickle Line removes iron oxide from the strip to prepare for cold reduction or for the coil to be sold as hot rolled pickled steel. The coil is the transferred to the Five Stand Cold Mill where the strip thickness is reduced. Output: Sold as hot rolled pickled and oiled steel, cold reduced uncoated steel, or sent to metal coating lines for further processing. Capacity: 135 kt/a (based on 2 crew operations,120kt CRFH + 15kt HRPO) 53

54 Springhill - metal coating METAL COATING LINES Technical Capabilities MCL1 Thick mm Width mm MCL2 Thick mm Width mm Pre-Heat Ovens Natural Gas Fired Selas Furnace Horizontal Cooling Baths Cooling Tower Skin Pass Mill MCL3 Thick mm Width mm Tension Leveller Passivation System Zincalume or Galvanized coil Cold rolled coil is uncoiled Metal Bath & Premelt Pot Process: Cold reduced coils are hot dipped coated with ZINCALUME coating (Nos 1 & 3 Lines) or galvanised (zinc) coating (No 2 & 3 Lines) to provide corrosion protection Output: Sold as ZINCALUME coil or galvanised coil to building and manufacturing industries or processed further by our Paint Lines. ZINCALUME, ZINCSEAL, ZINCANNEAL, GALVASPAN Capacity: 790 kt/a Resin Coaters To Painting or Pack & Despatch 54

55 Springhill painting and finishing Automatic Guided Vehicles PACK & DESPATCH PAINTING Primer Ovens Primer Coater Main Oven Main Coater Inspect & Test Labelling Strapping Protective Packaging Plastic Wrap Finished Coils Painted coil is recoiled Chemical rinsing, cleaning & pre-treatment Process: Uncoated or metal coated strip is thoroughly cleaned and chemically treated to provide best surface to apply a primer coat followed by a finish coat of paint, via roller application, which is then oven cured. Output: Building, packaging and manufacturing markets Capacity: 200 kt/a COLORBOND, AQUAPLATE Technical Capabilities Coated Coil from Metal Coating Lines No.3 Paintline - Thick mm Width mm 55

56 Springhill - cost profile $ Total cost $ FY2005 FY2006 FY2007 FY2008(E) Conversion Costs S&A Paint Metals Feed 06/07 coating metals increased zinc and aluminium prices 07/08 conversion costs increase in price of electricity 56

57 Springhill zinc / aluminium consumption Zinc Aluminium Tonnes /06 H1 2005/06 H2 2006/07 H1 2006/07 H2 2007/08 H1 57

58 Western Sydney COLORBOND facility - update Currently Western Sydney paint line is progressing well Best start up in BlueScope Steel with respect to quality and output Operating at 64ktpa (annualised) vs. nameplate capacity of 120ktpa Not currently operating at full capacity (currently expected in FY2010) World Class facility New technology making this one of the most automated paint lines in the world World class environmental operation (Regenerative Thermal Oxidiser unit reduces Greenhouse Gas) Water saving built into the process (40% of roof area is captured for re-use on site) High performance teams Extensive training at other facilities Excellent start up 58

59 Western Sydney COLORBOND facility Process: Strip is thoroughly cleaned and chemically pretreated prior to painting Primer and finish coats are applied through a series of rolls then oven cured at deg C Output: Organically painted coil, COLORBOND for building, distribution and manufacturing markets 20 colours represent 90% of our production Annual Actual Capacity: 120,000 tonnes 59

60 Blueprint Initiatives 60

61 Blueprint initiatives What we will do Areas of focus A. Reinvigorate our Australian and New Zealand businesses B. Continue the improvement process across our Asia and North America businesses C. Grow, or acquire, new businesses that build on our distinct competitive advantage Categories of Initiatives Grow domestic markets and steel penetration How we will do it Execution excellence 1. Increasing customer and market focus 2. Improving productivity year on year 3. Optimising return on capital Drive manufacturing excellence Enhance the supply chain Business essentials 4. Building an integrated BlueScope operating system 5. Further develop organisational capability Continue focus on productivity Procurement optimisation Improve capital planning and execution What we will be known for Safety 6. Improve on our world class safety performance Sustainability & Environment 7. Become a recognised leader in sustainability & environment Shareholder value 8. Increasing shareholder value Monetise surplus assets Disciplined growth 61

