OneSteel closing two mills

OneSteel, Australia’s second largest steelmaker, will be closing two mills amid rising competitive pressures and surplus capacity.

The steel maker has announced a decision to close the Martin Bright Mill in Melbourne and its bar making mill in Newcastle after a six month review.

The implementation of the closure is expected to cost $35 million and result in the loss of 270 jobs.

The company hopes to save up to $30 million per year by closing the mills.

“We have to be competitive to go forward if we’re going have a viable business ... so this decision is very much around that,” said OneSteel’s executive manager of the group’s rod, bar and wire division, Chris Keast.

“If we look at the steel market, which fits within OneSteel’s range of products, imports have doubled over the last four years,” he said.

OneSteel said the decision to close the two plants was also related to a significant surplus in production capacity after the company acquired a suite of assets from rival Smorgon Steel Group in August.

Keast said the Newcastle mill was operating at 55% of its capacity and the closure of the two mills would “remove around half a million tonnes of underutilised capacity”.

He said the closure would result in a 50,000 tonne reduction of engineering bar each year, which represents less than 1% of the company’s annual revenue.

“We are trying to position ourselves in relation to the markets that we can best compete in and the markets which we believe are growing for us as well, particularly around construction and mining,” he said.

The Martin Bright Mill is expected to be closed by December while the Newcastle mill will be shut by February 2009.

The Australian Workers Union (AWU) blasted OneSteel, saying it should be investing in new technologies to gain further efficiencies instead of closing facilities.

“This is a hugely profitable company with revenue nearing $6 billion and approximately $700 million in profit,” AWU national secretary Paul Howes said.

“But unlike comparable companies, it has put virtually nothing into plant modernisation and investment. Their profits come purely out of a slash and burn strategy.”