BlueScope Australia & New Zealand (BANZ ... - BlueScope Steel

BlueScope Australia & New Zealand (BANZ)
Investor Briefing Day
30 May 2013
BlueScope Steel Limited. ASX Code: BSL

Important Notice
THIS PRESENTATION IS NOT AND DOES NOT FORM PART OF ANY OFFER, INVITATION OR
RECOMMENDATION IN RESPECT OF SECURITIES. ANY DECISION TO BUY OR SELL BLUESCOPE STEEL
LIMITED SECURITIES OR OTHER PRODUCTS SHOULD BE MADE ONLY AFTER SEEKING APPROPRIATE
FINANCIAL ADVICE. RELIANCE SHOULD NOT BE PLACED ON INFORMATION OR OPINIONS CONTAINED IN
THIS PRESENTATION AND, SUBJECT ONLY TO ANY LEGAL OBLIGATION TO DO SO, BLUESCOPE STEEL
DOES NOT ACCEPT ANY OBLIGATION TO CORRECT OR UPDATE THEM. THIS PRESENTATION DOES NOT
TAKE INTO CONSIDERATION THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR
NEEDS OF ANY PARTICULAR INVESTOR.
THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WHICH CAN BE IDENTIFIED
BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY”, “WILL”, “SHOULD”, “EXPECT”,
“INTEND”, “ANTICIPATE”, “ESTIMATE”, “CONTINUE”, “ASSUME” OR “FORECAST” OR THE NEGATIVE
THEREOF OR COMPARABLE TERMINOLOGY. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN
AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL
RESULTS, PERFORMANCE AND ACHIEVEMENTS, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT
FROM ANY FUTURE RESULTS, PERFORMANCES OR ACHIEVEMENTS, OR INDUSTRY RESULTS,
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
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RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, ACCEPT NO RESPONSIBILITY FOR ANY
INFORMATION PROVIDED IN THIS PRESENTATION, INCLUDING ANY FORWARD LOOKING INFORMATION,
AND DISCLAIM ANY LIABILITY WHATSOEVER (INCLUDING FOR NEGLIGENCE) FOR ANY LOSS
HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR RELIANCE ON ANYTHING CONTAINED
IN OR OMITTED FROM IT OR OTHERWISE ARISING IN CONNECTION WITH THIS.
Page 2

Agenda
Introduction:
Mark Vassella – Chief Executive, BlueScope Australia & New Zealand
CIPA Products and Markets:
Andrew Garey – General Manager, Sales & Marketing
CIPA Manufacturing:
John Nowlan – General Manager, Manufacturing
Building Components & Distribution Australia:
Andrew Bray – General Manager, Distribution
Mark Crimmins – General Manager, LYSAGHT
New Zealand & Pacific Islands:
Simon Linge – President, New Zealand Steel & Pacific Islands
Summary:
Mark Vassella
Page 3

Safety is a core value for BlueScope. BANZ continues to have world class
performance and is striving for zero harm
Lost Time Injury Frequency Rate (BANZ)
2.24
Medically Treated Injury Frequency Rate (BANZ)
11.34
Lost time injuries per million man-hours worked
1.52
0.86
1.38
1.01
1.17
0.64
0.95
1.35
1.23
0.90
Medically treated injuries per million man-hours worked
7.14
5.35
5.00
6.76
6.28
5.26
4.87
9.65
9.15
9.20
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13*
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13*
*Note: FY2013 data is up to and including March 2013. Charts in include both contractor and direct employee data combined
Page 4

BlueScope remains committed to continuously improving the environmental
footprint of its operations
• The BlueScope Steel Environment Management System comprises the following major elements:
Our Bond HSEC Policy Environment Principles
Environment Standards BSL & Operational Procedures and Guidelines
• BlueScope continues to work on improving performance through its Environment Network involving
environment reviews and audits, implementation of the compliance system, the business planning process,
and the engagement of all employees in environment awareness & training
• We manage our environmental risks and impacts through the use of a framework we call LAWWNE, which
seeks to:
Reduce our environmental impact on Land, Air, and Water
Reduce generation of Waste and Noise
Minimise our use of Energy and the generation of GHG emissions
Page 5

Introduction
Page 6

BlueScope Australia & New Zealand businesses
BlueScope external operating segment reporting structure 1
Global Building
Solutions
Building Products
ASEAN, North
America and India
Coated & Industrial
Products Australia
(CIPA)
Building Components
& Distribution
Australia (BCDA)
New Zealand and
Pacific Steel
Products
Hot Rolled Products
North America
• Leading global designer
and manufacturer of preengineered
buildings 2
• Key markets in China &
Nth America; plants in
ASEAN, India, Mid. East
• Supplying buildings to
global customers
• China coating & painting
• Operates metallic coating
and painting lines and rollforming
in Indonesia,
Malaysia, Thailand,
Vietnam, India and North
America
• Includes NS BlueScope
Coated Products JV
• Largest supplier and only
manufacturer of HRC, plate,
metal coated and painted
steel in Australia
• Australian finished-product
capacity of ~2.5Mtpa;
domestic market 1.9Mt in
CY2012
• Major steel product
supplier / distributor to the
Australian building and
construction, automotive,
white goods manufacturing
and general manufacturing
industries
• Only fully integrated flat
steel maker in New Zealand
• Leading domestic market
share of flat products
• Includes iron sands mines
(own consumption and
export sales)
• 2.1Mtpa mini-mill in Ohio
• 50/50 JV with Cargill Inc.
• Voted no. 1 flat rolled
steel supplier in North
America (Jacobsen
Survey) for ten
consecutive years
(1) BlueScope also has a Corporate segment which is not shown; (2) engineering and component building systems
Page 7

The BANZ business structure was created in July 2011, and the management team
was refined in January 2013 to ensure we stay focussed on core business
BANZ Management Team
Page 8

BlueScope Australia and New Zealand (BANZ)
Considerable change since established on 1 July 2011
Business Changes
• On 1 July 2011, BANZ was established by combining three existing businesses into one. The right structure to
support better management decisions across one value chain, enabling more effective resource allocation across
business lines.
• Major Australian operational restructure announced on 22 August 2011:
– Halved production, largely exited export business and moved to a one Blast Furnaces operation at Port
Kembla steelworks
– Numerous consequential changes for other operational assets in the supply chain
• Subsequently, major changes and restructures completed across both the Distribution and LYSAGHT businesses
in Australia to reduce costs and better align with the current market
• Expanded our minerals business in New Zealand, including iron sands exports. During 2H CY2014 we expect to
achieve at least a 2.7Mtpa run rate and therefore the Company will be 55% economically hedged on iron ore cost
• In January 2013 announced significant changes to optimise our Western Port operations to match our supply
capability to the current market demand
• Launch of Next generation ZINCALUME® with Activate technology in coming months – breakthrough new
coating technology
Page 9

BlueScope Australia and New Zealand (BANZ)
Considerable change since established on 1 July 2011
Behavioural Changes – A fundamental change in the way we operate
• A ‘one value chain’ approach
• A ‘market driven’ approach
• Focusing on controlling the actual cost and quality per tonne of steel produced (at half the volume)
• Initiated the ‘Triple A’ culture change program in early 2012. Goal: all employees to be: Aligned, Accountable and
Agile
• More effective and efficient communications to better engage employees. BANZ Blog, BANZ TV, BANZ News
Page 10

BANZ will be a vibrant, sustainable steel business. We are good at what we do
and proud of it
We’re recharging BANZ to deliver long term
sustained profitability and cash generation
$
GET LEAN, FIT
AND HUNGRY
TARGET WINNING
MARKETS
OPTIMISE
VALUE CHAIN
TRIPLE A
CULTURE
BROADEN VIEW TO
CREATE GROWTH
Page 11

Snapshot of BANZ strategic initiatives
Target winning markets
Get lean, fit, and hungry
Optimise value chain
Broaden view to create growth
• Next generation ZINCALUME ® steel with Activate technology has
commenced production in Australia and is being progressed at NZ Steel
• This will become the substrate of next generation of COLORBOND ® steel
products which will be released in late 2013
• Progress is being made on combating unfair trade by international
steelmakers (anti-dumping & countervailing actions)
• Ongoing cost reductions in CIPA through feed mix changes, lean
manufacturing initiatives, and manning optimisation
• Continue to improve performance of BCDA through network and process
optimisation initiatives
• Cost savings in NZS through utilisation of lower cost raw materials,
maintenance spend optimisation, and ongoing productivity improvements
• During 2H CY2014 we expect to achieve at least a 2.7Mtpa iron sands
export run rate
• Utilisation of NZ iron sands in PK blast furnace to lower the total feed cost
• Maximising by-product revenue streams through Vanadium sales growth
• Pacific Islands businesses selling broader suite of BSL products and
solutions (e.g. PEB’s)
• Deep pipeline of product development initiatives to unlock new market
opportunities for BANZ
• Investigating non-traditional areas of business activity
Page 12

