steel manufacturing businesses analyst site visit - western port … · 2015-07-21 · steel...

17th November 2009

Steel Manufacturing Businesses Analyst Site Visit - Western Port Plant, Hastings

Aimee Allen, GM Western Port

Important notice

THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE FINANCIAL ADVICE. RELIANCE SHOULD NOT BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BLUESCOPE STEEL DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR INVESTOR.

TO THE FULLEST EXTENT PERMITTED BY LAW, BLUESCOPE STEEL AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION, AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS.

Why Western Port ?• Deep water port• Energy from Bass Strait/Latrobe

Valley• Key southern states customers:

– automotive, white goods, drum makers and building industry

Milestones• 1968: Feasibility study undertaken for a new steel site• 1970: Joint venture signed and Victorian Government approval obtained• 1972: Cold Mill and Metal Coating Line 4 commissioned• 1973: Pickle Line and Paint Line 2 commissioned• 1978: Hot Strip Mill commissioned• 1979: Metal Coating Line 5 commissioned• 1982: Paint Line 4 commissioned• 1992: Metal Coating Line 6 last major production unit commissioned

History

• Experienced workforce with strong depth of process knowledge• One of Victoria’s safest and environmentally sustainable manufacturing sites• Major employer on the Mornington Peninsula• Production records through the Metal Coating and Paint Lines achieved prior to Global

Financial Crisis• Key strategic alliances underway with Silcar, Patrick, Roll Surface Technologies

(RST), BIS Industrial Logistics and Swire

• Supported by experienced suppliers and service sector

• Unique production footprint within BlueScope Steel

Western Port Today

Noel Cornish Paul O’Keefe Keith Mitchelhill Sanjay Dayal Bob MooreMark Vassella

Aus/NZ Steel Manufacturing

Businesses

Australian Coated and Industrial

Markets

Australian Distribution and

Solutions

CFO (Charlie Elias)

Asia

Legal (Michael Barron)

ChinaNorth America

People and Organisational Performance (Ian Cummin)Paul O’Malley

Managing Director and CEO

Aimee Allen

General ManagerWestern Port

BlueScope Steel Divisional Structure

John WaughManager Finance & Business Systems

Aimee AllenGeneral Manager

Elise LatchfordManager People &

OrganisationPerformance

Garry BattyeManagerRollings

Gary ElliottManager

Assets & ManufacturingServices

Russell GibbsManager Quality &

Manufacturing Supply

Richard MillardManager

Procurement

Ron BangeManagerCoating

Western Port Manufacturing Business

Louisa HancockPersonal Assistant

Coil StorageSlab Storage

No 2 Paint Line

Pickle Line

FiveStand

Mill

No 6 Galvanising LineNo 5 Zincalume LineNo 4 Zincalume Line

No 4 Paint Line

Temper Mill / Slit / Packing

Warehouse

AdminBldg

W/house

Maintenance Services Bldg

Slab from Wharf (dedicated ship

delivery slab from Port Kembla Steelworks)

Bayview Road

TechnicalBldg

WaterTreatment

Plant

Slab by Rail

Main GateFinished Product to:• Customers / Melbourne• Wharves by Road / Rail

Finished product to:• Western Port Wharffor export

Coil Annealing

Hot Coil

Proc’g

Cold Strip Plant

Hot StripMill

Organic Finishes

Operations – General Site Overview

• Record MTIFR result for Western Port in 2008/09 at 1.2 – best ever result !• Managed market downturn effectively through workforce flexibility and aggressively

reducing compressible costs• Over the last five years to 2008/09 we have:

o reduced LTIFR by 30% and MTIFR by 55% o delivered financial benefits of $64M to the business (cost, quality and productivity

improvements)o reduced employee numbers by 25% whilst incrementally increasing production outputo reduced fresh water intensity by 5%o reduced total waste water to Western Port Bay by 20%o reduced industrial waste to landfill by 93%o maintained our WorkSafe self insurance status with no imposed conditions

