The heart of the Port Kembla steelworks is the blast furnace, where the iron is made - a vital component in the steelmaking process.

The furnace, which normally runs 24 hours a day, is due to be relined towards the end of this decade.

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Without a reline, the furnace can't be used. And if it can't be used, then the steelworks can't make steel.

A reline doesn't come cheap - in 2009 it cost almost $400 million - so it has to make financial sense to spend that sort of money.

While the benchmark for that investment is that the steelworks remains profitable, that doesn't mean being in the black - even by the smallest amount - is enough.

"No, it's not acceptable for a business just to be in the black," Mr Vassella said.

"A business can't just be in the black. A business has to be making an acceptable return. If a business can't do that we either intervene to correct that situation, or we have to take more drastic steps."

Mr Vassella was speaking after the earnings announcement on Monday that saw the steelmaker's profits drop by more than 90 per cent.

The $96.5 million included an almost $200 million write-down of the New Zealand business.

Mr Vassella said profit fluctuations were part of the cyclical nature of steel prices - so that profits are good at the high point and low at the bottom.

For that reason there wasn't the expectation that the steelworks had to return strong profits each year to guarantee the reline.

"We understand that you can't be shooting the lights out every year, it's just the nature of the business we're in," he said.

"But over the cycle we would expect these businesses to be earning 15 per cent return on invested capital and if you can't achieve that we need to intervene to get it to that position."

Even though it is as much as a decade away, the steelmaker has started working out "what a blast furnace reline will look like", Mr Vassella said.

At the moment, he said, things were looking good for that prospective reline.

"At this stage we are very comfortable with where we are at as a business even though our earnings are off in Australia," he said.

"We are at a low point in the cycle and all of the good work that's been done around our cost position, efficiencies, product innovations are things we need to continue to pursue to make sure that we've got an open and shut case on the blast furnace when it needs to be relined."

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