Coated & Industrial Products Aust –
Products & Markets
Page 13

Product categories and applications
Product Primary end use markets Applications
Slab
• Steel manufacturing
• Hot rolled coil and plate
Plate
Hot rolled coil
Cold rolled coil
• Manufacturing, building and construction
and mining
• Building and construction, mining,
automotive and transport, manufacturing
• Automotive and transport, manufacturing
• Infrastructure projects, mining equipment and structural
applications
• Mining equipment, racking, guard rails, building and construction
products, structural tubing, water pipelines, oil/gas pipelines and
automotive components
• Automotive, packaging (drums) and storage systems
Galvanised (including
GALVASPAN® steel) and special
zinc finishes
Zinc/aluminium alloy-coated
ZINCALUME® steel
Painted (including pre-painted
COLORBOND® steel)
• Building and construction, manufacturing,
automotive and transport
• Building and construction
• Building and construction
• General manufacturing, automotive, structural sections for
commercial and industrial buildings and structural decking
• Commercial and industrial construction including roofing, walling,
rain water goods and residential framing
• Residential, commercial and industrial construction including
roofing, walling, fencing, rain water goods, architectural panels,
sheds and garages
Page 14

1H FY2013 despatch mix
1,248kt
Export
345kt
Domestic
903kt
Domestic Export
HRC
Plate
CRC
Metal Coated
Painted
Other
Six months
ended Dec-2012
Page 15

Four fundamental drivers of profitability
Domestic Demand
Domestic
Volume / Mix
Market Share
CIPA Profitability
Global Spread
Margins
Domestic Value
Proposition
Page 16

Market channels
Steelmaking & Coating
Export
Domestic
Building Component
Manufacturers
(including Lysaght)
Steel Distribution
(including BSD)
Pipe and Tube
Manufacturing
General
Manufacturing
Market Segments
Residential
Non-Dwelling
Engineering
Manufacturing
Agriculture &
Mining
Automotive &
Transport
Page 17

Australian external despatch volumes
‘000 tonnes
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Gross
Despatches
less 1
Normalised
Despatches
2H FY08 1H FY09 2H FY09 1H FY10 2H FY10 1H FY11 2H FY11 1H FY12 2H FY12 1H FY13
63%
(No. 5 Blast
Furnace Reline)
64%
Construction
27% (436kt)
65%
27% (389kt)
66%
67% 67% 65% 64%
21% (344kt)
15% (243kt)
13% (208kt)
15% (239kt)
9% (144kt)
23% (341kt)
14% (212kt)
13% (192kt)
14% (202kt)
9% (130kt)
70%
29% (236kt)
28% (235kt)
13% (109kt)
11% (90kt)
11% (92kt)
8% (62kt)
28% (349kt)
25% (312kt)
13% (161kt)
13% (160kt)
13% (156kt)
8% (105kt)
28% (391kt)
23% (320kt)
14% (187kt)
11% (152kt)
14% (198kt)
10% (134kt)
29% (340kt)
27% (313kt)
11% (133kt)
11% (123kt)
13% (157kt)
9% (102kt)
29% (344kt)
26% (308kt)
13% (154kt)
10% (124kt)
14% (164kt)
9% (106kt)
29% (346kt)
26% (301kt)
10% (119kt)
11% (128kt)
15% (174kt)
9% (106kt)
1,614kt 1,466kt 824kt 1,243kt 1,381kt 1,168kt 1,198kt 1,174kt 1,138kt 1,048kt
(264kt) (192kt) (140kt) (164kt) (166kt) (161kt) (160kt) (159kt) (148kt) (143kt)
1,368kt 1,274kt 684kt 1,079kt 1,215kt 1,007kt 1,038kt 1,015kt 990kt 905kt
FY2009
1,958kt
FY2010
2,294kt
FY2011
2,045kt
FY2012
2,005kt
28% (321kt)
24% (274kt)
12% (138kt)
12% (131kt)
15% (170kt)
9% (103kt)
65%
30% (311kt)
27% (278kt)
8% (89kt)
11% (118kt)
15% (158kt)
9% (94kt)
Non-dwelling
Dwelling
Engineering
Manufacturing
Agri & mining
Auto & transport
2
(1) Normalised despatches exclude third party sourced products, in particular, long products.
(2) Engineering includes infrastructure such as roads, power, rail, water, pipes, communications and some mining-linked use
Page 18

Australian residential construction starts slowly improving
Quarterly number of Australian residential construction starts (total new houses) to December 2012 1
(Number per quarter)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
Jun
85
Jun
86
Jun
87
Jun
88
Jun
89
Jun
90
Jun
91
Jun
92
Jun
93
Jun
94
Jun
95
Jun
96
Jun
97
Jun
98
Jun
99
Jun
00
Jun
01
Jun
02
Jun
03
Jun
04
Jun
05
Jun
06
Jun
07
Jun
08
Jun
09
Jun
10
Jun
11
Jun
12
Source:
Australian Bureau of Statistics. Series ID: 8752.0 Building Activity, Australia. Table 33: Number of Dwelling Unit Commencements by Sector, Australia.
(1) Based on total number of dwelling units – total houses, on seasonally adjusted basis. Excludes multi-dwelling commencements.
House definition: A detached building primarily used for long term residential purposes consisting of one dwelling unit. Includes detached residences associated with a non-residential building, and kit and transportable homes
Dwelling: A dwelling unit is a self-contained suite of rooms, including cooking and bathing facilities and intended for long-term residential use. Units (whether self-contained or not) within buildings offering institutional care, such as
hospitals, or temporary accommodation such as motels, hostels and holiday apartments, are not defined as dwelling units. The value of units of this type is included in non-residential building.
Page 19

Spread is a major determinant of CIPA profitability
East Asia HRC Price (US$/t) and Indicative Steelmaker HRC Spread (A$/t)
$800
$700
$600
$500
$400
Spread: SBB East Asia HRC price less cost of 1.5t iron ore fines and 0.71t hard coking coal
SBB East Asia HRC (US$/t)
$300
$200
$100
Indicative Steelmaker
Spread (A$/t)
Indicative spread with
pricing lags (A$/t)
$0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Source: SBB, CRU, Platts, TSI, Reserve Bank of Australia, BlueScope Steel calculations
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
FY2010 FY2011 FY2012 1H FY12 2H FY12 1H FY13
Indicative steelmaker HRC spread (US$/t) 365 271 276 260 291 273
Indicative steelmaker HRC spread (A$/t) 414 275 267 253 282 263
Indicative spread with pricing lags (A$/t) 398 290 261 249 273 287
A$ / US$ FX 0.88 0.99 1.03 1.03 1.03 1.04
Jan-13
Notes on calculation:
• ‘Indicative steelmaker HRC spread’ representation based on simple input blend of 1.5t iron ore fines and 0.71t hard coking coal per output tonne of steel. Chart is not a specific representation of BSL realised export HRC spread (eg does not account for iron
ore blends, realised steel prices etc), but rather is shown primarily to demonstrate movements from period to period arising from the prices / currency involved. ‘Indicative spread with pricing lags’ includes three month HRC price lag and two month raw
material prices lags
• Indicative iron ore pricing: 62% Fe iron ore fines price assumed. Industry annual benchmark prices up to March 2010. Quarterly index average prices lagged by one quarter from April 2010 to March 2011; 50/50 monthly/quarterly index average from April
2011 to December 2012. Monthly thereafter. FOB estimate deducts Baltic cape index freight cost from CFR China price.
• Indicative hard coking coal pricing: low-vol, FOB. Industry annual benchmark prices up to March 2010; quarterly prices from April 2010 to March 2011; 50/50 monthly/quarterly pricing thereafter.
Page 20

Better profitability in coated and painted products
Category
Summary
Hot Rolled Coil
Plate
Cold Rolled Coil
Aluminium Zinc Coated
(Next Generation
ZINCALUME® steel)
Galvanised coated
COLORBOND® Steel
Limited
product
differentiation
Increased
product
differentiation
Most
differentiated
• Ingredient products, typically substantially transformed into final
goods.
• BSL offer principally differentiated by service offer, supply reliability
and product quality
• Import parity pricing (IPP)
• Make use of sophisticated coating technologies, important to product
durability in end applications
• BSL’s products principally differentiated by product quality and
reliability, reputation (brand), service offer
• BSL investing in the introduction of unique product coating
technologies that further improve differentiation
• IPP influences pricing
• High quality painted products designed for Australian environment to
maximise durability
• BSL’s products differentiated by strong consumer brand preference,
product warranties, product reputation, ubiquity and supply offer
complexity.
• Intermaterial pricing most influential
Page 21

