Analyst Tours May-June 2001 3 presns - OneSteel
Analyst Tours May-June 2001 3 presns - OneSteel
Analyst Tours May-June 2001 3 presns - OneSteel
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Market Mills<br />
<strong>Analyst</strong> Presentation<br />
16 <strong>May</strong> <strong>2001</strong><br />
Agenda<br />
• Overview<br />
• Facilities<br />
• Products<br />
• Competitive Position<br />
• Key Strengths Summary<br />
• Improvement Initiatives<br />
• Plant visits<br />
è Bar Mill<br />
è Fine Wire Galvanising plant<br />
è Pipe Mills<br />
2<br />
1
Market Mills Business Overview<br />
• Processes raw steel (billets & coil) into rod, bar, wire, pipe<br />
& tube products<br />
• Sells to a wide range of customers including <strong>OneSteel</strong><br />
Distribution<br />
• Formed from four businesses<br />
è Sydney Mini Mill<br />
è Rod & Bar<br />
è Wire<br />
è Pipe & Tube<br />
• Covers three key product groups<br />
è Rod & Bar<br />
è Wire<br />
è Pipe & Tube<br />
3<br />
Market Mills Snapshot<br />
Market Mills’ Projected Sales Revenue<br />
by Product Category<br />
Steel Exports<br />
7%<br />
Rod and Bar<br />
39%<br />
Pipe and Tube<br />
31%<br />
Wire Products<br />
23%<br />
12 months ended 30 <strong>June</strong> <strong>2001</strong><br />
4<br />
2
Market Mills Position in <strong>OneSteel</strong><br />
<strong>OneSteel</strong><br />
Market Mills<br />
<strong>OneSteel</strong><br />
Whyalla<br />
Steelworks<br />
Billets<br />
650ktpa<br />
Sydney<br />
Steel Mill<br />
Wire Mills<br />
Billets<br />
500ktpa<br />
Rod / Y-Bar<br />
280ktpa<br />
Product Mills<br />
•Bar<br />
•Rod<br />
•Pipe<br />
<strong>OneSteel</strong><br />
Distribution<br />
•Wire<br />
•Tube<br />
•Rope<br />
•Fence<br />
posts<br />
Customers<br />
5<br />
Market Mills Lead Team<br />
Geoff Plummer<br />
President<br />
Market Mills<br />
Mark Parry<br />
Chris Keast<br />
John Monaghan<br />
John Prestidge<br />
Vice President<br />
Manufacturing -<br />
Pipe &Tube<br />
Vice President<br />
Manufacturing -<br />
Wire<br />
Vice President<br />
Manufacturing -<br />
Rod & Bar Newcastle<br />
Vice President<br />
Manufacturing -<br />
Rod & Bar Syd./Bris.<br />
Tony Dixon<br />
Graeme Downing<br />
Anthony Brooks<br />
Alan Gageler<br />
Don Gartsky<br />
Vice President<br />
Sales & Marketing -<br />
Distribution<br />
Vice President<br />
Sales & Marketing -<br />
Manufacturing<br />
Vice President<br />
Finance<br />
Vice President<br />
Human Resources<br />
Vice President<br />
Business Development<br />
& Services<br />
Co-Leaders Pipe & Tube Business<br />
Co-Leaders Wire Business<br />
Co-Leaders Rod & Bar Business<br />
6<br />
3
Market Mills Facilities<br />
Brisbane<br />
Rod and Bar<br />
1 x Bar Mill<br />
Kwinana<br />
BTM Tube Products<br />
1 ERW Tube Mill<br />
BBSC<br />
1 x Tyre Cord Plant<br />
Newcastle<br />
Rod and Bar:<br />
1 x Rod Mill<br />
1 x Bar Mill<br />
Structural Pipe & Tube<br />
1 Coil Slitter<br />
4 ERW Pipe Mills<br />
1 Auto HDG Bath<br />
Testing & Pipe Finishing<br />
Wire Products<br />
1 x Wire Mill<br />
1 x Fence Post Plant<br />
1 x Wire Rope Works<br />
Sunshine<br />
BTM Tube Products<br />
1 x ERW Tube Mill<br />
Altona<br />
BTM Tube Products<br />
1 ERW Tube Mill<br />
Geelong Wire Products<br />
1 x Wire Mill<br />
Somerton Structural Pipe, Tube and Profiles<br />
1 x Coil Slitter<br />
1 ERW Pipe Mill<br />
1 Profile Mill<br />
Sydney Steel Mill<br />
Steelmaking:<br />
1 x EAF (60t)<br />
1 x Billetcaster (127x127 mm)<br />
Rolling Mills:<br />
1 x Bar Mill<br />
Kembla Grange<br />
Oil and Gas SPP<br />
1 x ERW Pipe Mill<br />
1 x Testing & Pipe Finishing<br />
BTM Tube Products<br />
2 ERW Tube Mills<br />
Quench temper line<br />
Tube laser cutting<br />
7<br />
The Significance of Newcastle<br />
Newcastle as a %<br />
of Market Mills:<br />
Sales 82%<br />
Capital 61%<br />
People 80%<br />
8<br />
4
Market Mills Products<br />
• Market Mills sells a wide range of products to<br />
many different end users<br />
Product<br />
Distribution Channel<br />
End Use<br />
Rod<br />
Intra market mills business unit,<br />
Steel distribution companies,<br />
Direct to end user<br />
• Reinforcing products (e.g.<br />
buildings), wire, chains for<br />
construction, manufacturing,<br />
mining and rural markets<br />
Bar<br />
Steel distribution companies,<br />
Direct to end user<br />
• Reinforced products (e.g.<br />
buildings), grinding media,<br />
manufacturing, posts, machinery<br />
for rural, construction and mining<br />
Wire<br />
Intra market mill business unit,<br />
Direct to end user<br />
• Springs, Rope, fences, posts,<br />
fasteners for manufacturing<br />
Pipe<br />
[ ]<br />
Steel distribution companies,<br />
Direct to end user<br />
• Pipelines (oil and gas), buildings,<br />
