BlueScope Steel CEO backs carbon tariff at border; $1.15bn Port Kembla refurbishment gets green light
Mark Vassella says the government’s move towards a carbon tariff at the border is a positive step for Australian manufacturers.
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BlueScope Steel CEO Mark Vassella says the government’s move towards a carbon tariff at the border is a positive step for Australian manufacturers, throwing the steelmaker’s weight behind the move as BlueScope ticks off on a $1.15bn extension of the life of its Port Kembla steelworks.
Energy Minister Chris Bowen announced last week the start of consultations on whether Australia should adopt a cross-border adjustment mechanism (CBAM) as carbon reduction requirements under the government’s safeguard mechanism ramp up over the next decade.
Mr Vassella said on Monday, as BlueScope delivered its annual financial results, the company supported any moves towards a CBAM to avoid the outsourcing of domestic carbon emissions putting local manufacturers at a competitive disadvantage.
“From our perspective, if costs are going to be incurred by local industry to decarbonise, then it’s completely inappropriate that other countries that don’t have the same costs can export their products into this country at some advantage,” he said.
“I think it’s an entirely appropriate part of the broader public policy position or strategy in terms of decarbonisation of industry. Our experience with the safeguard mechanism is that we found the federal government willing to listen to industry in terms of understanding the challenges that the hard-to-abate industries like the steel industry face, so I would imagine that that will continue.”
Mr Bowen said last week he expected the results of a review on the policy to be delivered to government late next year. The EU also plans to implement a carbon tax at the border by 2026.
Mr Vassella’s comments came as Australia’s biggest steelmaker declared a final dividend of 25c a share after booking a $1bn net profit for the year, well down on the record $2.8bn profit the previous financial year.
BlueScope booked “robust” underlying earnings before interest and tax of $1.6bn, which Mr Vassella said was a testament to the company’s ability to weather volatile macroeconomic and industry cycles.
The company also delivered a vote of confidence in the outlook for its Australian operations on Monday, saying its board had ticked off on the $1.15bn reline and upgrade of a blast furnace at its Port Kembla steelworks.
It said it expected the refurbished blast furnace to be commissioned in mid to late 2026, and be fully operational in time for the 100th anniversary of the founding of the Port Kembla steelworks.
BlueScope says the refurbishment of the plant is a means of extending the life of Port Kembla as the company looks to alternative low-carbon steelmaking methods, such as the company’s collaboration with Rio Tinto over a direct reduced iron technology.
“In this sense the reline project is our bridge to the future and critical to maintaining the sovereign capability of flat steelmaking in Australia,” the company said.
BlueScope’s net profit was well down on the record profit delivered last financial year, which was fuelled by extraordinary steel pricing as governments pumped billions of dollars into infrastructure projects as part of their recovery plans after the initial threat of the Covid-19 pandemic receded.
But its result was still the third-highest underlying profit in the company’s history as a listed entity, Mr Vassella said.
“Operating cash flow for the half year, after capital expenditure, was $1.34bn. The balance sheet remains strong with $703m net cash, positioning the group well in a period of increased capital spending on projects that underpin sustainable earnings and growth,” Mr Vassella said.
“In 2023, BlueScope delivered $518m in shareholder returns through dividends and on-market buybacks. Today, the board has approved a fully franked final dividend of 25c per share, and an increase to the share buyback program, to allow up to $400m to be bought over the next 12 months.”
BlueScope booked its net profit on $18.2bn in revenue, down 4 per cent from the previous financial year. Its shares closed up 68c at $21.24 on Monday.
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Originally published as BlueScope Steel CEO backs carbon tariff at border; $1.15bn Port Kembla refurbishment gets green light
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