North Star BlueScope Reports Strong Half, Progress on Expansion

The expansion at North Star is progressing well and will expand production by about 850,000 metric tonnes per year to 1.4 million tonnes. “Over the last six months, work commenced on installing the melt shop, caster and shuttle furnace,” said Vassella. The meltshop tunnel furnace buildings are expected to be completed in the second half of FY 2021. Commissioning of the new plant is anticipated in June 2022, with full ramp-up following within 18 months.

In the second half of FY 2021, U.S. minimill benchmark spreads are expected to increase by about $340 per metric tonne to an estimated $610 per tonne. North Star BlueScope results are expected to be stronger than in 1H FY 2021. 

Group Results

BlueScope Steel group reported a net profit after tax of AUD $330.3 million, a 78% improvement on the first half of FY 2020. Sales revenue was $5.8 billion.

“Underlying EBIT for the half was $530.6 million, up 78% on 1H FY2020 and double that of 2H FY2020,” said Vassella. “All operating segments have performed well across the half. We have seen strong volumes and improving steel spreads in our largest steelmaking business in Australia and the U.S. Australian Steel Products’ domestic despatches were the highest in a decade, driven by a resurgent residential construction sector. Across the portfolio from India, ASEAN, China, the U.S. and NZ & Pacific Islands, our businesses recorded strong earnings improvements.”

BlueScope is refocusing its efforts on decarbonization by establishing a new executive position dedicated to climate change. Gretta Stephens, as Chief Executive Climate Change, will lead a team to explore new technologies to reduce carbon emissions.

“We recognize that the future of iron and steelmaking will need to be centered around breakthrough technologies – once proven and scalable,” said Vassella. “Exciting work is being undertaken around the globe to explore breakthrough ‘green steel’ ironmaking technologies – including using hydrogen and electrolysis. These technologies are currently in the early stages of technology readiness with significant advances expected to occur over the next decade.”

The No. 5 blast furnace at Port Kembla Steelworks will come to the end of its operating campaign at the end of this decade, and BlueScope has commenced a pre-feasibility assessment regarding a reline for the currently idled No. 6 blast furnace. Transitioning to an EAF in Australia is not economically viable at this time due to the lack of quality steel scrap to support flat steel production at Port Kembla. “In the shorter term, the steel sector will need to rely on technology performance improvements within conventional routes, increased use of renewable energy and other abatement measures,” said Vassella.

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2H FY 2021 Outlook

“At the beginning of 2H FY 2021, order and dispatch rates in key markets remain robust,” said the company in outlook remarks. ”Spot steel spreads in North America are materially higher than both 1H FY 2021 and longer-term averages. However, it is uncertain whether these conditions will be sustained throughout the half due to volatile macroeconomic and market factors – including potential impacts from COVID-19, which could disrupt demand, supply chains and operations.”

BlueScope Steel expects underlying earnings before interest and tax to be in the range of AUD $750 million to AUD $830 million in the second half of FY 2021.

Note: 1 Australian Dollar (AUD) = $0.773 U.S.