fences for mining, construction and<br />
rural<br />
Tube<br />
Steel distribution companies,<br />
Direct to end user<br />
• Furniture, shop fittings, fencing,<br />
outdoor equipment for the<br />
manufacturing industry<br />
9<br />
Competitive Position<br />
• Market Mills has the leading market share in<br />
the major product categories<br />
80%<br />
Market Mills 2000 Market Share<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
Rod & Bar Wire Pipe & Tube<br />
10<br />
5
Competitive Position<br />
Product<br />
Major Domestic<br />
Competitor<br />
Impacted by<br />
Imports<br />
Competitive<br />
Advantage<br />
Rod & Bar<br />
Smorgon Steel<br />
Yes<br />
Range, service and<br />
technical support<br />
Wire<br />
Smorgon Steel<br />
Yes<br />
Technology and<br />
brand<br />
Pipe & Tube<br />
Welded Tube,<br />
Hills Industries and Palmer<br />
Tube (Smorgon Steel)<br />
Yes<br />
Technology and<br />
quality<br />
11<br />
Innovation and Brand Names<br />
• <strong>OneSteel</strong> has strong brand names that are<br />
recognised by customers for their quality<br />
Merchant Bar and Structurals<br />
Pipe and Open Profiles<br />
Rural Products<br />
A Way of Doing Business<br />
Hardware Products<br />
12<br />
6
Market Mills Key Strengths<br />
• Leading market position and strong brands<br />
• Modern facilities – Sydney Steel Mill, Newcastle Fine Wire<br />
Galvanising Plant, Somerton Structural Mill<br />
• Flexible production capabilities<br />
• Leader in wire and pipe coating technology<br />
• Opportunity to selectively export<br />
• Minimal near term capital expenditure requirements<br />
• Experienced management team and sales force<br />
• Identified opportunities and plans to improve business<br />
performance<br />
13<br />
Technology and Alliances<br />
• Patented coating technologies<br />
èDuraGal, UHG, Coloured wire<br />
• Service solutions<br />
èCMi ® and VMI ®<br />
• Technology / Operational Alliances<br />
èBadische Stahl (Germany)<br />
èSumitomo (Japan)<br />
èBekaert (Belgium)<br />
èKobe (Japan)<br />
14<br />
7
Integration:-<br />
Improvement Initiatives<br />
• Successfully managed the “Spin-out” process<br />
without business interruption<br />
• Integration of the four previously discrete<br />
businesses<br />
èImplemented a single sales force for all Market<br />
Mills products (including Whyalla structurals)<br />
èImplemented shared service HR, finance &<br />
Technology functions<br />
• Implementation of an Integrated Sales &<br />
Operations Planning process through the<br />
<strong>OneSteel</strong> value chain<br />
15<br />
Improvement Initiatives- Managing to our Market<br />
Revenue / Costs / Cash:-<br />
• Selected price initiatives in merchant bar, hollow<br />
structurals and wire<br />
• Selective export growth in wire and pipe & tube<br />
• Adjusted operating levels in line with the depressed<br />
market - programmed plant shut downs, changed<br />
shift levels, minimal overtime<br />
• Significant cost reductions - workforce reduced by<br />
170 positions (6%) in 2000/<strong>2001</strong><br />
• Significant improvement in working capital<br />
management - $40M inventory reduction since<br />
October 2000<br />
16<br />
8
Improvement Initiatives - Driving Down the<br />
Break Even<br />
Key Initiatives Going Forward:-<br />
• Portfolio and asset review<br />
è Product portfolio review - MC4P (Managing Complexity for<br />
Profit) project<br />
è Bar Mills rationalisation project - closure of Brisbane Mill<br />
• Maintenance & Engineering review<br />
è Manufacturing Support Services<br />
è Contracting / outsourcing<br />
• Manufacturing Teams model<br />
è Reducing break-even points through structural change<br />
è Productivity and Yield improvements<br />
17<br />
Improvement Initiatives - Driving Down the<br />
Break Even<br />
Key Initiatives Going Forward (continued):-<br />
• Further workforce reductions of approx. 200 in<br />
<strong>2001</strong>/2002<br />
• Logistics - modal choice / dead freight<br />
• Strategic sourcing of coil for Pipe & Tube<br />
• S&OP Process<br />
• Facilities rationalisation<br />
• Fixed Vs variable cost<br />
18<br />
9
Major Infrastructure Projects<br />
• Alice Springs to Darwin Rail Project<br />
èLR wire sales for concrete sleeper reinforcement<br />
èSpring steel rounds for sleeper clips<br />
• Tasmanian Natural Gas Project<br />
è<strong>OneSteel</strong> to act as project manager<br />
è452km of high grade line pipe to be<br />
manufactured at Oil & Gas Kembla Grange<br />
è303km of thicker wall pipe contracted to Japan<br />
19<br />
Sydney Steel Mill<br />
<strong>Analyst</strong> Presentation<br />
6 <strong>June</strong> <strong>2001</strong><br />
10
Introduction<br />
1. <strong>OneSteel</strong> has steelmaking options<br />
2. Managing these options for value<br />