Progress on challenging unfair trade and dumping
Process
Current Duties
Hot Rolled Coil
(Anti-Dumping)
Galvanised steel &
aluminium / zinc (AlZn)
coated steel
(Anti-Dumping)
Galvanised
& AlZn coated steel
(Countervailing – China)
• Preliminary Affirmative Determination (PAD) issued Oct 2012
• Final recommendation Dec 2012
• Trade Measures Review initiated in Feb 2013 and announced in Apr
2013, has resulted in reinvestigation by Customs for Minister’s
sign-off by July 2013 (deals with four matters: basis of Ascertained
Export Price, Hyundai dumping margin, Auto industry dumping duties,
HR P&O other than Japan)
• PAD issued Feb 2013
• Minister decision due Jul 2013
• PAD issued May 2013
• Ministers decision due July 2013
• Interim Dumping Duties (IDD) rates:
– Japan 0- 7.5%
– Korea 2.6 - 11.8%
– Malaysia 15.4%
– Taiwan 2.6-8.2%
• Galv PAD rates: China 6.8-60.6%;
Korea 0-17.6%; Taiwan 0-12.7%
• AlZn PAD rates: China 4.9-20.4%;
Korea 0-7.7%
• Galv PAD rates: 0-24%
• AlZn PAD rates: 0-21%
(duties are not cumulative on top of
antidumping duties, no double
counting)
Plate
(Anti-Dumping &
Countervailing)
• Statement of Essential Facts due June 2013
• Awaiting findings
Page 22

Next Generation ZINCALUME®: Reinforcing status as market leader
• Production of next generation ZINCALUME ® steel with Activate technology commenced in 2H FY2013
following development and testing over a number of years
• Customers will benefit from:
‣ Improved product lifespan and longer warranties
‣ Reduced environmental footprint due to reduced coating metals and increased lifespan
• BlueScope will benefit from:
‣ Sales into new areas and applications including perforated construction products
‣ An ‘exclusive’ offering of leading technology for roofing, walling and rainwater applications; patent protection for BSL and
NSSMC
• Market familiarisation program – very positive response from construction industry professionals
• Will become the substrate of next generation of COLORBOND ® steel products which will be released late 2013
Page 23

Next Generation ZINCALUME®: Activate technology
AZ150
AM125
Original
ZINCALUME ® steel
Next generation
ZINCALUME ® steel
with Activate technology
• The introduction of magnesium into the aluminium-zinc alloy coating improves galvanic protection by
activating the aluminium to provide more effective corrosion resistance
• Outcome - Improved performance with less total coating mass (125 g/m 2 )
Doing more with less
Page 24

Next Generation ZINCALUME®: market response positive
• Multi-channel marketing program well advanced
– Targets four key audience groups: Architects,
Builders, Developers and all construction
professionals
• Direct customers are engaged and very positive
towards the opportunities this new product
presents
• Architects actively specifying the new product for
projects in pipeline
• Low risk implementation:
– Better performing product
– Recognised in Australian Standards for roofing and
walling as highest corrosion-resistant product
available
– Longer warranty
– Readily available with no change to fixing techniques
Page 25

Coated & Industrial Products Aust –
Manufacturing
Page 26

BlueScope’s Illawarra businesses
Recycling Area
Flat Products
(HRC & plate)
Iron & Steelmaking
Research, Administration & Original Steelworks Site
Page 27

Overview of flat products process in Australia: raw materials to HRC
SINTERING
Iron Ore
Coal
BLAST FURNACE
Sintered ore
Coke
COKE OVEN
Slag
Molten pig iron
CONVERTER
(BOS)
CONTINUOUS CASTING
“Graded” Liquid
Steel
REFINING
STAND
Slab
REHEAT
FURNACE
HOT STRIP MILL
Hot Rolled Coils
Page 28

Overview of flat products process in Australia: pickling and cold rolling
Coupled Pickle Cold Mill (CPCM)
Thickness reduction via cold rolling through
five stands
Recoiling using
carousel reel
Hot rolled coil is
uncoiled
Scale removal (pickling) using
hydrochloric acid
To Metal Coating or
Pack & Despatch
Page 29

Overview of flat products process in Australia: metal coating
Metallic Coating Line (MCL)
Page 30

Overview of flat products process in Australia: painting
Continuous Paint Line (CPL)
Primer Ovens
Primer Coater
Main Oven
Main Coater
Inspect & Test
Painted coil is recoiled
Chemical rinsing, cleaning & pre-treatment
Coated Coil from
Metal Coating Lines
Page 31

Annual capacities
Port Kembla Steelworks (Wollongong, New South Wales, Australia)
#5 Blast Furnace
2,600
Slab Casters
2,600
Plate Mill
450
Hot Strip Mill
2,900
Coupled Pickled Cold Mill
990
Metal Coating Lines
825
Springhill Coated Works
(Wollongong, NSW, Australia)
Slab
Plate
HRC
CRC
Metal Coated
Strip
Paint Lines
200 1 Painted Strip
Note:
Numbers reflect mill capacity in kt per annum
Pickle Line
1,100
Western Port Coated Works
(Hastings, Victoria, Australia)
Cold Mill
1,000
Metal Coating Lines
830 2
Paint Lines
330
(1) There is an additional 215ktpa of combined capacity at Western Sydney and Acacia Ridge (Qld) paint lines; (2) idling of MCL 5 has reduced available capacity by around 230Ktpa
Pickled HRC
CRC
Metal Coated
Strip
Painted Strip
Page 32

Major changes over the last two years to match capacity to demand and to
improve efficiencies
Shipping berths
Cokemaking
Sinter Plant
• Reduced manning and loading outbound coal at bulk berth; loading outbound coke
on No1 Products Berth
• Closed one battery; now operating 3 batteries (closed No. 4) and 21/22 Blowers
• Reduced production rate
Blast Furnaces • Shut down No. 6; operating No. 5
Port Kembla
BOS • Operating two vessels (closed No. 3)
Steel Treatment
• Reduced manning
Slab Casting
Hot Strip Mill
Skin Mill
Plate Mill
• Closed No. 1, operating two strands
• Reduced shift operation
• Reduced shift operation
• Reduced manning
Page 33

Major changes over the last two years to match capacity to demand and to
improve efficiencies (cont.)
Cold Rolling
• Reduced load (no export)
Springhill
Metal coating
• MCL1 converted and capable to produce Next Generation ZINCALUME® steel;
MCL3 in process of conversion
Painting
• Reduced shift operation
Hot Strip Mill
• Closed
Western Port
Cold Rolling
Metal coating
• Reduced shift operation
• Mothballed MCL5 and reduced shifts MCL6; MCL4 converted and commissioning to
produce Next Generation ZINCALUME® steel
Painting
• Reduced shift operation
Page 34

Examples of business improvement initiatives: cost saving initiatives
1. Hot rolled coil transported to Western Port by rail – a cheaper and more reliable option than marine
transport
2. Iron sands mix (from NZ Steel) used as feed material to the sinter plant – displacing external iron ore
purchases
3. Use of our own burnt lime in the sinter plant (replacing purchases)
4. Reclamation of iron ore from the storage and blending yards – previously viewed as being too hard
5. More extensive use of recycled ferrous material through the iron and steelmaking process
6. Sharing maintenance spares between departments – previously, siloed behaviour prohibited this approach
7. Improving scrap management – ways to get higher value through different channels and preventing aged
stock rather than economic disposal of aged stock
Page 35

Examples of business improvement initiatives: market facing initiatives
1. Sale of coke to export. We have deliberately configured our plant to enable export coke and drive
additional revenue for the business. Focus on ensuring the appropriate quality and changing our
process as a result to maximise returns
2. Development of a new Low Glare DECKFORM® Steel product that has the potential to displace 5,000
tonnes or more of imports. Collaborative work between R&D, manufacturing, sales and supply chain
3. Multi-slit galvanised coils at Western Port. Creating an additional 300 tonnes per week of product sales
and displacing imports. Teams from across Western Port, Logistics and Sales working together to meet
the customers expectations.
4. Western Sydney Service Centre producing 2 tonne horizontally packed coils and dispatching them
directly to customers (to save transportation and reprocessing costs at Chullora)
5. Victorian Processing Optimisation – long term cross business view of Processing asset requirements
instead of internal only view
Page 36

More cost effective iron ore blend
Iron inputs into Sinter Machine
Fine iron ores and recycled materials are
blended and fluxed in Sinter Machine to
produce Sinter
Iron inputs into Blast Furnace
Sinter and lump iron ore are added to
the Blast Furnace
SINTER
NZ Iron Sands
Recycled Materials
LUMP IRON ORE
Yandi Fines
Mt Newman Fines
Mt Newman Lump
Page 37

