22nd January 2003
File Reference: u:\Guidelines - BlueScope Lysaght PowerPoint Template
Port Kembla Steelworks & Springhill Analyst Site Visit
Noel Cornish 15 - 16 May 2008
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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.
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IntroductionIntroduction
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Internal business restructure to focus on strategic priorities and execution – Australian & New Zealand Steel Manufacturing Businesses
Noel Cornish Paul O’Keefe Mark Vassella (2) TBA Bob MooreBrian Kruger (1) (3)
Aus/NZ Steel Manufacturing
Businesses
Australian Coated and Industrial
Markets
Australian Distribution and
Solutions
CFO (Charlie Elias)
Asia
Legal (Michael Barron)
ChinaCorporate Strategy
and Innovation;North America,
People and Organisational Performance (Ian Cummin)Paul O’Malley
Managing Director and CEO
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
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Aimee AllenGeneral Manager
Western Port
Oscar GregoryGeneral Manager
Iron & Slab
Gabe MeenaGeneral ManagerMills & Coating
Ross MurrayPresident
New Zealand Steel & Pacific Islands
Chris FogartyGeneral Manager
Finance
Alan ThomasGeneral Manager
Eng’g, Technology &Environment
Barb BridgerGeneral Manager
People & OrgPerformance
Sharon WingatePersonal Assistant
Noel CornishChief Executive
ANZSMB
Australian & New Zealand Steel Manufacturing Businesses
John NowlanChief Manufacturing
Officer BSL
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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
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Safety & EnvironmentSafety & Environment
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3.5
2.5 2.4
1.8 1.8
0.7
1.2
00.2
0
0.5
1
1.5
2
2.5
3
3.5
4
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H07/08
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
22.2
16.2
13
7.34.9 4.2 4.3 4.9
3.6
0.0
5.0
10.0
15.0
20.0
25.0
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H07/08
Port Kembla Steelworks - SafetyF
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4.2
3.02.6
2.2
1.4
0
2.3
0
0.8
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H07/08
Medically Treated Injury Frequency RateLost Time Injury Frequency Rate
Springhill - Safety
21.7
11.89.7
6.9
10.1
5.5 53.6 3.7
0.0
5.0
10.0
15.0
20.0
25.0
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H07/08
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Water Conservation – further reducing fresh water consumption
Total process water use
50% REDUCTION IN FRESHWATER CONSUMPTION
Salt Water96%
Recycled Water 2%
Fresh Water2%
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Port Kembla Steelworks
Co-Generation Plant
ProcessSteam
Electricity 120Mw base load up to
220Mw peaking
Surplus process gasfrom iron & steel making
• 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
CO2 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
PKSW Cogeneration plant – technology led solution to abate greenhouse gas emissions
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• 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
• $500,000 in sponsorships
• Support 30+ Illawarra organisations
Community EngagementF
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BlueScope’s Illawarra Businesses F
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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 - FlexibilityF
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ProcessF
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4.9 4.8 4.8 5.0 5.1 5.1 5.3 5.3
2.62.4 2.1 2.4 2.4 2.5 2.5 2.6 2.8
1.4
0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.20.0
1.0
2.0
3.0
4.0
5.0
6.0
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H07/08
Millio
n To
nnes
Slab HRC Plate
Port Kembla Steelworks productionF
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CokemakingF
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GAS PROCESSING
COKE SCREEN
3.0Mtpa BLENDED COAL
COKE PLANT
2.3Mtpa COKE
SOLIDS
Cokemaking process overview
TARSULPHATE
39Kt 86Kt
BTX (Benzene)
23ML
COKE OVENS GAS 19,000TJ
Interworks energy (boilers,
furnaces)
BREEZE(< 10 mm)
NUT(10 – 25 mm)
LUMP(25 – 80 mm)
TATA(20 – 50 mm)
86%
7%
2%
5%
Coke usageBlast furnaces 1.9MtpaSinter plant 0.2MtpaExport 0.2Mtpa
2.3Mtpa
Export coke
BlueScope approach is to sell excess production on a spot basis. Generally offered in 30-45kt cargo sizes.
Current expected sales of coke in FY08 260k tonnes
1 tonne of coke solids is equivalent to 1.30t coking coal
Types of coke solids produced•Lump•Tata•Nut•Breeze
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Sinter PlantF
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Hot Strip MillF
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Plate MillF
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Port Kembla Steelworks – relentless cost control
Total cost $
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008(E)
S&A Conversion Costs Despatch & Freight Raw Materials(1) Raw material includes iron ore, coal, scrap and alloys but not scrap purchased on behalf of OneSteel.
