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BlueScope competitor gears up in Queensland

A NEW steelworks proposed in Queensland's booming coal country is poised to provide new competition for BlueScope Steel - but a potential jobs lifeline for Illawarra workers retrenched from the Port Kembla plant.

The $4 billion Gladstone Steel Project might overtake BlueScope and OneSteel to become the biggest steel manufacturer in Australia if its plans to produce five million tonnes of steel every year come to fruition.

The proponent, Boulder Steel, wants to take advantage of the area's proximity to Queensland coalfields and Gladstone's port - the same factors that made Port Kembla an attractive place for a steelworks at the start of last century.

The new steelworks would be a blast furnace operation, like that at Port Kembla, starting with production of 2.5 million tonnes a year in late 2014 and increasing to five million tonnes in 2017.

Boulder's plans include a cogeneration plant to be built in conjunction with the steelworks.

"All waste heat and gases from the steel plant would be supplied to the cogen plant for conversion into electricity," Boulder says.

"The plant would be a net energy exporter, whereas many other steel plants around the world are net energy importers."

Boulder intends to employ just 1800 workers - 1500 permanent employees on-site and 300 full-time equivalent jobs from Gladstone businesses doing maintenance work.

For workers made redundant by BlueScope's recent cuts, the Gladstone Steel Project could offer them a way to continue a career in steel - if they are willing to relocate to central Queensland.

Boulder plans to export steel slabs to Asia for finishing offshore.

Economist Phil Ruthven, chair of IBISWorld, said with BlueScope struggling on the export market, Boulder would be hoping the Australian dollar falls, to make its plans viable.

"It's been my prediction that we'll probably go down to a more normal level of about US80? within the next two to three years," he said.

"If that's when the Gladstone one comes on stream, [their] costs on the export market will be a quarter at least of what they are today. That will make them a little bit more competitive - but it would also make BlueScope more competitive.

"It just begs the question of whether BlueScope would rehire the people and get back into exports at that time," Mr Ruthven said.

"At Gladstone, they might have a more modern plant that might be more efficient - that may be another factor as well," he added.

Mr Ruthven said workers in the Illawarra may find the Queensland project appealing.

"It's a faster-growing state in Queensland than in NSW," he said.

"It seems to keep attracting people both from NSW in particular, and to a lesser extent from Victoria - that would have to be an option many of those workers would think about indeed."

Boulder is finishing its environmental impact statement and is entering the capital-raising phase of the project. It has entered a memorandum of understanding with the Metallurgical Corporation of China International Incorporation as it tries to raise the necessary capital.


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