Supply and pricing of iron ore and metallurgical coal to PKSW
Supplier Term Approximate Volume (p/a) Pricing Basis
Iron ore
BHP Billiton
10 years from
1 July 2009
Up to 4.18Mt 1 lump & fines
Linked to average monthly index in the month of
shipment
New Zealand Steel Short term contracts 0.15Mt iron sands Linked to average index 15 days prior to shipment
Metallurgical coal
Supplier
BHP Billiton
(Illawarra Coal)
Term
30 years from
1 July 2002
Product /
Approximate Volume (p/a)
Hard coking coal;
minimum volume linked to
blast furnace requirements
Pricing Basis
Market based pricing linked to BHP Billiton sales to
contract customers
Peabody Energy Until 31 March 2014 PCI Coal; 300-400Kt 1 Agreed quarterly pricing
Various suppliers for
production of export
coke
Short term contracts Coking coal as required Agreed monthly & quarterly pricing
Note: 1) reflects agreed reduced annual volumes post closure of No.6 Blast Furnace at Port Kembla
Page 38

Impact of restructuring
CIPA 1 employee numbers
5,272
4,339
4,224
FY11
FY12
FY13
2
Note:
1) CIPA employee numbers include: CIPA Manufacturing, CIPA Sales & Marketing and CIPA Supply Chain & Processing
2) FY2013 is based on April 2013 position
Page 39

The monthly Sales & Operation Planning (S&OP) cycle provides operational and
financial integration across CIPA
Demand
Review
Product
Review
Supply &
Logistics
Reviews
Management
Review
Page 40

Community engagement in the Illawarra
• High-profile community partnership program established
in the Illawarra with WIN Network (headquartered in the
Illawarra) – the largest regional TV network in Australia
• Policy of supporting health, safety, environment, diversity,
youth and education
• Funding decisions made against established criteria to
promote worthwhile community programs/projects
• Independently managed by a local not-for-profit, along
with representatives from BlueScope and WIN
• ~$500,000 in sponsorships and donations supporting 30+
community organisations
Life Education Australia - Mobile school education facility
Citizenship
program for
disabled
and able
bodied
young
athletes
Southern Stars
2000 strong school spectacular
Surf Lifesaving
New Jet Ski
BlueScope Youth Orchestra
Foundation sponsor (27 years)
Urban Grown – Community farm
Sustainable farming – jobs for disadvantaged
youth
Telephone counsellor
recruitment program
Page 41

BlueScope environmental performance – resource efficiency & GHG measures
• The reduction in operations at Port Kembla Steelworks, the closure of the Western Port Hot Strip Mill and other
associated changes in downstream operations have contributed to significant changes in BlueScope’s group
environmental footprint
BlueScope’s freshwater consumption
has fallen significantly, with an overall
reduction in use of 2,677 ML (~14%)
We have managed these changes such
that the percentage of recycled water
contributing to the total water demand
has continued to increase, reaching a
new record level of 41.5% in FY2012
The changes have contributed the majority of a 40.1 PJ (26%) energy
reduction and a corresponding 4.45 million tonne (28%) reduction in CO2
emissions in FY2012
FY2013 data will reflect the first full year of operations at this new level, and
further Energy and GHG emissions reductions will be reflected in these
While the Energy and GHG emissions intensities have deteriorated as a
result of the changes in economies of scale, BlueScope Steel remains
focussed on continual improvement off the new production baseline
Page 42

Building Components &
Distribution Australia
Page 43

Overview of segment
• The Building Components & Distribution Australia (BCDA) segment, effective from FY2013, brings
together BlueScope Steel’s LYSAGHT and Distribution businesses
• The Australian solutions businesses (Buildings, Water, Ranbuild, Highline etc) are now part of the
new Global Building Solutions segment
• Sheet & Coil Processing is included in the Coated & Industrial Products Australia segment
LYSAGHT
• Roofing
• Walling
• Rainwater goods
• Fencing
• Home improvements
• Structural products
• Mobile roll forming
Steel & Tube Distribution
• Plate
• Tube
• Structural steel
• Merchant bar
• Reinforcing steels
• Rural products
• Pipes, valves & fittings
• Specialty steels
• Processing services
Sheet Metal Supplies
& Impact Steel
• Hot rolled coil
• Cold rolled strip
• Metallic coated coil
• Painted coil
• Plate
• Stainless steel
• Aluminium
• Processing services
Page 44

Role of BCDA in BANZ
• Aim for positive cash flows and profits, achievement
of hurdle rates of return and pull through tonnes to
benefit the integrated chain
• To achieve this, BCDA must:
– Be a low cost steel channel to market
– Ensure ongoing access to competitively priced steel
products (vs. imports and spot markets)
– Effectively manage inventories and the supply chain
– Be a market leading processor / value adder
– Deliver consistent service against customer expectations
Page 45

BCDA Locations
Darwin
1 1
Legend
33 • LYSAGHT
58 • Distribution
11 20
1 9 2 2
Brisbane
Perth
11 10
Adelaide
4 14
Sydney
Sites 91
Active Customers >20,000
3
2
Melbourne
Hobart
Page 46

BCDA sales by market segment (FY2012)
Construction segment represents 65% of total domestic despatches
Agriculture & Mining
17%
Manufacturing
8%
11%
Auto & Transport
Construction - Engineering
6%
Construction - Dwelling
26%
33%
Construction - Non Dwelling
Page 47

Distribution: Overview
• Over 58 locations and approximately 1,200 employees Australia wide, providing quality steel solutions to the
residential, non residential, engineering construction, automotive, transport, manufacturing, mining and
agriculture market segments
• Supplies full range of steel products, including sheet and coil, plate, structural steel, merchant bar, tube,
reinforcing, pipes, values & fittings, and specialty metals
• Offers customers value added processing and supply chain solutions – plate profiling, beam processing,
routing, cutting, sawing, drilling, slitting, shearing, inventory and warehouse management and next day
delivery services
• Our customer promise – superior customer service, technical expertise, innovation, quality and commitment
• Works in conjunction with other parts of BlueScope to ensure a consistent and complete solution outcome for
our customers
• Leverages the brand equity in BlueScope products such as COLORBOND® steel, ZINCALUME® steel and
GALVASPAN® steel and incorporates the warranties of these products to provide peace of mind for our
customers
Page 48

Distribution business plan & focus areas
Get lean, fit &
hungry
Target winning
markets
Optimise value
chain
Broaden view to
create growth
Productivity
enhancement
Customer & Sales
excellence
Reduction of waste
Branch excellence
Facility utilisation
Steel efficiency
review
Product
rationalisation
Scrap reduction
One Best Way
SLOB reduction
Customer focussed
technology &
innovation
TRIPLE A CULTURE
Page 49

Distribution: Vision
“to deliver sustainable, profitable growth by positioning
BlueScope Distribution as the preferred business partner to
customers throughout the value chain”
Page 50

Distribution: Core products
Steel & Tube
Plate
Hot Rolled Structural
Tube
Merchant Bar
Pipe, Valves & Fittings
Reinforcing & Rural
Aluminium
Sheet & Coil
Hot Rolled
Cold Rolled
Galvanised
ZINCALUME® steel
TrueCore® steel
COLORBOND® steel
Page 51

Distribution: Processing solutions
Value added processing
services provided include:
• Plate profiling
• Drilling
• Cutting & Sawing
• Routing
• Slitting
• Shearing
• Recoiling
Page 52

Distribution: Restructuring program
• During FY2012 Distribution implemented a comprehensive restructuring program
• Focus was on lowering costs and better aligning BSD to customer demand
• Continue to strive for Zero Harm through engaged workforce participation
• Restructure program has achieved significant cost reductions, along with productivity improvements
• Additional business improvement initiatives have been indentified focused on:
– Customer and Sales Excellence
– People and Branch Excellence
– Productivity Enhancement
• Business is aiming to increase volume and has targeted initiatives underway, however market demand
continues to remain weak
Page 53

LYSAGHT: Overview
• Over 30 locations and close to 900 employees around Australia, providing a unique service capability
unsurpassed by our competitors
• Manufactures and markets an extensive range of roll formed steel products for the building industry
with specific offerings into the residential, commercial, structural, home improvement, distributor and
shed segments
• Trusted steel supplier with over 90 years of operations in Australia, 100% Australian steel supply,
unmatched technical expertise and quality service
• Works in conjunction with other parts of BlueScope to ensure a consistent and complete solution
outcome for our customers
• Leverages the brand equity in BlueScope products such as COLORBOND® steel, ZINCALUME®
steel and GALVASPAN® steel and incorporates the warranties of these products to provide peace of
mind for our customers
Page 54

LYSAGHT business plan & focus areas
Get lean, fit &
hungry
Target winning
markets
Optimise value
chain
Broaden view to
create growth
Deliver on customer
promise
Reconnect with
customer base
Differentiated
products and
services
Expand footprint
into emerging
markets
One best way
Operational
efficiency
Deepen
understanding of
market
LYSAGHT brand
effective and
relevant
Achieve customer
service promise
Grow high value
segments
Optimise
production footprint
National approach
to key market
segments
Upgrade service
offers and profiles
Partner with key
customers
TRIPLE A CULTURE
Page 55

LYSAGHT: Vision
Half Round Gutter
Australian
Quality
LYSAGHT
The trusted
experience
in steel
Service
Klip-lok ®
Technical
Expertise
Heritage
Custom Blue Orb ®
Heritage Red TM
Custom Orb ®
Dune TM
Page 56