(1)
$
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• 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
Expected raw material usage - FY 2008F
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Raw material costs
• Historical global iron ore (fines) and coking coal prices (financial year):
• Reported for FY 2009– 71% 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
US$/wmt 2002 2003 2004 2005 2006 2007 2008
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 $101.00 $116.00 $98.00% change 7.5% 12.5% -4.0% 23.8% 76.6% 14.9% -15.5%
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0
2,000
4,000
6,000
8,000
10,000
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 1H 07/08*0
250
500
750
1,000
1,250
1,500
1,750
Employees Productivity (Tonnes per person per year)
Port Kembla Steelworks productivityEm
ploy
ee N
umb e
rs
Prod
uctiv
ity (C
rude
Ste
el Ou
tput
, Ton
nes/E
mpl
oyee
/Yea
r)
* Annualised
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Commissioning Project Capex (A$m)
1996 No. 6 Blast Furnace 478
2000 5mtpa Project 90
2001 Coke Side Emission Control 91
2004 Sinter Plant Emission 94
2006 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)
700 – 1000(estimate)
Port Kembla Steelworks Capital ExpenditureF
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Port Kembla Steelworks – No.5 Blast Furnace reline
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Port Kembla Steelworks – No.5 Blast Furnace reline
• Every blast furnace in the world needs to be relined periodically, typically every 15-20 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 performanceF
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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.
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Reline experience
• Many of the Project Team and Key personnel have been key resources in :o 1996 No.6 BF constructiono 1993 No.4 BF Relineo 1991 No.5 BF Relineo 1989 No.2 BF Reline o 1987 No.4 BF Relineo 1978 No.5 BF Relineo 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 experienceF
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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.
5 days
Holes are cut in the shell to gain access to rake out remaining material and refractory lining including cooling staves
16 days
Install protection and working platforms inside furnace; clean out hearth 12 daysInstall taphole shell plate; Install hearth plug refractory 17 daysRemove & replace bosh shellplate; install bosh staves; install tuyere staves 28 daysInstall hearth sidewall, tuyere and bosh area refractories 25 daysRemove platforms and close up furnace; pressure test 12 daysCharge raw materials, heat up hot blast main; blow-in 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
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Cut in - access through shell (No.5 BF reline 1991)
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Hearth demolition (No.5 BF reline 1991)
34
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Internal working & protection platforms (No.5 BF reline 1991)
35
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Installation hearth sidewall refractory (No.5 BF reline 1991)
36
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Installation of stave lining (No.5 BF reline 1991)
37
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Installation hot blast main refractory (No.5 BF reline 1991)
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Granulator stack & downcomer installation (No.5 BF reline 1991)F
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Reline Complete (No.5 BF reline 1991)F
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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).
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No. 5 BF ramp up plan
5 BF Uprate Plan
0
1000
2000
3000
4000
5000
6000
7000
8000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Days
Tonn
es/d
ay
6BF Plan 5BF Plan Actual 6BF
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.
First servicepost reline
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STRAND
Dustrecycled
MainFans
Dry Electrostatic Precipitators
Waste Gas Mains x2
IronOre
Fines
LimestoneFines
CokeBreeze
SinterFines
Sinterto Blast
Furnaces
Water
Mixing &Rolling Drum
Port Kembla Steelworks - Sinter Plant upgrade
Sinter process
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4544
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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
Precipitators• Refurbish zones 2, 3 & 4 -
R&M• New Zone 1 • Modern ElectricsStrand
• Increase Height• Increase Length
Port Kembla Steelworks – Sinter Plant upgrade
Two new major conveyor systems and several chute modifications will be installed in raw materials handling yards
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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 + 1.1 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.For
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Springhill & Western Sydney Coated
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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
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Markets and Supply Chain
Building & Construction
Export
Domestic
Distributors
Distribution & Solutions
Australia
Direct
Manufacturing
Pipe & Tube
Western Port
Illawarra
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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 2008- 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 trendsF
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• Hot dip metallic coating of Zinc or Zinc/Al alloy
• Acacia Ridge• Service Centre paint
