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BHP 20th Anniversary: The Newcastle steel industry today

2019-10-02

THERE was a time, even if it was only a guided tour through the BHP plant, that the primary school age children of the Newcastle and Coalfields areas would have known something about steelmaking.

Some of it might have been picked up around the kitchen table, from shift-working parents, or relatives or family friends.

Tours of the Newcastle works were a staple school excursion for as long as school excursions had existed.

Kids would have been taught that the three basic ingredients were iron ore, coal and limestone, with various other bits and pieces mixed in to either help the process along, or to give the finished product its desired characteristics.

Some might have known that iron was made in a blast furnace, and that the molten iron was poured into a steelmaking furnace. Open hearth in the old days, basic oxygen steelmaking or BOS furnace after that.

Or that the steel was tapped out of the furnace into a bloom, and that these cast blooms of steel were then put through the mills. Hot-rolling mills, with the steel glowing orange and red for the bigger shapes, and then cold-rolled to make finer products, like wires.

They might have even known that basic steel was called "mild" steel. That mild steel with nickel and chromium added to it became stainless steel.

And so on. Even if the initial lessons were forgotten, or that those observations probably applied more fully to boys than to girls, the massive presence of the works ensured that steel was front and centre in many young people's minds.

Today, a growing emphasis on the so-called STEM subjects (science, technology, engineering and maths) is helping to lower the barriers for women entering such previously male-dominated worlds. Still, the loss of the works from the Newcastle skyline means that many people today are blissfully unaware that the city still has a steel industry, albeit a much smaller one.

On the BHP side, the rolling mill side of the business continued to operate after the closure, along with a number of steel processors, such as Tubemakers, that had set up alongside BHP over the years. The mills receive their feedstock from the Whyalla steelworks and an electric arc furnace steelmaking plant in Sydney's Rooty Hill. All of these businesses were spun out by BHP two years after the steelworks shut in 2001 as OneSteel. They were bought in 2017 by British Entrepreneur Sanjeev Gupta, through his Liberty House business.

The other major arm of the Newcastle steel industry is Commonwealth Steel at Waratah, where the longstanding electric arc furnace - fed by about 1000 crushed car bodies a day - and its associated plant is still in operation, nowadays under the ownership of the private-equity-backed MolyCop.

Paul Cartledge, who ran the BHP Pathways employment program and then operated it as a standalone company after its steelworks obligations were over, recounts various conversations he's had in recent years with friends of his children.

"I had a van with Pathways on the side and they would ask me what Pathways was and I'd tell them about the steelworks," Cartledge says.

"And they'd say 'Steelworks? What steelworks? Did Newcastle have a steelworks? Where?'

'Once the place was demolished, it didn't take long at all for the memory to fade."

Although there was widespread speculation and fear in the mid-1990s that BHP was on its way to shutting the entire Newcastle works, the eventual announcement on April 29, 1997, contained a promise to retain the rolling mills, giving a reprieve to about 15 per cent of the plant's workforce.

What this means, today, is that hundreds of people have kept their jobs at the old BHP "downstream" section of the works, although today only the No2 rod mill remains in operation, after the bar mill was shut some years back.

Various ownership movements at Waratah and Mayfield in recent years have resulted in a sometimes confusing array of name changes.

Both owe their present ownership structures to the 2016 collapse of Arrium - as OneSteel became known in 2012 - with debts of more than $3.5 billion accrued in building up the iron ore side of its business.

The administrators sold the profitable Comsteel side for $1.6 billion to MolyCop, while Gupta's Liberty group bought the remaining assets, which included Whyalla steelworks and an electric arc furnace steelmaking plant at Rooty Hill, for about $700 million.

When Gupta first arrived, the new signs said GFG Alliance, but that brand was replaced by InfraBuild earlier this month. Gupta had planned to refloat the "east coast" part of the business on the stock exchange - while keeping hold of Whyalla - but the float has been delayed to at least next year.

InfraBuild has also reportedly had problems raising new finance in the bond market, and Gupta moved to reassure investors last week by committing what's been described as a "personal" investment of $US150 million ($220 million) into the east coast business.

These financial concerns have unsurprisingly left the workforce and the main union, the Australian Workers Union, wondering what comes next.

Union delegate Bill McGuinness said that after the turmoil of the Arrium collapse, it was fair to say that people were once again concerned about their futures.

McGuinness said Gupta was hailed as "the saviour of Whyalla, and rightly so", after buying the WWII era plant and reviving the town's fortunes.

"We all want to see this mill, and the whole business, keep operating," McGuinness said.

A veteran of the management/union Transition Steering Team that helped the shape the 1999 closure, McGuinness said that a lot of people had predicted the mills would shut within a few years of the steelworks closing.

But time had proven everyone wrong and the bar mill was still operating 20 years later. Trains took three days to arrive from Whyalla, with up to 39 wagons each carrying 75 tonnes of steel.

About 35 per cent of the feed stock comes from Rooty Hill, and is brought in by truck because there is no rail line into the Sydney plant. Virtually all of the mill's products are used domestically, although trial shipments of exports had started under the new management.

InfraBuild's marketing and sales director Brett Howlett told the Herald that with the rest of the former OneSteel businesses included, the company was employing about 1200 people in Newcastle.

Given that much of Newcastle's downstream steel processing businesses set up shop after BHP began steelmaking in 1915, those that survive have also marked their centenaries, or are about to. Comsteel celebrated its in March last year, while Infrabuild Wire is marking its 100th birthday today.

If things are less than certain at InfraBuild, the Comsteel operation at Waratah is hitting new and highly innovative heights, building on some of the technological advances it unveiled in March last year at its 100th birthday celebrations.

In partnership with the University of NSW, MolyCop is working with a highly acclaimed inventor and academic, Professor Veena Sahajwalla, whose research and experiments at the Waratah electric arc furnace have led to major breakthroughs in steelmaking. These include using shredded car tyres and plastics instead of increasingly problematic coking coal as a source of carbon.

Australia's only onshore railway wheel maker, Comsteel employs about 500 people with another 100 contractors.

Bradken - which can trace its history back to a pair of BHP engineers in the 1920s - was also operating from Waratah when it took its modern form with a stock exchange listing in 2004.

Although it still makes rail and mining products, it has shifted its manufacturing to China and in 2013 moved its head office to the Steel River estate at Mayfield.

It has almost 120 staff at in Newcastle - mostly in research and design - and although its earnings are well down from the heights of the mining boom, it still recorded revenues last year of more than $500 million. It was taken over in 2017 by Japanese giant Hitachi and delisted from the stock exchange.

Source:  Newcastle Herald