Steelmaker BlueScope to keep Port Kembla works open following support from NSW Government and job cuts

BLUESCOPE says job cuts and millions of dollars in government support have helped save the Port Kembla steelworks.

Molten steel passes through 'the flame' into the galvanizing pot at BlueScope Steel Ltd. works in Port Kembla, NSW. BLOOMBERG...

STEELMAKING will continue in the Illawarra after the NSW Government deferred $60 million of payroll tax at BlueScope’s Port Kembla works for the next three years.

There had been fears that BlueScope could close the steelworks, near Wollongong in southern NSW. However the $60 million contribution, as well as a reduction in labour costs by $60 million a year through 500 job cuts and a pay freeze, looks to have saved the plant.

BlueScope chairman Graham Kraehe said the deal with the state government was crucial to the plant’s future.

“The arrangement we have struck demonstrates the government’s clear support for our employees, our business and the Illawarra, and it has been a key component in the board’s decision to keep the steelworks open.”

The company’s CEO, Paul O’Malley, said China was exporting the equivalent production of 45 Port Kembla steelworks causing a global steel glut that continued to pose a challenge to the Australian industry.

“The ongoing lesson is that to continue to make steel in Port Kembla, we must remain cost competitive and continue to deliver value.

“We recognise this has been an especially tough time in the Illawarra and we are grateful for the support from all our employees, customers and communities.”

The announcement has been welcomed by the Australian Workers’ Union (AWU) who said its members had accepted temporary wage freezes and job cuts in order to secure the survival of steelmaking in the region.

AWU National Secretary, Scott McDine, said, “Steelmaking in Port Kembla owes its survival to the courageous and long-sighted decision taken by workers to accept sacrifice today for viability tomorrow.

“If profitability continues to climb, Port Kembla workers should be at the front of the queue for bonuses to reflect that.”

BlueScope upgraded its first half earnings outlook, saying earnings before interest and tax would be about 40 per cent higher than the previous six months.