Smorgon Steel and OneSteel to Implement a

Smorgon Steel Group Ltd ("Smorgon Steel") and OneSteel Limited ("OneSteel") today announced that they have adopted and will proceed to implement the "New Transaction" announced on 18 December 2006 as the means to effect the merger of the companies. As a result, the Scheme of Arrangement announced on 26 June 2006 will no longer be pursued.

In summary, the New Transaction involves OneSteel acquiring all of the assets and liabilities of Smorgon Steel except Smorgon Steel's steel and metals distribution businesses, and assuming effectively all of Smorgon Steel’s debt, in return for the issue of new OneSteel shares to Smorgon Steel, and the distribution of those OneSteel shares to Smorgon Steel shareholders.

Smorgon Steel's Managing Director and CEO, Ray Horsburgh, said: "The New Transaction will enable Smorgon Steel and OneSteel to advance implementation of the merger we announced in June 2006 by an alternative path. It will facilitate the bringing together of two complementary businesses for the benefit of both sets of shareholders.

After completion of the New Transaction, Smorgon Steel will continue as a listed company specialising in steel and metals distribution, and our shareholders will retain a shareholding in a dynamic distribution business with a strong balance sheet and sound growth prospects."

OneSteel's Managing Director and CEO, Geoff Plummer, added: "The benefits of the merger for both Smorgon Steel and OneSteel shareholders are significant, and both parties are committed to delivering those benefits, for shareholders, as well as customers and employees. The ongoing businesses of each entity will be robust, efficient and competitive."

The New Transaction is subject to approval by the Australian Competition and Consumer Commission ("ACCC"), as well as other conditions, such as satisfactory tax rulings and shareholder approvals by both Smorgon Steel and OneSteel shareholders. Smorgon Steel and OneSteel will shortly lodge an application relating to the New Transaction with the ACCC. Details of the New Transaction are presented below.