LYSAGHT: Channel to Residential and Non-Residential Market Segments
MARKET SUB-SEGMENTS
Residential Building
LYSAGHT
Roll formed Product
Construction Industry
• Roofing Contractors
• Building Contractors
• Fencing Contractors
• Shed Manufacturer’s
• DIY
Commercial
Building
Sheds
Structural Segment
Reseller Network
Home
Improvements inc
Fencing
Page 57

LYSAGHT: Core products and brands
• Roofing for the residential and commercial segments in profiles such as
CUSTOM ORB®, TRIMDECK® and KLIP-LOK® 406
• A walling range that gives flexibility to suit any architectural style or environment
with brands such as MINI ORB®
CUSTOM ORB® Night Sky TM
• Fencing profiles such as NEETASCREEN®, SPANSCREEN® and
SMARTASCREEN
• Structural products such as battens, purlins and structural decking in brands such
as TOPSPAN®, SUPAPURLIN® and BONDEK®
• Full range of rainwater products including gutters, fascia and downpipes
NEETASCREEN® Domain TM
• Combinations of the above products also support Ranbuild and other shed
customers in the manufacture of domestic, light commercial and industrial sheds
• Our LYSGHT Living Collection range of verandahs, patios, carports and decks
are supported by products such as FIRMLOK® and FLATDEK®
SUPAPURLIN®
Page 58

LYSAGHT: Recent Innovations
• LYSAGHT has a strong pipeline of product development with expected
range enhancements across the segments we service.
• Recent and imminent releases include:
– Patented four panel fence structure using less posts for better aesthetics and
quicker installation
– New roofing profiles and systems
– LYSAGHT DIY Carport
– LYSAGHT Living Collection range of custom designed Patios, Verandahs, Decks
and Carports
Page 59

New Zealand &
Pacific Islands
Page 60

NZ&PI assets, products & markets:
Overview of New Zealand & Pacific Island sites
Glenbrook
Integrated
Steel Mill
Waikato
North Head Mine
Taharoa Mine
Page 61

NZ&PI assets, products & markets:
Glenbrook overview
Raw Material Yards
Iron & Steel Making
Coating & Finishing
Rolling Mills
Page 62

NZ&PI assets, products & markets:
Annual capacities
Glenbrook Steelworks
Steelmaking
670
Slab casters
670
Hot strip mill
750
Slab
Hot rolled coil
Coupled pickled cold mill
380
Metal coating lines
230
Heavy Plate mill
25
Light Plate mill
90
Hollow sections mill
45
Paint line
65
Cold rolled
coil
Metal coated
strip
Painted strip
Plate
Pipe & tube
Note:
Numbers reflect mill capacity in kilotonnes
Page 63

NZ&PI assets, products & markets:
Unique process to directly reduce iron sands
Page 64

NZ&PI assets, products & markets:
Steelmaking raw materials
Iron Sand Concentrate (Waikato North Head Mine)
• Iron sand mined and concentrated on site – 58.5% Fe
• Sufficient resource for long term steel making operations
• Concentrate is slurry pumped 18km underground to
Glenbrook
• Low cost captive iron units
• High value vanadium by-products captured through iron
making process
Thermal Coal
• Multi-source domestic and imported coal
• Approximately 0.8Mt transported by rail to Glenbrook each
year
Lime (McDonalds Lime - 28% NZS owned)
• 34Ktpa lime (oxide and chip) quarried and processed at
Otorohanga
• Railed and trucked to Glenbrook
Page 65

NZ&PI assets, products & markets :
Key product categories and applications
Product Primary end use markets Applications
Plate
• Manufacturing, building and construction
and mining
• Infrastructure projects, mining equipment and structural
applications including welded structural beams
Hot rolled coil
• Building and construction, mining,
automotive and transport, manufacturing
• Racking, guard rails, building and construction products,
structural tubing and water pipelines,
Cold rolled coil
• Agriculture and petroleum
• Packaging (drums) and storage systems
Galvanised (including
GALVSTEEL )
Zinc/aluminium alloy-coated
ZINCALUME® steel
AXXIS ® STEEL
Painted (including pre-painted
COLORSTEEL® )
Hollow sections
• Building and construction and
manufacturing,
• Building and construction
• Building and construction
• Agriculture, construction and
manufacturing
• General manufacturing, structural sections for commercial and
industrial buildings, structural decking and residential framing
• Commercial and industrial construction including roofing,
cladding, and rain water goods
• Residential framing solution
• Residential, commercial and industrial construction including
roofing, cladding, fencing, rain water goods, architectural panels,
sheds and garages
• Agricultural applications, including machinery and dairy systems.
Building scaffolding
Steltech (Welded Beams) • Building and construction • Multi storey applications, industrial and commercial construction,
bridges
Page 66

NZ&PI assets, products & markets:
NZ market at a glance
Total market size within New Zealand CY2012 (Kt)
Long Imports
29
End use segments (NZS domestic despatches)
Infrastructure
16%
Pacific Steel
(long)
120
250
New Zealand
Steel (flat)
Manufacturing /
Agriculture
31%
53%
Building &
Construction
Flat Imports
56
NZ Steel Value Stream
Building & Construction
Rollformers &
Distributors
Installers
Builder/Developer
Building Owner
Manufacturing (Agriculture Included)
Distributors
Manufacturers
Reseller Distributor
End User
Infrastructure
Distributors
Manufacturers
Installer/Developer
Council/Govt
Asset owner
Page 67

NZ&PI assets, products & markets:
1H FY2013 despatch mix
261kt
Export 136kt
Domestic 125kt
Domestic Export
Main export markets:
• Australia
• North America
• Pacific Islands
HRC
Plate
CRC
Metal Coated
Painted
Other
Six months
ended Dec-2012
Page 68

NZ&PI assets, products & markets:
Better profitability in coated and painted products
Category
Summary
Hot Rolled Coil
Plate
Cold Rolled Coil
Aluminium Zinc coated
Galvanised coated
COLORSTEEL®
prepainted steel
Limited
product
differentiation
Increased
product
differentiation
Most
differentiated
• Ingredient products, typically substantially transformed into final
goods
• Import parity pricing (IPP). NZS offer principally differentiated by
service offer, supply reliability and product quality – with
corresponding price premium
• Make use of sophisticated coating technologies, important to product
durability in end applications
• NZS’s products principally differentiated by product diversity, product
quality and reliability, reputation (brand), and service offer with small
order quantities
• IPP influences pricing
• High quality water based painted products designed for the New
Zealand environment with superior durability
• NZS’s products differentiated by strong consumer brand preference,
product warranties, product reputation and supply offer complexity
• Intermaterial pricing most influential
Page 69

NZ&PI assets, products & markets:
Taharoa mining and expansion 2012
Mining and Processing
• Mining land and mineral title owned by a Maori trust
• Mining free-flowing sands via dredge and floating
concentration plant
• Typical magnetic content of mined sand 40% to 50%
• Fresh water resources are as important as the iron
sand resources. Very low environmental impact
• Current mining & concentration capacity is 1.5 Mtpa;
shipping capacity ~1.35 Mtpa
Taharoa Shipping
• Taharoa loading facility is via a slurry pipe line, 3kms
offshore
• Use specialised vessel MV Taharoa Destiny
(replaced 22 year old vessel). In service since May
2012
• Increased loading capacity by 40%
• Enhanced safety, speed, and product loading
Page 70

NZ&PI assets, products & markets:
Waikato North Head – different mining methodology given different sand structure
• Consolidated rather than free flowing sand. Dry mining method via bucket wheel excavator
• Deposit is very different to the Taharoa deposit
– Lower valuable mineral content
– But higher Fe product
• Average magnetic content of between 20% and 40% through the depth of the resource but highly variable
between lithologies
• Very low environmental impact
Concentration Plant
Mine Face
Concentrate Stock
Tailings planted in
Forest
Settling Ponds
Page 71

NZ&PI assets, products & markets :
Iron sands shipment model
Taharoa iron sand legacy model
• Dedicated slurry vessels
• 40 to 50 day cycle time
• System constrained by vessel
• Port expansion to accept 175,000 DWT
Iron sands exports (Mt)
Waikato North Head
Taharoa
1.2
1.7
0.3
0.9
0.7
0.9
0.8
0.2
1.4
0.9
0.7
0.9
0.8
1.0
FY2008
FY2009
FY2010
FY2011
FY2012 FY2013f
Transhipment model
• Commenced 2012
• 14 day cycle time
• Greatly increases slurry
vessel utilisation
Waikato North Head iron sand model
• Commenced 2012
• Pumped to Glenbrook & road to Port
of Auckland
• Charter 40,000 DWT vessels
• Combined coal and irons and logistics
when possible
Iron sands volume growth driven by:
• New larger vessel Taharoa Destiny
– Increased capacity
– Faster turn around
• Ability to ship export out of Waikato North
Head (WNH), with agreement of NZ
government
• Ability to trans-ship via Port Kembla
• Range of shipping solutions opens up new
markets and customers
Page 72

