SYDNEY – Australia’s largest steel maker BlueScope Steel Ltd. announced Monday it will shut two production facilities and shed 1,000 jobs as part of a restructure aimed at turning around a 1.05 billion Australian dollar ($1.09 billion) annual loss.
Bluescope said it will shut down a blast furnace at Port Kembla in New South Wales state and close its Western Port hot strip mill in Victoria state.
The Port Kembla closure will result in 800 job losses, while 200 jobs will be cut at Western Port.
Contractors and suppliers will also be affected by the closures, BlueScope said.
The company reported a AU$1.05 billion net loss for the fiscal year to June 30, compared to a AU$126 million profit in the previous year.
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BlueScope said the high Australian dollar which is near record highs against the greenback, low steel prices and high raw material costs were being compounded by low domestic steel demand.
“We are experiencing significant economic challenges and structural change in the global steel industry,” chairman Graham Kraehe said in a statement on Monday.
The closure of the plants will better align BlueScope’s production with demand from Australia, and the company will no longer export its products, he said.
“The restructure announced today will produce a more viable and sustainable Australian steel business and allow us to focus clearly on domestic markets and international growth opportunities,” Kraehe said.
“We are committed to making steel in Australia and can now prioritize our resources and efforts toward even better service for our domestic customers,” he added.
Managing director Paul O’Malley said the changes would deliver a material improvement in earnings and cashflow, reduce export losses and reduce earnings volatility.
“It’s the right decision for the long-term viability of our business,” he said.
Export sales delivered an AU$487 million earnings loss in the last fiscal year, BlueScope reported.
Total earnings loss was AU$1.04 billion, compared to earnings of AU$240 million in the prior year.
Paul Howes, national secretary of the Australian Workers Union which represents many of the BlueScope work force, said the strength of the Australian currency was the major cause of loss and has created a crisis for Australian manufacturers.
Howes called on the Australian government to pressure Beijing to increase the value of the yuan.
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