3. Sydney Steel Mill performance<br />
21<br />
Sydney Steel Mill Production<br />
Process<br />
Sydney Melt Shop<br />
Sydney Rolling Mill<br />
Cold Ferrous<br />
Finished<br />
Feed<br />
Billets<br />
Product<br />
Newcastle<br />
and Brisbane<br />
Rolling Mills<br />
22<br />
11
Key Facilities<br />
Melt Shop<br />
Commissioned 1992<br />
Expanded Capacity 1994<br />
• Scrap Bay (18kT)<br />
• 80 Tonne AC EAF<br />
• LMF<br />
• Billet Caster – 4 strand<br />
• Billet Yard<br />
Rolling Mill<br />
Commissioned 1994<br />
• Reheat Furnace<br />
• Walking Hearth<br />
• Gas Fired<br />
• Hot Rolling Mill – 16 stands<br />
(no twist mill)<br />
• Finishing End with Stacker<br />
• Warehouse (18kT)<br />
Ancillary Plant<br />
• Bag Filtration House<br />
• Water Treatment Plant<br />
• Material Handling Plant<br />
• Slag Processing Plant<br />
23<br />
Comparison of EAF and Integrated<br />
Steelmaking<br />
EAF – Sydney<br />
• Commercial steels<br />
• Unit cost relatively<br />
volume insensitive<br />
• Billets<br />
• Designed to operate with<br />
variable output<br />
• Scrap price is major cost<br />
variable<br />
Integrated – Whyalla<br />
• Commercial and special<br />
steels<br />
• Unit cost volume<br />
sensitive<br />
• Billets, Blooms and<br />
Slabs<br />
• Designed to operate at<br />
capacity<br />
24<br />
12
SSM’S Products<br />
• Market Mills sells a wide range of products to<br />
many different end users<br />
Product<br />
Rod<br />
Bar<br />
Wire<br />
Distribution Channel<br />
Intra market mills business unit,<br />
Steel distribution companies,<br />
Direct to end user<br />
Steel distribution companies,<br />
Direct to end user<br />
Intra market mill business unit,<br />
Direct to end user<br />
End Use<br />
• Reinforcing products (e.g.<br />
buildings), wire, chains for<br />
construction, manufacturing,<br />
mining and rural markets<br />
• Reinforced products (e.g.<br />
buildings), grinding media,<br />
manufacturing, posts, machinery<br />
for rural, construction and mining<br />
• Springs, Rope, fences, posts,<br />
fasteners for manufacturing<br />
25<br />
Competitive Position<br />
Product<br />
Major Domestic<br />
Competitor<br />
Impacted by<br />
Imports<br />
Competitive<br />
Advantage<br />
Rod & Bar<br />
Smorgon Steel<br />
Yes<br />
Range, service and<br />
technical support<br />
Wire<br />
Smorgon Steel<br />
Yes<br />
Technology and<br />
brand<br />
26<br />
13
SSM Key Drivers<br />
• Low cost billet production<br />
• Low conversion cost Bar Mill<br />
• Safety - The Goal Is Zero<br />
• Billet production to <strong>OneSteel</strong> Plan<br />
(currently maximum)<br />
• Provide flexibility to the market<br />
• Customer service and satisfaction<br />
27<br />
Our People<br />
• 226 people<br />
• Team based culture<br />
• Excellent employee relations<br />
• Excellent safety performance<br />
28<br />
14
Improvement Initiatives- Managing to our Market<br />
Revenue / Costs / Cash:-<br />
• Selected price initiatives in merchant bar,<br />
structurals and wire<br />
• Adjusted operating levels in line with the<br />
depressed market - programmed plant shut downs,<br />
changed shift levels, minimal overtime<br />
29<br />
Driving Down the Break Even<br />
Key Initiatives Going Forward:-<br />
Portfolio and asset review<br />
èProduct portfolio review - MC4P (Managing<br />
Complexity for Profit) project<br />
èBar Mills rationalisation project - closure of<br />
Brisbane Mill<br />
Manufacturing Teams model<br />
èProductivity and Yield improvements<br />
30<br />
15
SSM Initiatives<br />
• Badische Stahlwerke GmbH (BSW)<br />
– Technology Agreement in place<br />
• Production<br />
– Sequence length<br />
– Rolling Mill yield<br />
– Rolling rates<br />
– Slit rolling 16mm<br />
– Despatch Performance<br />
31<br />
New Initiatives by Management<br />
• Oxy fuel burners on EAF<br />
• Slit Rolling<br />
• New Sections<br />
• Lightweight Y Bar<br />
• Flexibility to meet production<br />
plan<br />
• Cost reductions<br />
• Inventory - fixed A$<br />
32<br />
16
Supporting Whyalla<br />
New Steel Grades<br />
WK1006 64,860T<br />
Low C Wire Drawing<br />
WK1031 4,380T Medium Carbon Wire Drawing<br />
WK1044 6,240T Medium Carbon Wire Drawing<br />
K15M45<br />
700T Mining Roof Bolts<br />
33<br />
Summary<br />
What SSM Is Focused On<br />
• Flexibility<br />
Melt Shop<br />
• Production to Plan<br />
• New grades<br />
• Decreasing costs<br />
• Contract out non-core<br />
activities<br />
Rolling Mill<br />
• Taking on new sections ex<br />
BMM<br />
• Increasing rolling rates<br />
• Support product<br />
developments<br />
• Conversion costs<br />
34<br />
17
SSM’S Position in <strong>OneSteel</strong><br />
<strong>OneSteel</strong><br />
Market Mills<br />
<strong>OneSteel</strong><br />
Whyalla<br />
Steelworks<br />
