Speech by Bob Every
Managing Director & CEO OneSteel
25 September 2003
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Reinventing Whyalla
Steel Industry Landscape
Positioning of OneSteel
Achievements to Date
The Future for Steel
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• Global Over-capacity
– 800 million tonnes demand
– 950 million tonnes capacity
• Fragmented Industry
– 95 players produce more than 2 million tonnes p.a
– Top player only produce 5% of total production
• Some consolidation is occurring
• China has grown dramatically – 22% of world
demand
• Mega or niche to succeed
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Australian steel industry production - 7.6 million tonnes.
– Long products – 2.6 million tonnes, predominantly aligned with
Australasian market.
– Flat products – 5.0 million tonnes, more than 40% of which is
exported.
OneSteel is nationally focussed and is best placed to service the
local market, with a strong distribution capacity providing significant
benefits.
This is the niche in which OneSteel operates.
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• Vertically Integrated Business
• Low-Cost, High-Quality Iron Ore
• Leading Metals Distributor
• Strong Cash Flows
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• Long Products Market Leader
• Strong Brand Names
• Restructured Business
• Rational Domestic Industry Structure
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• Eight businesses into four
• Rationalised products – product complexity has
reduced by 31%
• Inventory down 30% from over 14 stock weeks to
under 10 weeks
• Revenue enhancements of $86 million since listing
• Since listing reduced costs by $165 million (offsets
$158 million rise in inflationary and other cost
increases).
• Sale of Canadian distribution business – AJ Forsyth
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• Brisbane Bar Mill closure
• Closure of No. 3 Tube Mill in Newcastle
• Shift reduction from Newcastle Rod Mill
• Joint acquisition of Email by OneSteel and Smorgon
Steel in April 2001 – stronger industry structure
• Realigned bonus/incentive structure – reward is based
on company performance, not divisional
• Employee share plan – 80% participation
• Equity raising in December 2001 - $66 million
• Reduced total debt by 44% or $530 million
• US private debt placement in April 2003 – US$128
million
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Australian Steel Institute/OneSteel Employees
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• Environment and Climate Change
- Greenhouse gas emissions cut by 15%
- OneSteel has invested $100 million in
environment-related projects over 10
years
• Steel is the most Recycled Material
- In 2001 over 435 million tonnes of steel -
more than 40% of steel production – was
recycled around the world
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• Consumption is rising
• Consolidation is occurring
• Potential to trade steel on
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Industrial Production Growth in the 1990s
Index, 1990 =100
450
400
350
300
250
200
150
100
50
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Western Europe
Eastern Europe
China
Japan
Other Asia
North America
Source: Ecowin
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World Steel Consumption by Region
900000
800000
China
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700000
Japan
600000
Other Asia
500000
Western Europe
Eastern Europe
400000
Form er Soviet Union
300000
Middle East
200000
Africa
Oceania
100000
Latin Am erica
0
19
55
19
58
19
61
19
64
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
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Canada
USA
Source: IISI
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World Steel Consumption and GDP Per Capita, 1950-2010
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6000
Collapse of USSR led to
steel consumption
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Europe
5000
4500
3500
1989
Phase 2
3000
1983
1954
1973
1970
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recessions led to massive light-weighting
of steel-containing products
Phase 1
2000
1979
1975
1971
1961
2500
2002
1997
1994
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1970 led to predictions of
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growth
4000
2010
2005
Phase 3
Asian crisis
5500
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Source: Macquarie Research
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Tons of Steel Framing Used In US Residential Floors
Tons of Steel Framing Used In US Residential Walls
80,000
180,000
70,000
160,000
60,000
140,000
120,000
50,000
100,000
40,000
80,000
60,000
30,000
20,000
40,000
20,000
-
10,000
1997
1998
1999
Tons of Steel Framing Used In US Residential Roofs
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
1997
2000
1998
1999
2000
Tons of Steel Framing Used In US Residential Construction
300,000
250,000
200,000
150,000
100,000
50,000
1997
1998
1999
1997
2000
1998
1999
2000
Source: Nucor
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Speech by Bob Every
Managing Director & CEO OneSteel
25 September 2003
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