NZ&PI assets, products & markets:
Uses of iron sands
• Iron sands are common geologically, but uncommon on the seaborne trade
• Demand for low cost Fe units is increasing
• An increases in the number of pellet plants in China is also driving demand
Lump
6mm – 31 mm
Iron ore
Iron sand
Fines
1mm – 6 mm
Taharoa
180 μm
WNH
150 μm
Sinter
Pellets
Blast Furnace
Iron sand in sinter operations:
• Has been used at 20% blend ratios
• No affect on sinter quality at blend
ratios < 5% blend
Iron sand in pellet operations:
• Has been used at > 60% blend ratios
• 100% pellets are possible
Concentrate
< 75 μm
Page 73

Examples of business improvement initiatives: cost saving initiatives
• Recycling of previously dumped par processed raw materials
• Use of alternative imported coal sources
• Recycling of previously by-products in steelmaking
• Redesign of maintenance team with significant role reductions
• 6% reduction in FTE across steel assets with no asset closures
• Changed contractor arrangements for major capital shut work resulting in lower cost and reduced time to
complete
• 10% increased in iron making capability through a range of initiatives in the kilns
• Extended WNH and Taharoa operations to 24/7 to allow iron sand market expansion and growth
• Change of roster arrangements in rolling mills, pipe mill to provide flexibility and lower cost
• 20% improvement in WNH iron sand production through de-bottlenecking improvement team activity
Page 74

Examples of business improvement initiatives: market facing initiatives
• Export sales of iron sands from Waikato North Head
• Dynamic costing models developed to allow assess best option of HRC sales vs. iron sands sales
• Introduction of new COLORSTEEL® Maxx product range, run rate of an additional 1,000t of sales p.a.
• New cattle rail products introduced with potential for 1,500 tonnes of sales p.a. replacing imported product
• Differentiation of aggregate products to allow for increased value added product sales
Page 75

NZ&PI business plan & focus areas
Get lean, fit &
hungry
Target winning
markets
Optimise value
chain
Broaden view to
create growth
Back 2 Basics
Delivery
performance
Supply Chain
efficiency
Market Innovation
Product Innovation
Leading through
our people
Quality products &
services
Energy
management
Iron Sands
Expansion
Talent Pipeline
Productivity
Product & margin
Flexibility to meet
the market
Business
Development
TRIPLE A CULTURE
Page 76

NZ&PI business plan & focus areas:
Pacific Lysaght Growth continues as we look to broaden product range and territories
New Caledonia
• New facility in North opened in Feb
2013 – performing ahead of plan
• New territory exploration for JV –
Tahiti
• PEB solution for housing in North
• Nexus Building Solution
Vanuatu
• Continue to build market for low
cost steel intensive housing.
Fiji
• New territory exploration for JV
– Solomon Islands
• Agricultural sheds
• Light steel framing solutions for
distribution through the pacific
BlueScope Acier Nord, New Caledonia
Page 77

NZ&PI business plan & focus areas:
Product and systems innovations and value chain management
Concept
Develop
Product
Proving
Manufacturing
Proving
Market
Launch
No. of Projects 12 8 3 3 4
Warmframe TM
Vintage Patina
Box Section
Systems
COLORSTEEL®
Bounce
Page 78

Markets: Residential construction approvals trending higher – Christchurch rebuild
underway
Monthly number of New Zealand residential construction approvals 1
(Number per month)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Mar
02
Mar
03
Mar
04
Mar
05
Mar
06
Mar
07
Mar
08
Mar
09
Mar
10
Mar
11
Mar
12
Mar
13
Source:
Statistics New Zealand. Series ID: SSC11AS.
(1) Based on total number of new dwellings consented on an unadjusted basis. Data to March 2013
Data includes apartments. Figures for new apartments are compiled from consents that have 10 or more attached new
dwellings. Consent definition: A building consent is the formal approval issued by a Building Consent Authority (BCA)
to ensure certain works meet the requirements of the Building Act 2004, Building Regulations and New Zealand
Building Code
Page 79

NZ&PI business plan & focus areas:
Continued growth in iron sands and non-steel businesses
Iron sands expansion:
Iron sands exports (Mt)
• New mining methodology being introduced to mine existing
geology and allow for expansion
• Expansion scheduled completion Nov 2013
• Will deliver production increase of 1.5Mtpa – at
infrastructure capital cost of A$30/t, compared to capital
cost of greenfield/ brownfield expansion in WA of $150 –
190/t
• Increased production off take will be transported via
second vessel – anticipated delivery during 2H CY2014
– Targeting total export volume run-rate of at least 2.7Mtpa
• Evaluation of further shipping capability
0.9
Waikato North Head
Taharoa
0.9
0.7
0.8
1.2
0.2
1.7
0.3
1.4
Other non-steel opportunities:
• Expanding Vanadium recovery / sales capability
– Increased Vanadium production volumes
– Trialling sales to new customers and geographies
0.9
0.7
0.9
0.8
1.0
• Continue to generate revenue from non core activities eg
aggregate sales, consultancy and other by products (iron
oxide)
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013f
Page 80

Summary & Questions
Page 81

Summary
• Market factors still seemingly at ‘bottom of the cycle’ (construction activity, A$ and
spreads); we are acting on matters in our control
– Made the necessary changes to business mix and strategy
– Working smarter – lean, fit and hungry culture
– Targeting winning markets and new products; innovation
• Positioned to benefit as market conditions recover
Page 82

Appendices
Page 83

Appendix:
Financials for BANZ
Segments
Page 84

Segmental financials
1H FY2013
FY2012
CIPA BCDA NZS Interseg Total CIPA BCDA NZS Interseg Total
Steel despatches (kt) 1,248 364 261 3,544 758 580
Revenue 1,668 720 319 (338) 2,369 4,280 1,486 755 (710) 5,811
EBITDA (underlying) 79 2 27 (4) 104 (151) (27) 113 3 (62)
EBIT (underlying) (6) (7) 2 (3) (14) (327) (46) 69 3 (302)
EBIT (reported) 7 (10) 2 (4) (5) (726) (227) 65 3 (885)
Capital & investment expenditure 56 3 19 - 78 110 6 42 (1) 157
Net operating assets (pre-tax) 1,973 324 339 (12) 2,623 2,003 329 296 (9) 2,620
Page 85

CIPA: breakdown of 1H FY2013 revenue
CIPA revenue 1H FY2013
Steel despatch volume 1H FY2013
$1,668m
1,248kt
Non-steel
business
• Export coke
• Cold ferrous
• By-products
Steel business
Six months
ended Dec-2012
Export
Domestic
345kt
903kt
Six months
ended Dec-2012
Domestic Export
Export prices are
generally sensitive to
regional steel prices
HRC
Plate
CRC
Metal Coated
Painted
Other
Most domestic non-painted
steel prices are largely
sensitive to regional steel
prices, though timing and
degree of relationship can
vary
Page 86

CIPA: breakdown of 1H FY2013 underlying cost components
Non-steel business costs
relate to:
Non-steel business
costs
A$1,674m
• Export coke sales
• Cold ferrous feed to Arrium
(scrap pool)
• By-products (eg. Tar, BTX,
Sulphate)
Conversion & Overhead
Components (in order of value):
• Direct labour
• Repairs & maintenance
Conversion &
overhead
• Sales & administration
• Services & contractors
• Utilities
Depreciation
Freight
Freight
(in order of value):
• Domestic despatches
• Export despatches
• Consumables
• Other (includes $36m oneoff
workers compensation
benefit)
• Internal (eg. Springhill &
Western Port to Service
Centres)
Raw materials
(in order of value):
• Iron ore
Raw materials
• Coal
• Scrap
• Fluxes and alloys
• Paint
• Zinc
1H FY2013
• Aluminium
Page 87

BCDA: volume and costs
Product mix 1H FY2013 (by volume)
Components of underlying costs in order of size
• Steel feed / purchases
• Labour
• Freight
• Facilities / leases
• Depreciation
• Other
Metal Coated
Plate
Painted
Tube
Structural
Merchant bar
Reinforcing
HRC
Other
Page 88

NZ&PI: breakdown of 1H FY2013 underlying cost components
A$317m
Conversion & Overhead components
(in order of value):
Conversion &
overhead
• Direct labour
• Utilities
• Services
• Consumables
• Selling, general & administration
Depreciation
Freight
Raw materials
Raw Materials (in order of value):
• Coal
• Scrap
• Iron ore
• Zinc
• Alloys
• Paint
• Aluminum
• Other coatings
1H FY2013
Page 89

