Bluescope Steel AUD$280 Million Investment in China

The Board of BlueScope Steel Limited, Australia’s leading steel company, has approved the construction of a major new flat steel metallic coating and painting facility in Suzhou Industrial Park in China’s Jiangsu province, 80 kilometres west of Shanghai. The capital cost will be approximately A$280 million, to be spent primarily in FY2005 and 2006.

This state of the art facility, which will be wholly-owned by BlueScope Steel, will have metallic coating capacity of 250,000 tonnes and paint line capacity of 150,000 tonnes per annum.

The plant will manufacture BlueScope Steel’s range of premium quality branded products, including Clean COLORBOND® steel, ZINCALUME® steel and TRUZINC® galvanised steel. Drawing on an existing substantial customer base in China, products will be predominantly aimed at the rapidly growing building and construction markets.

The new facility will be completed by mid CY2006 and will provide employment for approximately 300 people. The business license to construct the new facility was granted in December 2003.

Managing Director and CEO Kirby Adams said: “This new investment represents another major step forward in further advancing BlueScope Steel’s strategy to grow our downstream steel products business in Asia. The Company is focused on expanding its capability to provide value-added building solutions, including pre-engineered buildings and their components.”

President Asian Building and Manufacturing Markets Mike Courtnall said: “For nearly a decade, BlueScope Steel has been focused, through its BlueScope Lysaght rollforming facilities and coated coil sales offices, on developing strong demand for our products in downstream building and construction applications in China. The success of our market development activities and the widespread acceptance of BlueScope Steel’s range of premium branded products in China indicates that now is the time to begin manufacturing Clean COLORBOND® steel and ZINCALUME® steel in China for China.

”BlueScope Steel’s approach to market development in China, as in its other key markets in Asia, focuses on working together with the Chinese steel industry to grow the use of steel in building and construction applications leading to higher ongoing steel consumption.

“We have secured a 50 hectare site in Suzhou Industrial Park which is less than two hours from central Shanghai and ideally located with direct access to water transport, and to road and rail distribution facilities.”

Mr Adams said: “Earlier this week, BlueScope Steel announced the proposed acquisition of Butler Manufacturing, the market leader in China in the provision of pre-engineered metal building systems and architectural products. The China metallic coating and painting investment has been evaluated independently of the Butler acquisition and stands on its own merits. Nonetheless, the steel feedstock requirements of the BlueScope Lysaght and Butler China businesses will together ultimately account for about half the output of the new China facility.”

BlueScope Steel already operates Lysaght manufacturing businesses in Shanghai (commissioned 1995), Guangzhou (1996), Langfang (2003) and Chengdu (2003). Our sales of coated, painted and roll-formed steel in China are supported through an extensive network of 49 sales and marketing offices throughout China.

Mr Adams said: “BlueScope Steel has a strong position in the premium end of the Chinese building and construction market, where our products are highly visible in prestige projects such as airport expansions at Beijing, major sporting stadia, high-rise office towers and commercial premises.

“Demand for steel products in China continues to be very strong, with overall steel consumption expected to increase by more than 12% this year, to over 250 million tonnes.”

The new facility will complement BlueScope Steel’s existing network of steel coating and painting facilities in Asia:

  • Thailand – incorporating a cold rolling mill and pickle line (capacity 300,000 tonnes), metallic coating capability (currently 175,000 tonnes) and a paint line (90,000 tonnes). Last month, the Company announced a planned expansion of Thailand’s metallic coating capacity to 375,000 tonnes, at a cost of approximately $80 million.
  • Malaysia – with metallic coating capacity of 160,000 tonnes and painting capacity of 70,000 tonnes.
  • Indonesia – with metallic coating capacity of 90,000 tonnes and expanded painting capacity of 55,000 tonnes. The Company has recently commissioned an expansion to the paint line, increasing capacity by 25,000 tonnes.
  • Vietnam - the Company has a new coating and painting facility under construction in Vietnam, near Ho Chi Minh City, which will have metallic coating capacity of 125,000 tonnes and painting capacity of 50,000 tonnes per annum.
  • In addition, BlueScope Lysaght, BlueScope Steel’s building products business in Asia, has a network of 23 rollforming and manufacturing centres across China, Indonesia, Thailand, Malaysia, Brunei, Singapore, Vietnam and Sri Lanka.

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