Billets<br />
650ktpa<br />
Sydney<br />
Steel Mill<br />
Wire Mills<br />
•Wire<br />
•Rope<br />
•Fence<br />
posts<br />
Billets<br />
500ktpa<br />
Rod / Y-Bar<br />
280ktpa<br />
Product Mills<br />
•Bar<br />
•Rod<br />
•Pipe<br />
•Tube<br />
<strong>OneSteel</strong><br />
Distribution<br />
Customers<br />
35<br />
Market Mills Facilities<br />
Brisbane<br />
Rod and Bar<br />
1 x Bar Mill<br />
Kwinana<br />
BTM Tube Products<br />
1 ERW Tube Mill<br />
BBSC<br />
1 x Tyre Cord Plant<br />
Newcastle<br />
Rod and Bar:<br />
1 x Rod Mill<br />
1 x Bar Mill<br />
Structural Pipe & Tube<br />
1 Coil Slitter<br />
4 ERW Pipe Mills<br />
1 Auto HDG Bath<br />
Testing & Pipe<br />
Finishing<br />
Wire Products<br />
1 x Wire Mill<br />
1 x Fence Post Plant<br />
1 x Wire Rope Works<br />
Sunshine<br />
BTM Tube Products<br />
1 x ERW Tube Mill<br />
Altona<br />
BTM Tube Products<br />
1 ERW Tube Mill<br />
Geelong Wire Products<br />
1 x Wire Mill<br />
Somerton Structural Pipe, Tube and<br />
Profiles<br />
1 x Coil Slitter<br />
1 ERW Pipe Mill<br />
1 Profile Mill<br />
Sydney Steel Mill<br />
Steelmaking:<br />
1 x EAF (60t)<br />
1 x Billetcaster (127x127<br />
mm)<br />
Rolling Mills:<br />
1 x Bar Mill<br />
Kembla Grange<br />
Oil and Gas SPP<br />
1 x ERW Pipe Mill<br />
1 x Testing & Pipe Finishing<br />
BTM Tube Products<br />
2 ERW Tube Mills<br />
Quench temper line<br />
Tube laser cutting<br />
36<br />
18
Non Scrap Conversion Cost<br />
Sydney Steel Mill Conversion Costs<br />
37<br />
Fully Absorbed Billet Cost<br />
SSM - Fully Absorbed CPT of Billets Inc Depn<br />
at varied production levels<br />
102<br />
100<br />
100<br />
Fully Absorbed CPT Inc Depn<br />
98<br />
96<br />
94<br />
92<br />
96<br />
94<br />
93<br />
92<br />
90<br />
88<br />
1 2 3 4 5<br />
Billet Production Tonnes (000's)<br />
38<br />
19
Steelmaking Flexibility<br />
Sydney Steel Mill Production<br />
39<br />
Driving Through Improvement<br />
SSM Melt Shop Production<br />
50000<br />
45000<br />
40000<br />
35000<br />
30000<br />
25000<br />
20000<br />
15000<br />
10000<br />
5000<br />
0<br />
March-00<br />
April-00<br />
<strong>May</strong>-00<br />
<strong>June</strong>-00<br />
July-00<br />
August-00<br />
September-00<br />
October-00<br />
November-00<br />
December-00<br />
January-01<br />
February-01<br />
March-01<br />
40<br />
20
Driving Through Improvement<br />
SSM Rolling Mill Production<br />
500<br />
450<br />
400<br />
350<br />
Tonnes Per Shift<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
Jan-00<br />
Feb-00<br />
Mar-00<br />
Apr-00<br />
<strong>May</strong>-00<br />
Jun-00<br />
Jul-00<br />
Aug-00<br />
Sep-00<br />
Oct-00<br />
Nov-00<br />
Dec-00<br />
Jan-01<br />
Feb-01<br />
Mar-01<br />
Apr-01<br />
41<br />
<strong>OneSteel</strong> Distribution<br />
Agenda<br />
Union Steel Distribution<br />
• <strong>OneSteel</strong>/Email Merger Rob Freeman<br />
• <strong>OneSteel</strong> Steel Distribution Paul McNicholl<br />
• Union Steel Wetherill Park<br />
– Overview and Tour Steve Mellor<br />
George Ward Granville<br />
• Introduction Alan Dean<br />
• <strong>OneSteel</strong> Sheet & Coil Distribution Ian Hush<br />
• George Ward – Overview and Tour Ashley Smith<br />
42<br />
21
Email Sites & Facilities<br />
Overall 39 sites and 517 employees<br />
Steel Sydney 69<br />
Newcastle 23<br />
Perth 62<br />
12 Other Sites 112<br />
266<br />
PSA (Pipes) New Zealand 27 3 sites, mainly Auckland<br />
Sydney 14<br />
Brisbane 28<br />
Adelaide 14<br />
Mulgrave Vic 60 Includes National Office<br />
Perth 34<br />
15 Other Sites 54<br />
231<br />
S&C Perth 20<br />
43<br />
Management Structure<br />
Email Businesses<br />
<strong>OneSteel</strong> Businesses<br />
• Union Steel – Sydney, Newcastle, Steel<br />
Perth<br />
• PSA – Metropolitan Piping Systems<br />
– New Zealand<br />
• Union Steel Regional (12) Metaland<br />
PSA (15)<br />
• Union S&C – Perth Sheet & Coil<br />
44<br />
22
Combined Sales<br />
Sales<br />
$M<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
35 27 55 55 30<br />
Steel S&C Mland Piping Reo<br />
Market<br />
Share %<br />
Email<br />
OSD<br />
45<br />
<strong>OneSteel</strong> / Email Merger<br />
Major Objectives:<br />
• Customers / Market Share<br />
• Costs – Premises, Headcount, Buyins<br />
• Assets – Property, Inventory<br />
• Safety<br />
• Special Skills<br />
• Market Presence<br />
• Systems<br />
46<br />
23
Presentation<br />
Distribution<br />
Operational Tour<br />
06/06/01<br />
Tubemakers Steel Divisional Profile<br />
Location:<br />
Ten major warehouses in capital cities<br />
- Two Brisbane (owned)<br />
- Three Sydney (1 owned/2 leased)<br />
- Two Melbourne (1 owned/1 leased)<br />
- One Adelaide (owned)<br />
- Two Perth (owned)<br />
Six Metro Metalands<br />
