Strong BlueScope profit brings Port Kembla blast furnace reline a step closer

For the last few years, the steelmaker has been working through the early stages of a proposed reline of the No6 blast furnace, which has sat unused since BlueScope left the export market.

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A working blast furnace is crucial to the viability of the steelworks - without it, there is no steelmaking at Port Kembla.

The main requirement for BlueScope to go ahead with the billion-dollar reline is for the steelworks to remain profitable.

That's what's happened, with BlueScope recording a record $2.81 billion net profit coming from before-tax earnings of $3.79 billion.

That $3.7 billion figure is the company's biggest earnings year since it was spun off from BHP in 2002.

The result makes it easier for BlueScope to decide to push the reline button, as the steelworks approaches its 100^th anniversary in 2028.

"The feasibility study of the comprehensive reline of the mothballed No6 blast furnace is progressing well and we expect to move into the execution phase early in the calendar year," BlueScope CEO Mark Vassella said.

"This project includes a range of improved environmental controls as well as technology options that will enable greenhouse gas reductions over the medium to longer term.

"Importantly it also provides a bridge to our adoption of breakthrough lower emissions steelmaking, once technically and financially viable."

However, Mr Vassella said viable green steelmaking "was still decades away".

The Australian Steel Products division, which included the Port Kembla steelworks, saw a 92 per cent increase in pre-tax earnings to $1.2 billion.

Driving the record profit was "robust" demand for steel for public infrastructure and non-residential investments as well as a move to regional work environments in the wake of the pandemic.

This was coupled with very favourable spreads (the difference between raw material costs and the price of the finished product).

Mr Vassella said the steelworks gained "strategic importance" as the war in Ukraine and other world events affect international supply chains.

"Recent macro-economic and geopolitical volatilities has continued to reinforce the importance of domestic supply chains and sovereign manufacturing capability which aligns perfectly to BlueScope's strategy of focusing on our domestic markets," Mr Vassella said.

The pre-tax earnings over the next six months weren't predicted to be as strong - in the range of $800 million to $900 million.

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