Hot steel demand emerging for revived industry

Ag trend sets pace as giant Liberty OneSteel braces for boom


Agribusiness
British industrialist, billionaire and chairman of Liberty OneSteel's parent company, the GFG Alliance, Sanjeev Gupta, wants Australian steel production modernised and expanded and the product range diversified.

British industrialist, billionaire and chairman of Liberty OneSteel's parent company, the GFG Alliance, Sanjeev Gupta, wants Australian steel production modernised and expanded and the product range diversified.

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A $1.2 billion plan is set to expand Liberty OneSteel's production plants, including its fencing product operations

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ON top of what has already been a busy couple of years for metal product suppliers selling to the farm sector, newly re-badged manufacturer, OneSteel, is preparing for a 10-year demand boom.

A $1.2 billion spending program is on the drawing boards to upgrade Liberty OneSteel’s eastern Australian production sites and product range following British steel billionaire Sanjeev Gupta’s purchase of parent company, Arrium.

His global metals and energy group, GFG Alliance, wants to ramp up production at South Australia’s Whyalla steelworks and boost capacity utilisation at electric arc furnaces and rolling mills in Newcastle, Sydney, and Melbourne.

Visiting the Newcastle site last week he said the one-time BHP steel products plant had been “stifled” of investment.

The Mayfield site is one of the key production plants for the 130-year-old Waratah wire and fencing products brand.

OneSteel is Australia’s only local maker of fencing wire and steel fence posts, among a host of other products derived from its steel rod and beam production lines.

New ownership era

A week ago, at Whyalla, Mr Gupta formally took control and renamed the former Arrium business from administrator KordaMentha, which had run the steel and mining company since it slipped into receivership with debts worth $4b early last year.

He used the formal handover to highlight the need for the business to make and recycle more steel in Australia, rather than importing it.

The executive chairman of GFG Alliance, whose UK business, Liberty House, has several steel mills in Britain, expects the revitalised Australian company to cash in on wave of government and private infrastructure projects which will likely demand more steel than the Whyalla plant’s current 1.2m tonnes capacity.

Capacity at Newcastle was also underutilised, he said.

Mr Gupta said a huge pipeline of infrastructure projects ranging from new airports, railway lines and highways through to commercial developments was emerging in Australia.

Steel demand for farms is going very well, and from the fencing point of view there’s been steady growth domestically, and from overseas. - Brett Howlett, Liberty OneSteel

The potential infrastructure boom has been predicted by some, including building products group Boral, as likely to overtake housing as a major driver of the domestic economy in the next decade.

The farm sector has already been making a significant investment in steel for new rural buildings and grain and livestock handling infrastructure, particularly in the wake of livestock prices hitting new highs and rural export initiatives opening up.

Producers have used their extra cashflow to upgrade facilities and spend on efficiency initiatives.

Liberty OneSteel’s rural sales and marketing manager, Brett Howlett, said while not every agricultural commodity sector or region was celebrating good times, the past few years had been some of the busiest the company had enjoyed in almost two decades.

“Every year it’s been getting better and better,” he said.

Rural sales and marketing manager, Brett Howlett.

Rural sales and marketing manager, Brett Howlett.

“The wool market has returned to strength, red meat prices are strong –  even feral goats are worth good money, if you can fence them in.

“Investment in rural buildings and steel demand for farms is going very well, and from the fencing point of view there’s been steady growth domestically, and from overseas.”

New fencing ideas at work

Mr Howlett attributed the company’s good sales run to several factors.

Many producers had paid down borrowings and now had funds to spend modernising or making their livestock operations more efficient.

A much-expanded range of fencing products in the past decade had encouraged landholders to explore new designs, fresh stock handling solutions and different environment management ideas, including heavy duty exclusion fencing to keep feral animals at bay.

“It’s been interesting to see the depth of interest in making a profit by investing in a better value proposition,” he said.

“Many farmers are much more perceptive about what they need to do, what will be efficient in their environment in the long-term, and what’s going to give a good return on their money.”

Liberty OneSteel has now started a 100-day business review and is finalising a transformation plan to put the 6000-worker enterprise, on a competitive, sustainable footing.

The company wants to improved energy generation capabilities, including developing co-generation power plants to capture and recycle waste gases.

Also being explored are development opportunities for new high value-added steel and steel-based products and services local and export markets.

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