Union Steel Newcastle<br />
Employee numbers 532<br />
24
Market Segments:<br />
Non Residential Construction 32%<br />
Manufacturing 28%<br />
Construction Engineering 10%<br />
Automotive 9%<br />
Transport & Storage 6%<br />
Mining 5%<br />
7000 active customers<br />
Market share 35%<br />
Product Mix: $ T<br />
Structural 17% 23%<br />
Merchant Bar 15% 17%<br />
RHS 19% 15%<br />
CHS 5% 4%<br />
Tube 11% 7%<br />
Plate 17% 20%<br />
Sheet&Coil 4% 6%<br />
Special Steels 4% 3%<br />
Other 8% 5%<br />
Seventy-three percent of tonnes sold are sourced from<br />
<strong>OneSteel</strong> Market Mills and Whyalla<br />
25
Scale:<br />
Tonnes sold to customers 300000<br />
Tonnes valued added 55000<br />
Tonnes ex mother centre role 60000<br />
Tonnes per invoice 0.7<br />
Line items per invoice 2<br />
Stock Tonnes 44000<br />
Stock Weeks 6.5<br />
Major Plant:<br />
- Five Beamlines<br />
- Seventeen Plate Profiler Lines<br />
- Seventeen major saws<br />
- Six Tube saws<br />
- Seventy-five overhead cranes<br />
26
Market Conditions:<br />
Non Residential and Engineering Construction Segments<br />
have been very soft for past eighteen months<br />
Manufacturing (furniture, shop fitting etc) weakening since<br />
December<br />
Automotive is holding, particularly for Holden and Toyota<br />
suppliers<br />
Sydney is very soft and will be the last market to turn<br />
Nationally some upside now showing with quotation levels<br />
on the improve and a definite up turn in Perth/WA<br />
Tubemakers Sheet & Coil<br />
A Business of<br />
<strong>OneSteel</strong> Distribution<br />
54<br />
27
<strong>OneSteel</strong><br />
Organisation Structure<br />
MD & CEO<br />
<strong>OneSteel</strong><br />
Bob Every<br />
CEO Steel & Tube<br />
Holdings<br />
(NZ)<br />
Nick Calavrias<br />
President<br />
Distribution<br />
Robin<br />
Freeman<br />
President<br />
Market Mills<br />
Geoff<br />
Plummer<br />
President<br />
Whyalla<br />
Steelworks<br />
Leo Selleck<br />
Chief<br />
Financial<br />
Officer<br />
Bernard<br />
Carrasco<br />
Vice<br />
President<br />
Human<br />
Resources<br />
Bill Gately<br />
Vice President<br />
External Affairs & Investor<br />
Relations<br />
Mark Gell<br />
55<br />
<strong>OneSteel</strong> Distribution<br />
Organisation Structure<br />
President<br />
Robin Freeman<br />
Personal Assistant<br />
Freda Kyrou<br />
Vice President<br />
Finance & Systems<br />
Dean Hill<br />
Vice President<br />
Human Resources<br />
Julie Miller<br />
Vice President<br />
Marketing<br />
TBA<br />
President<br />
Tubemakers<br />
Steel<br />
Paul McNicholl<br />
President<br />
Tubemakers<br />
Sheet, Coil & Aluminium<br />
Ian Hush<br />
President<br />
Tubemakers Piping<br />
Systems<br />
John Brazier<br />
President<br />
Tubemakers<br />
Metaland<br />
Kevin Wallace<br />
President<br />
<strong>OneSteel</strong><br />
Reinforcing<br />
Steven Hamer<br />
56<br />
28
Sites – Sheet & Coil<br />
President<br />
Ian Hush<br />
Hemmant, QLD<br />
27 Emp<br />
$42M Sales<br />
George Ward, NSW<br />
65 Emp<br />
$105M Sales<br />
Dandenong, VIC<br />
45 Emp<br />
$50M Sales<br />
Kilburn, SA<br />
8 Emp<br />
$12M Sales<br />
Welshpool, WA<br />
13 Emp<br />
$20M Sales<br />
Spearwood, WA<br />
19 Emp<br />
$18M Sales<br />
Metpol, NSW<br />
20 Emp<br />
$4M Sales<br />
Metpol, QLD<br />
9 Emp<br />
$2.5M Sales<br />
57<br />
Sites – Aluminium<br />
President<br />
Ian Hush<br />
Salisbury, QLD<br />
10 Emp<br />
$12.4M Sales<br />
Bankstown, NSW<br />
11 Emp<br />
$9.5M Sales<br />
Dandenong, VIC<br />
11 Emp<br />
$10.3M Sales<br />
Kilburn, SA<br />
3 Emp<br />
$3.7M Sales<br />
Bibra Lake, WA<br />
11Emp<br />
$19.4M Sales<br />
58<br />
29
Markets Served -<br />
Aluminium<br />
• Boat Building<br />
– Kits<br />
• Transport<br />
– Truck Trays, Bullbars , etc<br />
• Shop Fitting<br />
– Extrusions<br />
• Windows<br />
– Extrusions<br />
• Signs<br />
59<br />
Australian Sheet & Coil<br />
Market<br />
125 kt<br />
Total Market<br />
1.77mt<br />
Through Distributors 0.73mt<br />
TS&C<br />
0.2mt<br />
Market Share 27%<br />
58<br />
kt<br />
56 kt<br />
SA/NT<br />
236<br />
kt<br />
254 kt<br />
Vic/ Tas<br />
60<br />
30
• Building and<br />
Construction<br />
48%<br />
Markets Served<br />
- Sheet & Coil<br />
• General Sheet Metal<br />
Manufacturing<br />
24%<br />
– Air Conditioning Ducting<br />
– Switchboards<br />
– Trailers<br />
– Shelving and Storage<br />
• Automotive Component<br />
Manufacturers<br />
10%<br />
• Rural /<br />
Mining<br />
12%<br />
61<br />
Operations<br />
• Warehouse<br />
– 4 bays<br />
– 14,000 sqm<br />
– 9 cranes (varying capacities)<br />
– 2 forklifts (6 tonne)<br />
– 1 sideloader (2 tonne)<br />
• Equipment<br />
– Durmech Slitter (1986) 0.25mm – 6.0mm<br />
– Durmech Shearline (1989) 0.4mm – 3.2mm<br />
• Manning<br />