line at Port Kembla
Coupled Pickle Cold Mill990 kt/a
• Descaling of strip via acid bath
• Strip thickness reduced by up to 80% by cold reduction
• Organic coating applied through use of applicator rolls
• Oven cured
Port Kembla Steelworks
Uncoated Strip
Metal Coating Lines
790 kt/a
Paint Line200 kt/a
Metal Coated Strip
Painted Strip
Note: Capacities represent nominal annual volumes
HR Coil
Packaging Cold Mill
135 kt/a
Springhill - material flowF
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Springhill - cold rolling
Hot rolled coil is uncoiled
Scale removal (pickling) using hydrochloric acid
Coupled Pickle Cold Mill
Thickness reduction via cold rolling
through five standsRecoiling using carousel reel
To Metal Coating or Pack & Despatch
COUPLED PICKLE COLD MILL (Springhill Site) Technical Capabilities
CPCM – Thick 0.30 – 3.30 mm
Width 615 – 1320 mm
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
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Springhill - cold rolling (packaging)
PICKLING and COLD ROLLING (Packaging site)
To Metal Coating or Pack & Despatch
Technical Capabilities
Pickle Line – Thick 1.48 – 3.0 mm
Width 457 – 1300 mm
Cold Mill – Thick 0.18 – 1.45 mm
Width 650 – 1085 mmHot rolled coil is uncoiled
Pickle Line
Scale removal (pickling) using hydrochloric acid
Five-Stand Cold Mill
Thickness reduction via cold rolling
Hot rolled pickled coil is uncoiled
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)
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Springhill - metal coating
Cold rolled coil is uncoiled
Pre-Heat Ovens
Natural Gas Fired Selas Furnace
Metal Bath & Pre- melt Pot
Cooling Tower
Horizontal Cooling Baths
Skin Pass Mill Tension Leveller Passivation System
Resin Coaters
Zincalume or Galvanized coil
To Painting or Pack & Despatch
METAL COATING LINESTechnical Capabilities
MCL1 – Thick 0.03 – 3.30 mm Width 610 – 1240 mm
MCL2 – Thick 0.50 – 3.50 mm Width 610 – 1240 mm
MCL3 – Thick 0.30 – 1.00 mm Width 610 – 1240 mm
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 protectionOutput: 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
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Primer OvensPrimer Coater
Main Oven Main Coater
Chemical rinsing, cleaning & pre-treatment
Inspect & Test
Painted coil is recoiled
Automatic Guided Vehicles
Labelling Plastic Wrap
Protective Packaging
Strapping Finished Coils
PAINTINGPACK & DESPATCH
Coated Coil from Metal
Coating Lines
Technical Capabilities
No.3 Paintline - Thick 0.20 – 1.5mm Width 600-1320 mm
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 marketsCOLORBOND®, AQUAPLATE®
Capacity: 200 kt/a
Springhill – painting and finishingF
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Springhill - cost profile
• 06/07 coating metals – increased zinc and aluminium prices• 07/08 conversion costs – increase in price of electricity
Total cost $
FY2005 FY2006 FY2007 FY2008(E)
Conversion Costs S&A Paint Metals Feed
$
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Springhill – zinc / aluminium consumption
2000
4000
6000
8000
10000
12000
14000
2005/06 H1 2005/06 H2 2006/07 H1 2006/07 H2 2007/08 H1
Tonn
es
Zinc Aluminium
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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
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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 200–260 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
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Blueprint InitiativesBlueprint Initiatives
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Blueprint initiatives
What we will do …
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
Areas of focus
How we will do it …
1. Increasing customer and market focus2. Improving productivity year on year3. Optimising return on capital
Execution excellence
4. Building an integrated BlueScope operating system5. Further develop organisational capability Business
essentials
What we will be known for …
6. Improve on our world class safety performance
Safety
7. Become a recognised leader in sustainability & environment
Sustainability & Environment
8. Increasing shareholder value
Shareholder value
Categories of Initiatives
• Grow domestic markets and steel penetration
• Drive manufacturing excellence
• Enhance the supply chain
• Continue focus on productivity
• Procurement optimisation
• Improve capital planning and execution
• Monetise surplus assets
• Disciplined growthFor
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Technical system
Management infrastructure
Mindsets and behaviours
Manufacturing Excellence
BlueScope’s Operating System
• Improve total cost per tonne produced
• Decrease variable costs• Increase uptime• Optimise changeovers • Optimise inventory• Grow ESVA
Key Outcomes
All three dimensions of the operating system need to be addressed to sustain improvementsF
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111111
124
104
110
117
85
90
95
100
105
110
115
120
125
• FY03 • FY04 • FY05 • FY06 • FY07
• Slab• HSMs• Plate• CRC• MCLs• CPLs
• 100
Focussing on Continuing Business ImprovementsF
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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 scheduleFor
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Supporting InformationSupporting Information
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Torpedo car – iron to BOS
Raw materials- iron ore lump, sinter, pellets, coal (coke) and limestone are fed into the top of the blast furnace
Hot air, gas and PCI is fed into the blast furnace through the tuyeres
Molten slag to by-products processing
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.