Highlights and Successes

0

5

10

15

20

25

30

Sep-

92

Feb-

93

Jul-9

3

Dec

-93

May

-94

Oct-9

4

Mar

-95

Aug-

95

Jan-

96

Jun-

96

Nov

-96

Apr-9

7

Sep-

97

Feb-

98

Jul-9

8

Dec

-98

May

-99

Oct-9

9

Mar

-00

Aug-

00

Jan-

01

Jun-

01

Nov

-01

Apr-0

2

Sep-

02

Feb-

03

Jul-0

3

Dec

-03

May

-04

Oct-0

4

Mar

-05

Aug-

05

Jan-

06

Jun-

06

Nov

-06

Apr-0

7

Sep-

07

Feb-

08

Jul-0

8

Dec

-08

May

-09

Lost Time Injury Frequency Rate (LTIFR) 12MMA

Safety Performance – Our Goal is ZERO HARM

LTIFR is at 0.8 at end October 2009

0

2

4

6

8

10

12

14

01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10YTD

MTIFR is at 1.7 at end October 2009

Medical Treatment Injury Frequency Rate (MTIFR)• Audit participation over 99% for three

consecutive years – currently 99.6%• Zero LTIs or MTIs during Pickle Line

recovery• Continual focus on keeping workforce safe

despite distractions

• Re-certified to ISO 14001 October 2008• EPA Accredited Licence since June 1996• Third (2006-2011) Environmental Improvement Plan

(EIP) with EPA underway• Zero environmental exceedances since March 2007,

including the Pickle Line fire• Recycled water project now in implementation stage • 2007 & 2008 Tidy Town Award winner, commendation

2009• 90% of captured stormwater is re-used in processes• 100% of iron oxide and by-product steel is recycled

Environment

0

500

1,000

1,500

2,000

2,500

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Prescribed Waste to Land Fill (t)

4.6

4.8

5.0

5.2

5.4

5.6

5.8

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Energy Intensity (GJ/t)

Impacted by reduced tonnes as a result of

the GFC

Philosophy Built on Our BondMix of Financial Support and Community Involvement

Examples:• Engaged and committed Community Liaison Committee • Active member of Western Port Chamber of Commerce

& Industry• Strong relationship with Peninsula campus of Monash

University • Beacon Program – Western Port & Somerville

Secondary Colleges • Sponsor many community activities such as:

• Major and founding sponsor of Fit to Drive • Australia Day, Bay 2 Bay Cycling and Western Port

Festivals sponsor• Long-term sponsor Mornington Peninsula Schools

Environment Week• Local Back to School program for underprivileged families

• Bushfire relief – employee and Company support• Hastings Blue Light Motor Cycle Club on Company land

Community – Our communities are our homes

Western Port Festival

Beacon ProgramWestern Port Secondary College

Port Kembla Steelworks

Coated Australia – Annual Capacities

Note: numbers shown are annual capacities in kt.

Slab

Hot Strip Mill1,400

Metal Coating Lines 830

Cold Mill1,000

HRC

Pickle Line1,100

Paint Lines330

HRC

CRC

Painted Strip

Metal Coated Strip

Western Port

HRC

Springhill Coupled Pickled Cold Mill990

Metal Coating Lines 825

Paint Line200

CRC

Metal Coated Strip

Painted Strip

Export

Western Port

Building & Construction

Automotive Market

Manufacturing

Distributors

Total (23%)

(Based on actual tonnes invoiced 08/09)

(37%)

(40%)Direct

ex SSC

Service Centres

Markets – Based on 2008/09

Unique to Western PortZINCANNEAL®AQUAPLATE®COLD ROLLED ANNEALEDHOT ROLLED > 1500 mm wideWidth of Lines -HSM, MCL6, CPL2

Our Product Range

Across BlueScope SteelCOLORBOND®ZINCALUME®GALVASPAN®TRUECORE®

• Cost decreases from initiatives around managing production to match market demand – riding out the financial crisis • Delivered reductions in ‘fixed costs’ through workforce flexibility and labour sharing across the site:

o reduced shift patternso eliminate overtimeo significant reductions in annual leave / long service leave across the business