62 Manufacturing Excellence BlueScope s Operating System Key Outcomes Technical system Management infrastructure Mindsets and behaviours Improve total cost per tonne produced Decrease variable costs Increase uptime Optimise changeovers Optimise inventory Grow ESVA All three dimensions of the operating system need to be addressed to sustain improvements 62

63 Focussing on Continuing Business Improvements Slab HSMs Plate CRC MCLs CPLs FY03 FY04 FY05 FY06 FY07 Production; Percent, indexed to

64 Summary Continued focus on safety, community and environment Blueprint focus on Increasing productivity Customers focus Relentless cost reduction Supply chain improvement Optimising return on capital Complete Steelworks Co-generation Plant feasibility review Western Sydney ramped up to full capacity No. 5 BF reline and Sinter Plant upgrade Finalise preparations and safely complete on budget and schedule 64

65 Supporting Information 65

66 Blast furnace iron making process Raw materials- iron ore lump, sinter, pellets, coal (coke) and limestone are fed into the top of the blast furnace Coke and gases burn to create temperatures up to 2200ºC; chemical reduction process creates molten iron and CO2 while limestone (flux) melts and forms slag. Molten iron and slag fall to the furnace bottom (hearth) where they are drained out through one of three tapholes into a torpedo ladle. Hot air, gas and PCI is fed into the blast furnace through the tuyeres Feed: - Iron Ore 7.7mtpa - Coal 3.7mtpa - Limestone ~850ktpa 2 Blast Furnaces Molten slag to by-products processing Torpedo car iron to BOS 66

67 Steelmaking process Basic Oxygen Steelmaking (BOS) Molten iron (250t) 5.3Mtpa Scrap steel (approx 60t) Oxygen blowing * Annual Scrap Usage (indicative) 1mtpa (approximately 40% sourced externally) Refractory lined BOS furnaces 3 x 280t 67

68 Slab making process Steel ladle Revolving Steel ladle turret Tundish Continuous Slab Casters 5.3 Mtpa Mould Max. width = 2200mm Max. length = 12.5m Max. thickness = 300mm To cut-to-length Hot Strip Mill, Plate Mill, Westernport or export 68

69 HRC process Hot Strip Mill Commissioned 1955, upgrades 1972, & Product flow 2.9 Mtpa Slabs ex Slab Casters Reheated to 1225 C Dual reheat furnaces Roughing- Reversing Mill300mm 25mm Coil box Six Stand Finishing Mill min. gauge 1.48mm 69

70 Plate process 0.4 Mtpa Commissioned mm- 180mm thick x 1200mm- 3400mm wide Slabs ex Slab Caster Reheat Furnaces Finishing Mill Roughing Mill Hot leveller Descaling Box Shearing, stencilling, shot blasting, prime painting & inspection Product flow 70

71 Hot Rolled Products Australia - product flow (Indicative) 1H FY2008 Port Kembla Steelworks 2.6mt slab 1H FY2008 (2.7mt slab 1H FY2007) Hot Strip Mill 53% (53%) C&BP Australia (1) (Western Port) 21% (22%) Export Slab 17% (16%) Plate Mill 9% (9%) C & BP Australia (1) (Springhill & Distribution) 41% (48%) Domestic HRC 23% (26%) C & BP Australia (Distribution) 19% (0%) Domestic Plate 70% (85%) Export HRC (2) 36% (26%) Notes: (1) C&BP Australia is Coated and Building Products Australia (2) Included 134kt internal sales to BlueScope s Thailand operations Export Plate 11% (15%) 71

