The NSW government says it "appreciates the importance" of the steel industry to the Illawarra community but has admitted to not using local material in at least one major city project.
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The Baird government is spending $106 million on redeveloping Wollongong Hospital, $31 million on the hospital's multi-storey car park and another $15 million on upgrading Wollongong Courthouse.
A local resident who was walking past the courthouse construction site last week snapped a photo of steel on the ground near the Market Street entrance bearing the stamp "made in Korea".
In light of the public campaign to "save our steelworks", he thought the stamping was relevant. However a NSW Justice spokeswoman said 95 per cent of the steel had come from an Australian supplier, but admitted it was OneSteel, not Illawarra's BlueScope.
The spokeswoman said the sourcing of materials was the responsibility of the construction company that won the tender for the job.
The $15 million project was being delivered by a local company for the local community and provided employment for more than 300 people from Wollongong and the Illawarra region, she said.
The Mercury asked the NSW government to provide a breakdown of the steel used on the three projects and to explain any restrictions that could affect decisions to use local products.
A spokesman said the NSW government was "a very large customer of the Australian steel industry" with products used "everywhere in our infrastructure and general construction works".
But he was not forthcoming on a breakdown on the hospital projects.
"Over the past three years, the NSW government has bought approximately $26 billion of construction goods and services," the spokesman said.
Over two thirds of this spending - $17.2 billion - was with NSW-based businesses. Virtually all of the remainder was paid to Australian-based companies.
"The government's procurement reforms have increased local involvement in infrastructure," the spokesman said.
"For projects valued at more than $10 million, the government requires tenderers to show how their tender will support local industry, including local jobs and skill development.
"The NSW government participates in Australia's free trade agreements as a way to ensure access to global markets for NSW-based suppliers."
As part of those arrangements, local mechanisms to preference local suppliers could have the effect of disadvantaging NSW and Australian steel manufacturers, the spokesman said.
"Our government stands committed to reducing regulation, reducing business taxes, reducing red tape and supporting industry. This will lower supply costs and enable NSW and Australian business to become ever more globally competitive."
Kiama MP Gareth Ward said he was in discussions with the NSW Premier about "changes to our procurement policy" so decisions could be based on quality as well as cost.
He said Australian steel was of the highest quality so "driving policy" to focus equally on quality would make Australian companies much more competitive.
Mr Ward could not comment on the specifics of the courthouse or hospital projects but said other major infrastructure projects used Illawarra steel - including the Gerringong upgrade (62 per cent) and the Berry bypass (54 per cent).
A NSW Health Infrastructure spokeswoman said a "competitive tender process" is undertaken to determine the preferred contractor to deliver a project.
"This process ensures the NSW government provides the best value for money," the spokeswoman said.