• Reduction in discretionary and S&A costs continuing• Coating Metals and Paint ‘usage’ being addressed by capital projects (gauge control on coating metals and on-line

trace pyrometer control for paint)

Total Costs – compressible costs the focus through site wide initiatives

Total Costs by Major Category

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Conversion Costs * Selling and Admin Other Raw Materials Delivery Feed

$B

* conversion costs include Depreciation and reflect Costs of Production

• Shift pattern changes to match market demand• Sharing of labour across the site to facilitate continuing reductions in annual leave and

long service leave• Quality improvements continuing on all units• Discretionary savings across the business

o travelo trainingo consultants and pre-feasibility deferrals

• Procurement savingso filter cake recoveryo zinc dross reviewo mill scale containerisation

• Packaging rationalisation at the Paint Lines• R&M reductions across the site• Reduction of furnace reheat temperature at the HSM – process scrap savings

Western Port – taking action to reduce costs

• Targeting 1% reduction in total costs year on year (which represents approximately a 4% reduction in compressible costs)

• Heightened focus with all employees on delivering financial benefits (safety/cost/quality) continuing across the business

• Conversion costs (per tonne) impacted by sharp decline in market demand

Continuing Cost Focus

2004/05 2005/06 2006/07 2007/08 2008/09

$ Milli

on

Financial Benefits *

2004/05 2005/06 2006/07 2007/08 2008/09

$ pe

r ton

ne

Conversion Costs per Packed Tonne

* doesn’t include volume related savings

• 2008/09 year severely impacted by the Global Financial Crisis

• Record year for metal coating line production in 2007/08

• Blueprint projects aimed at ‘incremental’ capacity and reliability improvements – initial focus on HSM and MCL4

• Incremental HSM volume improvements aimed at “core”Export/Steelscape/ BlueScope Steel Thailand.

• Volume in the 2004 – 2006 period impacted by industrial disputes and HSM fire

Hot Strip Mill and Coating Lines Production

Metal Coating Line Production

620 687 776 796589

200

400

600

800

2004/05 2005/06 2006/07 2007/08 2008/090

‘000 t

onne

s

NB: Silcar is our Maintenance Alliance Partner

HSM Tonnes per BlueScope and Silcar Employee

0

200

400

600

800

1,000

1,200

99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09

tonn

es

Pickle Line Fire and Recovery

Fire occurred in Pickle Line on 13 May 2009Pickle process precedes cold rolling Fire started in pickle tanks Damage contained largely to pickle tanks and non-structural roof damage - no other process impacted other than pickling

Pickle line operation resumed on 21 June 2009, 39 days after the fire

able to use decommissioned pickle tanks from BlueScope Steel’s Packaging Products facility at PKSWfinancial impact less than initial estimates − $3m net impairment charge (non cash)− $16m capital cost of recovery − $7m cash earnings impact (pre-tax)

Springhill supported the supply of customer needs during recovery period through either direct supply or provision of cold rolled coil

Nitrogen, Hydrogen & Compressed AirBOC

Slab FeedOneSteel Manufacturing

Natural GasTRUenergy

PaintAkzo Nobel

ElectricityTRUenergy + VENCorp

PaintPPG Industries + Velspar

ZincSun Metals

AluminiumRio Tinto Aluminium

Commodity / Service ProvidedSupplier / Contractor

Major External Suppliers – Commodities and Services

FY 2010/11• Reduction in fresh water consumption by approximately 600ML/Annum

• Reduction in treated waste water discharged to Western Port Bay by around 75% (from 375 ML/Annum to 95 ML/Annum)

• Reduction in Somers STP discharge to South Eastern Outfall• Project is Greenhouse neutral• Cost Savings

Recycle Water ProjectImplementation

FY 2009/10 & FY 2010/11

• Reduced excess coating metal• Cost Savings

MCL Coating Mass Control Systems UpgradesImplementation

FY 2009/10• Reduced operational Security risk • Cost Savings • Environmental (eliminate disposal of excess SPL)

Acid Regeneration Plant ( ARP )Feasibility

Benefit TimingProject

Capital program aimed at permanent cost reductions, operational security & the environment