• Feed: - Iron Ore 7.7mtpa - Coal 3.7mtpa - Limestone ~850ktpa
• 2 Blast Furnaces
Blast furnace – iron making processF
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Molten iron (250t)
Scrap steel(approx 60t) Oxygen blowing
Refractory lined BOS furnaces
3 x 280t
Basic Oxygen Steelmaking (BOS)
5.3Mtpa
* Annual Scrap Usage (indicative) 1mtpa
(approximately 40% sourced externally)
Steelmaking processF
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Steel ladle
Steel ladleRevolving
turret
Tundish
Mould
To cut-to-length
Hot Strip Mill, Plate Mill, Westernport or export
Continuous Slab Casters5.3 Mtpa
Max. width = 2200mm
Max. length = 12.5m
Max. thickness = 300mm
Slab making processF
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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
Hot Strip Mill
Commissioned 1955, upgrades 1972, 1985-1987 & 2000-2006
2.9 Mtpa Product flow
HRC processF
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Shearing, stencilling, shot blasting, prime
painting & inspectionProduct flow
Hot leveller
Finishing Mill Roughing Mill
Descaling Box
Reheat Furnaces
Slabs ex Slab Caster0.4 Mtpa
Commissioned 1963 5mm- 180mm thick x 1200mm- 3400mm wide
Plate processF
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Port Kembla Steelworks2.6mt slab 1H FY2008
(2.7mt slab 1H FY2007)
Hot Strip Mill 53%
(53%)
Plate Mill9%
(9%)
C & BP Australia (1)
(Springhill & Distribution)
41% (48%)
Domestic HRC23%
(26%)
Export HRC36%
(26%)Notes:(1) “C&BP Australia” is Coated and Building Products Australia(2) Included 134kt internal sales to BlueScope’s Thailand operations
Export Slab 17%
(16%)
C&BP Australia (1)
(Western Port)21%
(22%)
C & BP Australia (Distribution)
19% (0%)
Domestic Plate 70%
(85%)
Export Plate11%
(15%)
(2)
Hot Rolled Products Australia - product flow (Indicative) 1H FY2008
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Port Kembla Steelworks - despatches by half year
External Product Sales Mix
Slab 54% 42% 31% 29% 32%HRC 35% 45% 53% 55% 56%Plate/Other 11% 13% 16% 16% 12%
0200400600800
10001200140016001800200022002400260028003000
FY06-1H FY06-2H FY07-1H FY07-2H FY08-1HInternal Customers Domestic Customers Exports Customers *
(kto
nnes
)
2,6892,579
43% 45%
16% 15%
40%41%
* Including BlueScope Steel Asia feed
2,600
47%
21%
32%
50% 45%
18%18%
32% 37%
2,609 2,608
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%For
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FISCAL YEARS
99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 H1 08
Raw Steel (mt) 4.9 4.8 4.8 5.0 5.1 5.1 5.3 5.3 2.6
Capex (A$m) 38 47 80 83 65 139 202 136 64
Sales Volumes (‘000 tonnes)- Domestic - Export - Internal
Total
813 1,297 2,565 4,675
762 1,604 2,404 4,770
807 1,365 2,324 4,496
877 1,567 2,609 5,053
981 1,504 2,560 5,045
1,050 1,377 2,495 4,922
826 2,109 2,293 5,228
1,004 1,572 2,550 5,126
465 838
1,161 2,464
Historical Data – Port Kembla SteelworksF
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1939 John Lysaght (Australia) Springhill Works begins full operation1955 4 stand continuous Cold Rolling Mill commissioned1968 Cold Rolling Mill upgraded to 5 stands1961 First continuous galvanising line commissioned1964 Second continuous galvanising line commissioned1966 Third continuous galvanising line commissioned1970 BHP acquires 50% of Lysaght’s1976 MCL1 converted to Zinc/Aluminium galvanising
No.3 Paint Line commissioned1979 BHP acquires 100% of Lysaght’s1989 New pickle line coupled to 5 stand Cold Rolling Mill (CPCM)1994 Decommissioning of Electrolytic Cleaning and Galvanising Line facilities1996 CPCM Carousel Recoiler and Entry Accumulator upgrade
Integrated Coil Packaging and Handling Project2000 Closure of Batch Coil Annealing and Temper Rolling facilities2002 Transfer of the Slit Recoil Line to Acacia Ridge2003-05 Brownfield capacity increases2005 Packaging Products site integrated under Springhill management as Illawarra Coated Products2007 Packaging Products Tinplate & Finishing department closed2007 Closure of CRM Paintline announced
Springhill Site HistoryF
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• 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 14001 April 2008.• Current DECC site licenses.• Reviewed environmental improvement plan (2007 – 2008)• 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
Springhill environmentF
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Indicative FY2008 zinc and aluminium usage vs. FY2007
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).
Tonnes Zinc AluminiumFY2008(E) FY2007 FY2008(E) FY2007
AUSTRALIASpringhill 21,423 22,787 11,281 10,632Western Port 22,261 21,800 11,284 10,900Sub-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
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File Reference: u:\Guidelines - BlueScope Lysaght PowerPoint Template
Port Kembla Steelworks & Springhill Analyst Site Visit
Noel Cornish 15 - 16 May 2008
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