72 (ktonnes) Port Kembla Steelworks - despatches by half year ,579 2,689 2,600 2,609 2, % 32% 41% % 37% % 18% % 15% 18% % 45% 47% 50% 45% FY06-1H FY06-2H FY07-1H FY07-2H FY08-1H External Product Internal Customers Domestic Customers Exports Customers * Sales Mix Slab 54% 42% 31% 29% 32% HRC 35% 45% 53% 55% 56% Plate/Other 11% 13% 16% 16% 12% * Including BlueScope Steel Asia feed 40% sold domestically and 60% exported, with geographic split being: Asia 42% USA 36% Other 22% 100% exported, with geographic sales split Asia 68% USA 32% Other 0% 72

73 Historical Data Port Kembla Steelworks FISCAL YEARS 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 H1 08 Raw Steel (mt) Capex (A$m) Sales Volumes ( 000 tonnes) - Domestic - Export - Internal Total 813 1,297 2,565 4, ,604 2,404 4, ,365 2,324 4, ,567 2,609 5, ,504 2,560 5,045 1,050 1,377 2,495 4, ,109 2,293 5,228 1,004 1,572 2,550 5, ,161 2,464 73

74 Springhill Site History 1939 John Lysaght (Australia) Springhill Works begins full operation stand continuous Cold Rolling Mill commissioned 1968 Cold Rolling Mill upgraded to 5 stands 1961 First continuous galvanising line commissioned 1964 Second continuous galvanising line commissioned 1966 Third continuous galvanising line commissioned 1970 BHP acquires 50% of Lysaght s 1976 MCL1 converted to Zinc/Aluminium galvanising No.3 Paint Line commissioned 1979 BHP acquires 100% of Lysaght s 1989 New pickle line coupled to 5 stand Cold Rolling Mill (CPCM) 1994 Decommissioning of Electrolytic Cleaning and Galvanising Line facilities 1996 CPCM Carousel Recoiler and Entry Accumulator upgrade Integrated Coil Packaging and Handling Project 2000 Closure of Batch Coil Annealing and Temper Rolling facilities 2002 Transfer of the Slit Recoil Line to Acacia Ridge Brownfield capacity increases 2005 Packaging Products site integrated under Springhill management as Illawarra Coated Products 2007 Packaging Products Tinplate & Finishing department closed 2007 Closure of CRM Paintline announced 74

75 Springhill environment Springhill site is a zero process water discharge site all process water is treated through waste water treatment and returned to Sydney Water for recycling. only stormwater is received into the local environment. Recertified to ISO April Current DECC site licenses. Reviewed environmental improvement plan ( ) DECC recognition for make safe activities tin plating and finishing, considered benchmark Greenhouse gas targets are being established via benchmarking exercise. Water and energy intensity targets established. Achieving better than target on electricity energy intensity. Water use and intensity continues to track at record lows. Promote BlueScope Water products with installation of several 2 thousand litre rain water tanks. Continue to recycle 100% of by-product steel, solvent, HCL, with rags, gloves and oil 75

76 Indicative FY2008 zinc and aluminium usage vs. FY2007 Tonnes Zinc Aluminium FY2008(E) FY2007 FY2008(E) FY2007 AUSTRALIA Springhill 21,423 22,787 11,281 10,632 Western Port 22,261 21,800 11,284 10,900 Sub-total 43,684 44,587 22,565 21,532 NEW ZEALAND 7,300 6,800 3,700 3,500 ASIA 19,814 14,888 18,094 13,092 TOTAL 70,798 66,275 44,359 38,124 Note: (1 ) In future years BSL Asia s usage will increase as new mid-stream projects ramp-up to full capacity (2 ) Av FY 2007 Zinc price was US$3,728 per tonne vs av 1H FY 2008 price of US$2,889 per tonne, with current spot price of US$2,416 per tonne (12 Feb 2008). 76

77 22 nd January 2003 Port Kembla Steelworks & Springhill Analyst Site Visit Noel Cornish May 2008 File Reference: u:\guidelines - BlueScope Lysaght PowerPoint Template