• Manage through the current economic conditions – plans in place and being implementedo CAPEX spend focussed on cost improvements and reliability of assets – SE Water project commencedo Discretionary spend stoppedo Inventory reduction plans in placeo R&M directed at ‘bottleneck’ unitso Operations aligned with market demand

• Continue the drive towards Zero Harm• Further advance employee engagement and continued increase on individual accountability

and workforce flexibility – significant benefits delivered during the economic crisis• Deliver on planned Blueprint objectives – MCL4 and Hot Strip Mill initiatives underway • Focussing on cost reductions off setting increases in utilities and coating materials• Continued focus on Business Excellence and eliminating waste across all aspects of the

business• R&M initiatives - schedule compliance and proactive maintenance focus aimed at strategic

operational reliability

Our Focus Moving Forward

PROCESS OVERVIEW

Process: Slab from Port Kembla is reheated to 1250°C, then descaled, rough rolled to 25mm thick, coiled at the coilbox to retain heat, finish rolled to customer order thickness, then cooled for metallurgical properties and coiled

Output: Hot Rolled coils to export and domestic marketsHot Rolled coils to the Pickle Line for further processing

Capacity: 1.4 Mt/a

Furnace

Roughing

Finishing

Technical Capabilities

Thick 1.6 – 13 mm Width 600 – 1900 mm

Hot Strip Mill

Process: Hot rolled coil is processed through hydrochloric acid tanks to clean scale from the strip and is then side trimmed to the required width

Output: Sold as hot rolled pickled coil, or further processed at the Cold Rolling MillCapacity: 1.1 Mt/a Technical Capabilities

Thick 1.6 – 6.35 mm Width 607 – 1580 mm

Entry Loopers RecoilerUncoiler

Preheat Furnace Pickle Tanks Rinse Tanks Dryer

Welder

Exit Looper

Side Trimmer ShearShear

Pickle Line

Process: Hot rolled pickled coil is fed into the Cold Rolling Mill (five stands) that applies roll force (2500t) and tension to the strip reducing the thickness of the strip by up to 80%

Output: Sold as cold reduced uncoated steel, or further processed at the Metal Coating Lines or Uncoated circuit

Capacity: 1.0 Mt/a Technical Capabilities

Thick 0.03 – 3.5 mm Width 610 – 1830 mm

Product Flow

Cold Rolling Mill

Process: Cold reduced coils are Batch Annealed, Temper rolled (Coil Temper Mill CTM) and Tension Levelled (Tension Leveller Recoil Line TLRL) to impart the desired mechanical properties, shape and surface finish

Output: Sold as uncoated steel products for the automotive and manufacturing industries, or further processed at the Paint Lines

Capacity: 373 kt/a

Uncoated Circuit

Process: Cold reduced coils are hot dipped coated with ZINCALUME® coating (Nos 4 & 5 Lines) or galvanised (zinc) coating (No 6 Line) to provide corrosion protection

Output: Sold as ZINCALUME® coil or galvanised coil to building, manufacturing and automotive industry and feed for our Paint Lines.ZINCALUME®, ZINCANNEAL®, GALVASPAN®, TRUECORE®

Capacity: 830 kt/a

Skin Passing


MCL4 – Thick 0.03 – 2.00 mm Width 610 – 1540 mm



Metal Coating Lines (No. 4, 5 and 6)

Process: Uncoated or metal coated strip is thoroughly cleaned and chemically treated to provide best surface to apply a primer coat followed by a finish coat of paint, via roller application, which is then oven cured, CPL2 has a laminator.

Output: Building, packaging and manufacturing marketsCOLORBOND®, AQUAPLATE®Typically 2–5 tonne coils

Capacity: 330 kt/a

Laminating


CPL2 – Thick 0.20 – 1.60 mm Width 610 – 1575 mm

CPL4 – Thick 0.20 – 0.80 mm Width 610 – 1280 mm

Paint Lines (No. 2 and 4)

steel manufacturing businesses analyst site visit - western port … · 2015-07-21 · steel...

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