Confidence in Gladstone Steel Project remains strong

New kid on the steelmaking block Boulder Steel has told the market it intends to go ahead with its plans to build and operate the proposed $4 billion Gladstone Steel Plant project.

Boulder Steel claims it Gladstone plant will be a modern, state-of-the-art facility that is to be built efficiently in terms of capital expenditure and will operate with highly competitive production costs in the global steel market.

Boulder Steel released an announcement to the market reaffirming its enthusiasm for the project following the news that BlueScope Steel said it will shut down its number six blast furnace at Port Kembla, south of Sydney, and close its Western Port hot strip mill, in an effort to return to profitability after suffering a one billion dollar loss.

The closure of the two plants is expected to result in the loss of around 1000 jobs.

BlueScope’s steelworks at Port Kembla where No 6 blast furnace is to be closed. Picture AP

The reaction to the BlueScope closure was predictable to say the least with pundits around the country decrying the lack of manufacturing opportunities currently on offer in Australia.

“This is the first time I’ve said there was a crisis in manufacturing,” Australian Workers Union national secretary Paul Howes told Sky News.

“The calls that are concerning me the most are the calls I’ve had over the past three to four days from the CEOs of the major employers of the AWU membership, foreshadowing substantive announcements over the coming couple of weeks and months that will have a fundamental shift in the nature of manufacturing.

“We are going to see huge amount of jobs go. This is one of the worst periods Australian manufacturing has gone through since the Great Depression.”

Howes blamed the high-performing Australian dollar for the downturn and said the Federal Government should intervene in the Australian resources sector and mandate a buy-Australia policy.

Howes’ concerns were echoed by ALP Senator Doug Cameron said on the ABC Q&A program.

“I think government have a clear responsibility to maintain a manufacturing industry in this country,” Cameron said.

“There are a million people employed in manufacturing. There are only 200,000 employed in the mining industry.

“Manufacturing drives research and development. Manufacturing drives innovation and for us to listen to the economic rationalists, who simply say that we should abandon the manufacturing industry to concentrate on mining, is an absolute political disaster.

“So I think government needs to intervene but I also think that Twiggy Forrest, Gina Rinehart, Clive Palmer, BHP and Rio Tinto should also be there making sure that the infrastructure for the mining industry is produced in Australia.”

Boulder Steel expects the Gladstone Steel Plant will create approximately 2000 jobs during the construction phase, Stages 1 and 2.

Once operational it is expected to generate an estimated 1800 permanent positions comprising 1300 on-site and 500 full-time equivalent maintenance workers from businesses surrounding the Gladstone region.

The Gladstone Steel Plant project will use blast furnace technology to produce high quality steel slabs and billets for exports to Asian markets.

It will be developed in two stages. The Stage 1 plant will be capable of producing 2.5 million tonnes per annum of steel.

As Stage 1 begins operation, construction of Stage 2 will commence, which will duplicate the plant output capacity to 5Mtpa.

According to Boulder Steel the Gladstone plant will feature a mix of traditional and more contemporary steel-making processes that deliver greater cost efficiencies in comparison to existing steel producers, both in Australia and overseas.

Production costs would also be significantly reduced through the use of a co-generation power plant to be established adjacent to the plant.

Boulder Steel has calculated the Gladstone plant would meet significantly lower operating costs, hovering around the region of the lowest quartile of international steel producers.

“It is always difficult to compare new modern facilities with those built decades ago and obviously the proposed Gladstone Steel Plant can take advantage of new technology and processes leading to lower operating costs, which is much more cost effective than retrofitting existing steel plants,” Boulder Steel general manager Carl Moser said in a company announcement to the Australian Securities Exchange.

“Our extensive market research has identified potential customers and strong demand for our semi- finished steel products in Asian markets, which are key drivers pushing this project forward.”

One particular area where Boulder Steel says it will cut costs is also one of the most important, that of power generation.

All waste heat and gases from the steel plant are to be directed to a co-gen plant for conversion into electricity.

The energy balance is such that the plant will be classified as a net energy exporter, whereas many other steel plants around the world are net energy importers.

Moser said the Gladstone plant would be a fully integrated plant with smart in-plant logistics.

“Many steel making facilities around the world require an internal rail system whereas the Gladstone plant will not require such a rail system,” Moser explained.

“The Gladstone plant will also have purpose built steel product ship-loading facilities using state-of-the-art product handling systems.”

Boulder Steel is currently finishing the Pre-Feasibility Study review for the Gladstone Steel Plant project is currently being completed and the Company expects to receive a finalised version soon.