Key earnings drivers
Coated &
Industrial
Products
Australia
Building
Components &
Distribution
Australia
New Zealand
& Pacific Steel
Products
• Selling prices
• Material costs –
including iron ore,
coal, fluxes, alloys,
and coating
materials
• Conversion costs
• Foreign exchange
(eg AUD/USD)
• Despatch volumes
• Domestic / export
and product mix
• Despatch volumes
• Product and
segment mix
• Margins
• Foreign exchange
(eg AUD/USD)
• Selling prices of steel
• Material costs – mainly
coal, fluxes, alloys, and
coating materials
• We own our iron sands
resource, so just an
extraction cost applies
• Conversion costs
• Foreign exchange
• Despatch volumes
• Domestic / export and
product mix
• Iron sands and
vanadium revenue
Page 90

Appendix:
CIPA Markets & Logistics
Page 91

Logistics and supply chain
Darwin
Cairns
National Logistics Network
• National rail network – serving major cities
• Network of warehouses / distribution centres
in local markets to service customers
• SteelLink: over 1.2Mtpa annually of BSL
product
National & Metropolitan Road
Transport
• Road delivery to metro and regional
customers nationally
• Leverage across multiple BSL business
units
• Road transport networks: over 1.5Mtpa
annually
Brisbane
Outbound
Export markets
Perth
Sydney
Adelaide
Inbound and Outbound Shipping
• Inbound – iron ore (~ 4mtpa) and other
steel making raw materials
• Exports – BSL’s steel products to markets
in Asia Pacific, Europe and North America
Melbourne
Western Port Works
Hobart
Pt Kembla Works
Inbound
Raw materials
Page 92

Examples of product applications
Page 93

Appendix:
CIPA Manufacturing
Page 94

BlueScope Australia and New Zealand History
1915 BHP commenced steelmaking in Newcastle
1918 John Lysaght (Australia) founded
1925 BHP acquires Port Kembla Steelworks
1928 Australian Iron & Steel Limited (AIS) was formed to operate
a steelworks at Port Kembla
1935 BHP acquires Australian Iron & Steel Limited (AIS)
1939 Lysaght Springhill plant opened and Commonwealth
Rolling Mills (CRM) plant established as partnership
between American Rolling Mills and John Lysaght
1966 First COLORBOND® Steel Produced
1968 New Zealand Steel operations commenced at Glenbrook
producing GALVSTEEL
1970 Commissioning of iron and steelmaking at Glenbrook,
pioneering the direct reduction process to utilise iron sands
from Waikato North Head
1971 BHP acquires 50% of John Lysaght
1972 Western Port works opens; commenced exports of Taharoa
iron sands
1976 ZINCALUME® steel was launched
1979 John Lysaght becomes fully owned by BHP
1989 BHP acquires 71% of New Zealand Steel
2000 Long products division separated and listed on ASX as
OneSteel
2002 BHP Steel listed on ASX
2003 Name changed to BlueScope Steel
2006 Exit tinplating business
2007 Smorgon Steel Distribution acquired
2008 Western Sydney service centre opens
2011 BlueScope Australia & New Zealand business unit formed.
Closure of some manufacturing facilities at Port Kembla
Steelworks and Western Port to reduce exposure to export
markets. Expanded coke exports from PK using freed-up
coke capacity
2012 Commenced exports of irons ands from Waikato North
Head and expanded Taharoa exports
2013 Manning reductions at Western Port to respond to low
domestic demand
Page 95

Background: overview of main steel production processes
Steel
Scrap
STEEL PRODUCTION
SEMI’s
FLAT PRODUCTS
Scrap
Ladle
Electric Arc
Furnace
Slab
Hot rolled strip
mill
Cold rolled
strip mill
Wide coil
Narrow strip
Cut lengths
SCRAP ROUTE
Electrical coil
Metal Coated
coil
Painted coil
Laminated coil
Molten
Steel
Ladle
Reversing mill
Plate
LONG PRODUCTS
Continuous
Casting Machine
Bloom
Heavy
section
mill
H-section I-sectionT-section U-section Z-section L-section Rail
MOLTEN IRON
ROUTE
Basic Oxygen
Furnace (converter)
Molten
Iron
Bar/Section
mill
Round Square Half Round Flat
H-section
I-section
Blast Furnace
Torpedo Ladle
Billet
Rod mill
Wire rod
Wire
drawing
Wire
Seamless tube
mill
Tubes
Welded tube mill
Page 96

Background: overview of main steel production processes
Integrated “Conventional” Slab Casting – 3 to 5 Mt/a
– 500 to 800 m
1-2m/minute
Gas cutter Rougher
Coil box
Cooling
200-300 mm thick
Reheat furnace
500-800 m
Finisher
Run out table
cooling
4-6 m/minute
50-60mm thick
Holding furnace
1-10mm thick
Coiler
20-40 metric ton coil
Finisher
Minimill Thin-Slab Casting – 1 to 3 Mt/a
– 300 to 400 m
300-400 m
Run out table
cooling
1-10mm thick
Coiler
20-40 metric ton coil
Scale Control
Chamber
Strip Casting – 0.5 Mt/a
15-150 m/minute – 60 m
Mill
Run out table
cooling
60 m
0.7 - 1.8 mm thick
Coiler
20-40 metric ton coil
Page 97

Cokemaking process
BLENDED COAL
GAS
PROCESSING
SULPHATE
TAR
BTX
(Benzene)
COKE OVENS
GAS
Interworks
energy (boilers,
furnaces)
COKE PLANT
COKE SCREEN
Cokemaking:
• Pyrolysis of coking coal: coal heated to >1000ºC in absence of air
• Largely carbon plus some hydrogen, nitrogen, sulphur and
inorganic minerals
• 1.25t of coking coal generally produces 1 tonne of coke solids
Desirable physical properties of coke:
• Strong and large lumps
• Able to withstand the blast furnace environment without generating
fines
• Irregular shape, so that it doesn’t pack tightly (permeability)
• Very porous (react with blast)
BREEZE
(< 10 mm)
NUT
(10 – 25 mm)
TATA
(20 – 50 mm)
LUMP
(25 – 80 mm)
Desirable chemical properties:
• Low sulphur and phosphorus (steel quality)
• Low ash (less slag, less fuel, lower hot metal cost)
Page 98

Cokemaking
Page 99

Iron ore fines
• Typically 58-63% Fe; South American exception at 66% Fe
• Generally the cheapest, due to lower %Fe and higher gangue
• Not suitable for direct charge to blast furnaces (too fine, gets blown out as dust)
• Requires agglomeration into larger solid forms such as sinter or pellet by:
– Blending the fine ores to control chemistry & size
– Then add fluxes: limestone (CaCO 3 ), dolomite (MgO) & serpentine (SiO 2 ; MgO)
– Add fuels (coke) – layered on a moving grate
SINTER
Page 100

Iron ore lump
• Typically 61-64% Fe
• As received from the Mine, has 6mm)
• Remaining lump ore (>6mm to 60mm) is direct charged to BF
• However difficult to control chemistry – comes as “Mother Nature” including variability in SiO 2 , Al 2 O 3 ,
Phos, MgO, CaO etc
• Therefore “non ideal” smelting in the BF – wide temperature range ; affects zones in BF
• Generally limited to < 20% of Burden mix, however in lower productivity scenarios can use higher
proportions
• Comes with penalty of increased slag volume (gangue) and fuel costs
Ideal properties of lump:
• High % Fe – yield of hot metal
• Low combined gangue (SiO 2 , Al 2 O 3 ) = less slag volume
(costs)
• Low Phosphorus (P) = quality of steel
• Low Loss on Ignition (LOI) – combined water = freight cost &
fuel
• Low Specific Trace elements – Ti, V, Cr and alkali (Zn, K 2 O)
Page 101

Ironmaking
6 BF
5 BF
PCI
Sinter & raw materials
handling
Page 102

Sinter plant at Port Kembla
103
Page 103

Blast furnace process
• Function of a blast furnace is to:
– Remove oxygen from iron oxide
– Remove gangue from the iron ore
to form slag
• Achieved through use of carbon
monoxide gas from the
combustion of carbon from coke
& coal
Layers of coke & ferrous
materials descend to
bottom of furnace over
eight hours – soften then
melt and collect in the
hearth
Raw materials: sinter, lump
ore, coke & fluxes charged
through top of furnace
100 o C
Excess hot gases flow from
top of furnace to gas cleaning
plant and reused for heating
Cast iron / copper
stave cooling system
Molten iron drained from
taphole in side of furnace
into brick lined torpedo
shaped vessels.
Slag converted to either
‘sand-like’ particles in a
granulator or ‘rock slag’
when cooled in pits
1500 o C
2200 o C
Hot air + PCI blown into
furnace through 28
‘tuyeres’.
• Temperature 1200 o C
• Pressure 370 Kpa
• Velocity 230 m/sec
Carbon refractory lining
Page 104