– 2 shifts, 20 hours/day<br />
– 33 employees<br />
– 4 Production support personnel<br />
– 3 Despatch personnel<br />
62<br />
31
Operations (cont’d)<br />
• Processing<br />
– 100,000 tonnes processed pa.<br />
– 60% slitter<br />
– 25% shearline<br />
– 15% external processors (including 12000T @ Metpol)<br />
• Logistics<br />
– 10 “Core Contract Carriers”<br />
– Operate under a local Transport Agreement<br />
– Delivery to Sydney Metropolitan Area<br />
– Delivery Performance 95%<br />
63<br />
Whyalla Steelworks<br />
<strong>Analyst</strong> Presentation<br />
22 <strong>June</strong> <strong>2001</strong><br />
32
Agenda<br />
1 Our Business<br />
2 Our Markets<br />
3 Our Key Issues<br />
65<br />
1 Our Business<br />
66<br />
33
Whyalla Steelworks Business<br />
Overview<br />
v Mines<br />
• Iron Ore<br />
• Dolomite<br />
• Ancillary Fluxes<br />
v Integrated Steelworks<br />
• Ore Processing →<br />
Finished Steel Products<br />
v <strong>OneSteel</strong> Traklok<br />
• Sleeper Manufacture<br />
• Rail Fastening System<br />
Key Competitive Advantage –<br />
Low Cost Iron Ore (~63% Iron)<br />
67<br />
Management Team<br />
• Whyalla Steelworks has an experienced<br />
steelmaking management team<br />
Leo Selleck<br />
President<br />
Whyalla Steelworks<br />
Don Dart<br />
Manager<br />
Mining & Ore<br />
Processing<br />
Bob Pitts<br />
Manager<br />
Rolling Mills<br />
and Operations<br />
Planning<br />
John Baggs<br />
Manager<br />
Primary<br />
Operations<br />
Trevor Hansford<br />
Manager<br />
Steelmaking<br />
Mark Reichelt<br />
Manager<br />
<strong>OneSteel</strong><br />
Traklok<br />
Graeme Barkway<br />
Manager<br />
Marketing Rail<br />
Products<br />
Arthur Goode<br />
Manager<br />
Technology<br />
and<br />
Environment<br />
Greg Christensen<br />
Vice President<br />
Human Resources<br />
Whyalla<br />
Steelworks<br />
Sid Wilson<br />
Manager<br />
Engineering<br />
Ron Hardman<br />
Vice President<br />
Finance<br />
Whyalla<br />
Steelworks<br />
68<br />
34
Mining – Raw Materials Supply<br />
• Whyalla Steelwork’s key competitive<br />
advantage is its access to low cost iron ore<br />
– Iron Ore Mines (All mines ~ 50km from Whyalla<br />
Steelworks)<br />
• Iron Duke<br />
• Iron Duchess<br />
• Iron Knight<br />
– Metallurgical Flux Mines<br />
• Ardrossan, Dolomite<br />
• Coffin Bay, Limesand<br />
• Quartz Quarry<br />
– Imported Raw Materials<br />
• Coal, NSW<br />
• Limestone, Japan<br />
• Ferrous Alloys – Various<br />
69<br />
Iron Ore Resources and Reserves<br />
v Operating Mines – High Grade Haematite<br />
Iron Duke<br />
Iron Duchess<br />
Iron Knight<br />
Year<br />
Opened<br />
1990<br />
1998<br />
1999<br />
Resource<br />
>50% Iron<br />
Mt<br />
19.2<br />
23.6<br />
34.5<br />
77.3<br />
Reserve to<br />
JORC Std.<br />
Mt<br />
14.1<br />
11.9<br />
14.1<br />
40.1<br />
Iron<br />
Reserve<br />
Grade<br />
63.3%<br />
63.6%<br />
62.0%<br />
62.8%<br />
v Low Grade Concentrate Dumps<br />
• Probable 3.5 Mt – 7.5 Mt ore concentrate<br />
v Other Resources<br />
• Iron Duchess Magnetite – 300 Mt at >35% Iron<br />
Iron Ore Reserves Current Life ~ 2020<br />
70<br />
35
Production Process<br />
Hot<br />
Metal<br />
Slag<br />
Billet Caster<br />
Rod & Bar Mills<br />
Iron Ore<br />
3.0 Mtpa<br />
Pellets &<br />
Lump Ore<br />
2.0 Mtpa<br />
Blast Furnace<br />
1.2 Mtpa<br />
BOS<br />
Steelmaking<br />
1.2 Mtpa<br />
Coke Ovens<br />
0.7 Mtpa<br />
Slab/Bloom<br />
Caster<br />
Structural Mill<br />
Domestic / Export<br />
Rerolling<br />
71<br />
Integrated Steelworks Facilities<br />
• Pellet Plant<br />
Event<br />
Export Pellets<br />
Fluxed Pellets from Whyalla<br />
Waste Gas Cleaning Plant<br />
v Coke Ovens<br />
Event<br />
Battery 1<br />
Battery 2<br />
v Blast Furnace<br />
Event<br />
No. 2 Furnace Blown In<br />
Refurbishment<br />
Cast House Floor Revamp<br />
World Record Productivity<br />
Year<br />
1968<br />
1981<br />
1998<br />
Year<br />
1968<br />
1980<br />
Year<br />
1965<br />
1981<br />
1993<br />
1999<br />
72<br />
36
Integrated Steelworks Facilities<br />
Event<br />
2 Vessels @ 130t<br />
• BOS<br />
Hot Metal Desulphuriser<br />
IRUT/Sublance/Electrics/Controls<br />
LMF/Alloy System<br />
New Vessel Shells<br />
Year<br />
1965<br />
1991<br />
1992<br />
1999<br />
1999/2000<br />
v Casters<br />
Event<br />
Combination Slab/Bloom Caster<br />
5 Strand Billet Caster<br />
Year<br />
1992<br />
1999<br />
73<br />
Integrated Steelworks Facilities<br />
Event<br />
• Rolling Mill<br />
Commenced Rolling Ingots<br />
Rail Finishing End<br />
Revamp for Slabs/Blooms<br />
(new rolling stands, etc)<br />
Cooling Beds/Capacity Upgrade<br />
Year<br />
1964<br />
1982<br />
1992<br />
1996<br />
74<br />
37
Energy & Services Data<br />
Total<br />
Bought In<br />
(over fence)<br />
