The future of Port Kembla's steelworks has been brought into question again after investment firm Sandon Capital called for BlueScope to "mothball" the one blast furnace still operating at the facility.
In a presentation to its clients on Monday, Sandon Capital argued that BlueScope's earnings and cash flow would be improved by shutting down the steelworks.
Sandon Capital is an activist investment firm, using its investment power to influence the decision-making processes of the companies it invests in.
Sandon Capital managing director Gabriel Radzyminski told Fairfax Media that closing the steelworks would unlock value for shareholders.
"We have been workshopping with a few people about what value would be created if they were to shut the blast furnace at Port Kembla," he said.
"Ours is not an aggressive stance. We are not being hostile or critical. We just think there needs to be a discussion around the future of Port Kembla."
In its report, Sandon Capital said it believed that, unless the exchange rate of the Australian dollar remained consistently below US65¢, BlueScope steel production costs would "remain at the high end of the global steel cost curve and profitability will be sub-optimal".
Sandon Capital argues the costs of shutting the blast furnace, while considerable, would be more than offset by the improved profitability from not having to sell commodity steel into the export market at a significant loss.
The investment firm estimates BlueScope exports more than 500,000 tonnes of loss-making commodity steel products a year, costing more than $200 a tonne, and hitting earnings before interest, tax, depreciation and amortisation by more than $100 million a year.
By shutting down the blast furnace, BlueScope could be repositioned as a downstream producer of high-quality branded steel products.
Last week, BlueScope denied reports it was considering closing the Port Kembla steelworks, but said it needed to save about $130 million a year in costs to keep the steelworks viable.
AWU branch secretary Wayne Phillips told the Mercury last week that ending steel manufacturing at Port Kembla would directly claim up to 1000 jobs, as well as many thousands more contractors, suppliers, and people indirectly reliant on the steelworks, including small businesses and caterers.
A BlueScope spokesman on Monday said the company would "acknowledge today's reports" but declined to comment further.
"As a shareholder they are entitled to their view, but we won't be providing commentary on speculation," he said.
"We will provide an update in August at our full-year financial results announcement."