$27m upgrade lifts shadow on Glenbrook

The shadow which has hung over the future of the Glenbrook steel mill and its 1300 staff for several years lifted yesterday with its Australian owner BHP announcing that it will spend $27 million upgrading the second of the mill's two melters.

The company said the upgrade "will ensure the operational security of iron and steel making at BHP New Zealand Steel for the foreseeable future."

The investment represents BHP's acknowledgment that its New Zealand arm has met the challenge of improving its performance.

When the first of the melters was upgraded, about three years ago, BHP delivered an ultimatum to staff that unless performance targets were met the mill would close by 2005.

Praising staff efforts, the president of BHP Steel Kirby Adams said yesterday that over the past two years, BHP NZ Steel and its employees had "delivered on its commitments to improve safety, financial and customer satisfaction performance ... and have earned this re-investment in their operation."

The message was underlined by the president of BHP NZ Steel Cyril Benjamin, who said the company was now "solidly profitable" and "faces no immediate threat of closure."

He also emphasised that "the normal rules of business will continue to apply and we will have to keep delivering."

Mr Benjamin said the upgrade of the second melter basically involved replacing a piece of equipment which had reached the end of its life.

"But the work will also have the effect of increasing our capacity by about 10 per cent."

The upgrading is due to be completed early in 2002 and will necessitate a 10-week shut down of the mill's smelter.

BHP NZ Steel's Glenbrook mill uses local iron sands and coal to produce 600,000 tonnes of steel a year.

The parent company, BHP, is at present working through a $68 billion plan to merge with British-based Billiton to create the world's second-largest mining group. Part of the plan involves spinning off BHP's steel operations, including BHP NZ Steel, by the end of 2002.

This publicly listed steel company would have approximately $4.2 million of net assets and $6 billion in sales revenue.

At the time that the spin-off was announced the Engineering, Printing and Manufacturing Union said the proposal had left Glenbrook employees nervous about their futures.

Yesterday the union's national secretary, Andrew Little, said the announcement meant that the cloud which had been hanging over the future of the mill was now considerably brighter.

"It is a positive announcement for two reasons. First, because it demonstrates that BHP has a commitment to the future of the Glenbrook steel mill.

"Second, because in the light of the merger between BHP and Billiton, it indicates a confidence in the continued viability of the mill, whether the merger goes ahead or the steel assets are spun-off, or whatever."