Magnitude<br />
Comparator<br />
Electricity<br />
45 – 50 megawatts<br />
(400,000 MW hours/pa)<br />
25 – 30 megawatts<br />
(220,000 MW<br />
hours/pa)<br />
Total is 3.5% of state load<br />
25,000 room air conditioners<br />
Fresh Water 3,600 mega litres/pa All Whyalla township<br />
(population 25,000)<br />
consumes about same<br />
amount of water<br />
Natural Gas<br />
- General<br />
- Co Gen Plant<br />
3.5 – 4.0 petajoules/pa<br />
0.9 petajoules/pa<br />
All<br />
All<br />
About 6% of state load.<br />
Excluding power stations,<br />
<strong>OneSteel</strong> is the second<br />
largest customer in state<br />
By-products<br />
Gas<br />
Approx 12 petajoules/pa<br />
(50% Blast Furnace<br />
gas;<br />
50% Coke Ovens gas)<br />
All<br />
As Coal<br />
These by-product gases<br />
displace $40M pa of what<br />
otherwise would be natural<br />
gas<br />
Saltwater 180,000 mega litres/pa Pumped from<br />
Spencer Gulf<br />
Sydney Harbour is approx<br />
500,000 mega litres<br />
(40% of Sydney Harbour pa)<br />
75<br />
• Labour<br />
• Coal<br />
• Freight<br />
Major Cost Categories<br />
• Maintenance<br />
• Refractories<br />
• Contract Services<br />
– Mining<br />
– Railways<br />
– Slag Handling<br />
– Scrap Preparation<br />
– Product Handling<br />
– IT Services<br />
• Alloys and Fluxes<br />
• Natural Gas<br />
• Purchased Electricity<br />
76<br />
38
Labour<br />
1996<br />
<strong>2001</strong><br />
Movement<br />
Change<br />
(%)<br />
Steelworks Employees<br />
(includes Mines & Rail<br />
Products)<br />
2,359<br />
1,398<br />
(961)<br />
(41%)<br />
Contractor<br />
(equivalent employees)<br />
708<br />
878<br />
170<br />
24%<br />
TOTAL<br />
3,067<br />
2,276<br />
(791)<br />
(26%)<br />
• <strong>OneSteel</strong> has reduced its labour<br />
requirements by improving productivity and<br />
outsourcing<br />
77<br />
Production Process<br />
Hot<br />
Metal<br />
Slag<br />
Billet Caster<br />
Rod & Bar Mills<br />
Iron Ore<br />
3.0 Mtpa<br />
Pellets &<br />
Lump Ore<br />
2.0 Mtpa<br />
Blast Furnace<br />
1.2 Mtpa<br />
BOS<br />
Steelmaking<br />
1.2 Mtpa<br />
Coke Ovens<br />
0.7 Mtpa<br />
Slab/Bloom<br />
Caster<br />
Structural Mill<br />
Domestic / Export<br />
Rerolling<br />
78<br />
39
Semi Finished Products<br />
~12m<br />
600 ~ 1850mm<br />
250 – 200mm<br />
Slab<br />
~12m<br />
300 – 450mm<br />
250mm<br />
Bloom<br />
~12m<br />
127 &<br />
175mm<br />
127 & 175mm<br />
Billet<br />
79<br />
Finished Products<br />
UNIVERSAL<br />
COLUMNS<br />
PARALLEL FLANGE<br />
CHANNELS<br />
RAIL<br />
100 mm to 310 mm<br />
150 mm to 380 mm<br />
EQUAL ANGLES<br />
41 Kg/m – 68 Kg/m<br />
Plain Carbon<br />
Head Hardened<br />
UNIVERSAL BEAMS<br />
125 mm to 200 mm<br />
SLEEPER SECTION<br />
150 mm to 610 mm<br />
UNEQUAL ANGLES<br />
Mainline – 6.5 mm to 10 mm<br />
Heavy Haul – 9 mm to 14 mm<br />
150 x 90 & 150 x 100<br />
80<br />
40
<strong>OneSteel</strong> Traklok – Rail Products<br />
• Traklok operates at two sites:<br />
– Whyalla – steel sleeper manufacturing<br />
• 18 employees on site<br />
– Lonsdale (south of Adelaide) – resilient fastener (clips)<br />
manufacturing and principal office<br />
v Traklok<br />
• 15 permanent employees on site<br />
Event<br />
Purchased by BHP<br />
Lonsdale Plant<br />
Whyalla Line Revamp<br />
Year<br />
1987<br />
1991<br />
1996<br />
81<br />
Technology / Operational<br />
Alliances<br />
• Pellet Plant - Corus<br />
- Kobe<br />
• Blast Furnace - Corus<br />
- BHP<br />
• Steelmaking - Concast<br />
- von Moos<br />
- Sumitomo<br />
• Rolling Mills - Nippon Steel Corporation<br />
- Sumitomo<br />
82<br />
41
2 Our Markets<br />
83<br />
Whyalla Steelworks Repositioned<br />
• With the ramping up of the billet caster, Whyalla Steelworks<br />
has completed its repositioning<br />
• The markets now served are fundamentally different<br />
• Whyalla is inextricably linked to the <strong>OneSteel</strong> value chain<br />
“Previous” Market<br />
“New” Market – Post <strong>2001</strong><br />
Domestic<br />
Product<br />
55%<br />
Export<br />
(Structurals/<br />
Slabs)<br />
14%<br />
Export<br />
Product<br />
45%<br />
Domestic<br />
(Billets/<br />
Structurals<br />
Rails/Slabs)<br />
86%<br />
84<br />
42
Whyalla Steelworks Snapshot<br />
Whyalla Steelworks Sales Revenue by Product Category<br />
Raw<br />
Materials<br />
12%<br />
Structural and<br />
Rail Products<br />
35%<br />
Domestic<br />
Slab<br />
2%<br />
Steel<br />
Exports<br />
13%<br />
Billets<br />
38%<br />
85<br />
Domestic Market Volume<br />
• Whyalla Steelworks is Australia’s major supplier of structural<br />
and rail products, these markets tend to be cyclical<br />
Structural & Rail Products Market Size<br />
Indexed<br />
110<br />
100<br />
90<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
