BHP Steel to upgrade once-threatened Glenbrook

5.00pm

BHP Steel is expanding capacity at its once-threatened steelworks in Auckland to the tune of A$14 million ($16 million) next year.

The upgrade of BHP's metal coating plant in Glenbrook, near Auckland, will enable the plant to increase its output by 10 per cent, producing an extra 24,000 tonnes of premium metallic coated steel products a year.

While the upgrade would not necessarily mean more jobs, it ensured the plant's competitiveness, BHP Steel's New Zealand president Bill Jacob said

In August the company laid off about 100 of its 1300 staff at the Glenbrook steel mill as a result of the United State's 30 per cent tariff on imports.

"Things have turned around dramatically," Mr Jacob said.

"The effects of tariffs in the US market was not a helpful thing at the time, but the markets in New Zealand improved and with that we were able to capture additional market share in our own market, which we prefer to do."

BHP Steel NZ still exported about one-sixth of its capacity to the US, worth slightly under the $50 million worth a year before the tariffs.

"We're ending up with a very good fiscal year, which has allowed us to make this capacity adjustment on our metal coated line.

"It ties in well with our strategy of thinking of New Zealand Steel for the long term and it's a reinforcement from our corporate father, BHP Steel, saying, we do support you for the long term."

In 2001 BHP, which bought the mill in 1991 after the failure of former owner Equiticorp, announced a $27 million upgrade of one of the mill's two melters after years of uncertainty about the mill's future in depressed international steel markets.

Mr Jacob said the New Zealand operation's outlook was good for the 2004 financial year, which begins on July 1, "although maybe not the premium year we've had in 2003".

Steel consumption increased in New Zealand this year because of a buoyant economy, which spurred on more building, and the company also developed some new markets.

The company has not lost production or customers as a result of the power squeeze this year, although it had rearranged its production schedule to make the most of low-use periods.

New Zealand Steel produces over 620,000 tonnes of raw steel each year with a significant percentage processed at Glenbrook into metallic coated steel.

Modifiying the existing New Zealand Steel metal coating plant will allow a range of products to run at higher line speeds and higher throughput. The upgrade includes additional annealing capacity, which toughens the steel, with commissioning planned for early 2004.

BHP also announced today it was investigating building a new plant, estimated to cost about A$100 million, in Australia for its pre-painted steel construction product Colourbond.

- NZPA