BlueScope Reports Record 1H Profit, First Coil From EAF Expansion in Mid '22

“Underlying EBIT for the half year was $2.2 billion (Australian), clearly the best half-year performance BlueScope has produced in its 20-year history as a listed company,” Managing Director and CEO Mark Vassella said. “Demand in key segments, especially in building and construction, was strong, coupled with particularly robust margins driven by increased steel prices in Asia and the U.S.”

Company executives reported that the project to add 850,000 metric tons (roughly 937,000 short tons) of annual capacity to the North Star minimill in Ohio is progressing well. The first major component of the expansion, the new EAF, was commissioned during the first half and reached its 100-heat milestone last month. Commissioning of the ladle metallurgy furnaces is currently underway, and installation of the caster and shuttle furnace are nearing completion. The company expects production of the first coil in mid-2022, followed by an 18-month ramp-up to the full run rate. Total cost of the project is running about 10% above the initial estimate of $700 million.

To enhance the company’s position in the U.S., BlueScope invested $220 million in December 2021 to acquire the ferrous scrap recycling business of MetalX. Its two operating sites in Indiana and Ohio, near North Star BlueScope, now supply about 20% of the minimill’s needs. “The business now operates as BlueScope Recycling and brings us a crucial presence and expertise in scrap processing to further secure our prime and obsolete scrap needs, and helps drive our ambition to participate in the circular economy. The acquisition will enable North Star to improve the quality and quantity of obsolete scrap it uses and reduce the mix of prime scrap,” Vassella said.

In other news, BlueScope is doing a full feasibility assessment of a reline and upgrade of its mothballed No. 6 Blast Furnace (6BF) at Port Kembla, about 60 miles south of Sydney, Australia. The company maintains that a $1 billion reline of 6BF would secure its domestic ironmaking needs through 2026, without compromising its emissions goals.

“The blast furnace campaign life of up to 20 years aligns with BlueScope’s decarbonization strategy and 2050 net zero goal, and provides a challenging but credible timeframe for the development, scaling and commercialization of new low emissions technologies,” the company stated. “The reline does not lock BlueScope in to blast furnace steelmaking for the full 20 years if technology is ready earlier. However, achieving this will be dependent on several enablers including access to low-cost green hydrogen, affordable renewable energy, the development of suitable raw material supply chains and appropriate policy settings.”

During the first half, BlueScope commenced two important collaborations, signing memoranda of understanding with Rio Tinto to explore technological and process options for low-emissions steelmaking, and with Shell Energy Operations to develop renewable hydrogen projects at Port Kembla. The projects will focus on piloting an industrial scale 10MW hydrogen electrolyzer, hydrogen direct-iron-reduction furnace and iron melter, all powered by renewable electricity.

The company’s outlook for the second half of its current fiscal year projects earnings in the range of $1.20 billion to $1.35 billion (Australian) – which would be an achievement second only to the prior half in the company’s history.

By Tim Triplett, Tim@SteelMarketUpdate.com