87/88 89/90 91/92 93/94 95/96 97/98 99/00<br />
Structurals and Rail Products<br />
Structural & Rail Products Market Share<br />
Market Share<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
96/97 97/98 98/99 99/00 00/01<br />
Structurals and Rail Products<br />
86<br />
43
Whyalla’s Route to Market<br />
Product<br />
Distribution Channel<br />
End Use<br />
Billets<br />
Inter-divisional to Market<br />
Mills<br />
Used to produce rod and bar<br />
Structural<br />
s<br />
Domestic steel distribution<br />
companies, including<br />
<strong>OneSteel</strong> Distribution<br />
Structural frames for buildings,<br />
factories, bridges and other<br />
infrastructure<br />
Rails<br />
Direct to end user<br />
Rails<br />
Sleepers<br />
Direct to end user<br />
Sleepers<br />
Slabs<br />
Direct to re-roller<br />
Use to produce various flat<br />
products<br />
87<br />
Competitive Position<br />
• Main Competitors include:<br />
Structurals – Imports<br />
Siam -Yamato (Thailand), Inchon (Korea)<br />
Structurals – Domestic Steel Competitors<br />
Smorgon (Structural tube), Roll-formed sections<br />
Structurals – Intermaterial Products<br />
Concrete (in-situ, pre-stressed, tilt-up), Structural timber<br />
Rails – Imports<br />
Various international mills<br />
Rail Products – Inter-material Products<br />
Concrete, Timber<br />
Key Advantages<br />
Sole domestic manufacturer of a large range of structural and rail<br />
products<br />
Short supply lead times and reliable delivery performance<br />
Superior sales and technical service<br />
88<br />
44
3 Our Key Issues<br />
v<br />
v<br />
v<br />
v<br />
Safety<br />
Managing Current Economic Environment<br />
Business Initiatives – Moving Forward<br />
“Licence to Operate” - Environment<br />
89<br />
Safety Record<br />
Employees’ LTIFR (1)<br />
Contractors’ LTIFR (1)<br />
20<br />
18<br />
16<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
[4 M hrs LTI free on 10 <strong>June</strong> <strong>2001</strong>]<br />
18.0<br />
8.0<br />
4.0<br />
2.0<br />
0.7 0.8<br />
0<br />
1995 1996 1997 1998 1999 2000 <strong>2001</strong><br />
80.0<br />
70.0<br />
60.0<br />
50.0<br />
40.0<br />
30.0<br />
20.0<br />
10.0<br />
0.0<br />
70.0<br />
39.0<br />
12.0 11.0<br />
5.6 5.2<br />
2.01<br />
1995 1996 1997 1998 1999 2000 <strong>2001</strong><br />
(1) Lost Time Injury Frequency Rate (per million man hours)<br />
Key Drivers<br />
• Demonstrated management commitment<br />
• Systematic approach with regular reporting<br />
• Involvement of people<br />
90<br />
45
• Revenue<br />
Managing Current Economic<br />
Environment<br />
– One face to Market<br />
– Managing price<br />
– Domestic steel downturn offset by exports<br />
– Winning QR rail contract in September 2000<br />
• Managing Cash<br />
– Inventory reduction of ~ $25 million since spin out<br />
(Est. end <strong>June</strong> <strong>2001</strong>)<br />
– Workforce reduction of 81 in 2000 / <strong>2001</strong><br />
– Further 35 positions in July with Laboratory Sale<br />
• Relentless Cost Reduction<br />
– Range of targeted cost initiatives delivering ~ $16 million in<br />
2000 / <strong>2001</strong> across the areas of:<br />
- Labour<br />
- R & M<br />
- Operating / Fixed Costs<br />
91<br />
Business Initiatives – Moving Forward<br />
• Markets<br />
– Alice Springs to Darwin Rail Project<br />
• Integration into Market Mills<br />
– Addressing Complexity<br />
– Sales and Operations Planning (S&OP) Process<br />
• Operational Security<br />
– BOC - Oxygen / Gas Supply Agreement<br />
- New plant expected to commission December <strong>2001</strong><br />
– B/F Refurbishment Plan<br />
• Sourcing Initiatives<br />
– Utilising <strong>OneSteel</strong> leverage<br />
• Relentless Cost Reduction<br />
– Laboratories Contracting Out<br />
– Range of Operational Initiatives<br />
92<br />
46
“Licence to Operate” -<br />
Environment<br />
• Major Environmental Projects since 1993<br />
Project<br />
Blast Furnace Casthouse Floor<br />
BOS Secondary Fume Emissions<br />
Coke Ovens Battery Doors<br />
Reed Beds<br />
Site Upgrade and Regreening<br />
Pellet Plant Waste Gas Cleaning Project<br />
Pellet Plant Fugitive Dust *<br />
Blast Furnace Scrubber *<br />
TOTAL<br />
* Authorised in last six months<br />
$ million<br />
18<br />
9<br />
5<br />
4<br />
1<br />
36<br />
4<br />
7<br />
84<br />
93<br />
Whyalla Steelworks Key<br />
Strengths<br />
• Low cost iron ore<br />
• Flexible production capabilities – integrated into<br />
<strong>OneSteel</strong><br />
• Only domestic producer of medium structurals, rails,<br />
and special billet grades<br />
• Established contractor partnerships<br />
• Capable, can do workforce and management<br />
• Strong community support<br />
94<br />
47
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