Port Kembla blast furnaces
No.5 Blast Furnace (in operation)
No.6 Blast Furnace (not operating)
No.5
No.6
Built 1972 1996
Relined 1978, 1991, 2009 -
Inner Vol – m 3 3,427 3,208
Work Vol – m 3 3,000 (88%) 2,749 (86%)
Output 2.6 Mtpa 2.6 Mtpa
Page 105

Basic oxygen steelmaking (BOS) process
Molten
iron (260t)
Oxygen blowing
Scrap steel
(approx 50t)
Indicative ‘recipe’ of raw materials
per output steel tonne:
• 1.24t iron ore fines (sintering)
• 0.26t lump ore (into BF)
• 0.57t hard coking coal (into BF)
• 0.15t PCI (into BF)
• 0.18t scrap 1 (into BOS)
Refractory lined BOS
furnaces ~ 280t per ‘heat’ 2
Note:
1) 40% of scrap feed is sourced externally; balance, internally sourced scrap.
2) Yield loss resulting from BOS process is due to impurities in the hot metal that are burnt off. Eg Carbon, silicon, phosphorous.
Page 106

Slabmaking process
Steel
ladle
Revolving
turret
Steel ladle
Tundish
Mould
Oxy Cutter
Continuous Slab Casters
Max. width = 2200mm
Max. length = 12.5m
Max. thickness = 300mm
Page 107

Hot rolling process
PKSW hot strip mill (HSM):
• Commissioned 1955, upgrades 1972, 1985-1987 & 2000-2006
• 2.9 million tonnes per annum capacity
Product flow
Slabs ex Slab
Casters
Reheated to
1225°C
Dual reheat
furnaces
Roughing-
Reversing Mill
300mm – 25mm
Coil box
Six Stand Finishing Mill
min. gauge 1.48mm
Page 108

Plate mill
Slabs ex Slab
Caster
PKSW plate mill:
• Commissioned 1963
• 5mm-180mm thick x 1200mm-3400mm wide
• 0.45 million tonnes per annum capacity
Reheat Furnaces
Roughing Mill
Finishing Mill
Hot leveller
Descaling Box
Product flow
Shearing, stencilling
& inspection
Page 109

Summary of steelmaking steps: inputs and conversion costs
Process Raw material inputs Main conversion costs
Cokemaking
Sintering
Ironmaking (blast
furnace)
Steelmaking (BOS and
slab casting)
Metallurgical coals
Iron ore fines, iron sands, limestone
fines, dolomite fines, recyclables
Coke, sinter, iron ore lump, fluxes, PCI
coal
Molten iron, scrap, alloys (eg ferro
manganese, molybdenum, aluminium),
fluxes
Maintenance, labour, refractories & consumables, services (eg labs,
cleaning, coal handling), depreciation; (Note: utilities is a net neutral cost due
to coke ovens gas transferred to other units for energy)
Services (eg materials handling, cleaning), maintenance, labour,
depreciation, utilities, refractories & consumables
Services (eg materials handling, PCI, transport), utilities, depreciation,
refractories & consumables, maintenance, labour
Labour, maintenance, refractories & consumables, utilities, services (eg
transport, contractors), cryogenic gases (argon, nitrogen, oxygen)
depreciation
Plate mill Slab Labour, maintenance, depreciation, utilities, services
Hot strip mill Slab Labour, maintenance, depreciation, utilities, services
Pickling and cold rolling
Metal coating
Painting
Hot rolled coil
Cold rolled coil, zinc, aluminium
Metal coated strip (generally
ZINCALUME® steel), paint
Labour, maintenance, services, utilities, depreciation, refractories &
consumables
Labour, maintenance, services, utilities, depreciation, refractories &
consumables
Labour, maintenance, services, utilities, depreciation, refractories &
consumables
Page 110

Western Port History
Why Western Port
• Deep water port
• Energy from Bass Strait/Latrobe Valley
• Key southern states customers:
– automotive, white goods, drum makers and building
industry
Milestones
• 1968: Feasibility study undertaken for a new steel site
• 1970: Joint venture signed and Victorian Government
approval
• 1972: Cold Mill and Metal Coating Line 4 commissioned
• 1973: Pickle Line and Paint Line 2 commissioned
• 1978: Hot Strip Mill commissioned
• 1979: Metal Coating Line 5 commissioned
• 1982: Paint Line 4 commissioned
• 1992: Metal Coating Line 6 last major production unit
commissioned
• 2011: Hot Strip Mill decommissioned & MCL 5
mothballed
• 2013: MCL4 upgrade Next Generation ZINCALUME®
steel
Page 111

Western Port operations overview
Hot rolled coils arrive
via rail from PKSW
HRC Coil
Storage
Pickle Line
Water
Treatment
Plant
Technical
Bldg
Coil Annealing
Five
Stand
Mill
No.6 Galvanising Line
No 2 Paint Line
Maintenance
Services Bldg
Coil Temper Mill
No.5 Zincalume Line
No.4 Zincalume Line
Warehouse
Coil transfer to
Paintlines
CSP Warehouse / Slitter / Pack line
No 4 Paint Line
Finished Product:
• Despatched to customers via
road & rail
Main Gate
Admin
Bldg
Finished product to:
• Western Port Wharf
for export
Bayview Road
Page 112

Appendix:
New Zealand &
Pacific Islands
Page 113

New Zealand Steel History
• 1965 Company established
• 1968 First production of Galvanised Coil
• 1969 Production of Steel Billets
• 1972 Commenced iron sands exports from WNH
• 1984 Approval for an integrated flat products
business
• 1987 Commission flat products manufacture
• 1989 Purchased by Helenus (BHP Steel)
• 1992 100% BHP Steel ownership
• 2002 Brand changed to New Zealand Steel
• 2003 Company renamed BlueScope Steel Limited
• 2011 Executed long-term supply contract to double
Taharoa exports. Ship expected to be
commissioned in 2H CY2014
• 2012 Commenced iron sands exports from WNH
• 2012 Increased Taharoa loading capacity by 40%
with New Vessel ‘Taharoa Destiny’
Page 114

Brands
Page 115

Products: Overview
Iron sand concentration
Hollow sections
Metallic coated coil
Hot rolled coil
Cold rolled coils
Page 116

Waikato North Head process schematic
Page 117

Taharoa existing process schematic
118
Page 118

Taharoa new process schematic
Buried Feeder (Dozer trap)
Spiral Separation Plant
Concentrate Stockpiles
Ship Loading – Stockpile to CD tank
Ship Loading Pumps
SPM Buoy
Ship Loading
Undersea Pipelines
119
Page 119

Once Taharoa 2.4 Mtpa rate achieved, BSL 55% hedged for iron ore
Portion of iron ore consumption economically hedged 1 within BlueScope
2011 Today Future
Before CIPA Restructure, combined
with 0.8 Mtpa iron sands exports
(9.2 Mtpa usage rate, including NZ)
1.2 Mtpa iron sands exports from
Taharoa, and exports from
Waikato North Head
(5.0 Mtpa usage rate, including NZS)
Expected 2.4 Mtpa iron sands exports
from Taharoa once second ship
operational, and exports from
Waikato North Head
(5.0 Mtpa usage rate, including NZS)
15%
60%
40%
45%
55%
85%
Note:
1) Based on current market pricing ratio of iron ore fines to iron sands
Economically hedged
Unhedged portion of purchases
Page 120

Electricity is a key cost which is highly volatile and complex to manage
NZS Energy Sources
Wind Other
Geo-thermal
8% 2%
Coal
2%
7%
$/MWh
250
200
150
100
2013 Electricity spot prices
Gas
26%
55% Hydro
50
0
5 Jan
12 Jan
19 Jan
26 Jan
2 Feb
9 Feb
16 Feb
23 Feb
2 Mar
9 Mar
16 Mar
23 Mar
NZS Electricity Exposure
Spot
27%
• Third highest cost for the business
• NZ has greater than 50% reliance on hydro generation
• High short term (5 min) volatility results in complexity to manage
Hedge
16%
57%
Co-Gen
• Effectively 60% self-sufficient in electricity – generation from high
demand units
• Hedging strategy developed and now in place
Page 121

Community involvement
Engagement with the community through participation in various committees and fostering good working
relationships with key community stakeholders
• Community Environmental Committee
Formed in the 70’s with representatives from local
government, health, cultural and rural groups.
• Community Liaison Group
Forum for open discussion and information sharing
of NZ Steel, local neighbour ratepayers groups,
Auckland Council
• Education Sector
Involvement with secondary schools; Workchoice
Day, LEARNZ on-line interactive visit
• Public tours of NZ Steel
Schools, universities, community groups,
customers, suppliers etc
Page 122

NZ&PI is committed to reducing our impact on the environment
• 60% of electricity generated from waste gas
• 99% of process and storm water is reused or recirculated
• 100% of process steam generated from waste heat
• 100% sale of Iron oxide sold into water treatment & magnet production
• ~200ktpa aggregate recycled into applications such as road base, drainage & construction
• ~18ktpa mill scale recycled replacing energy intensive gaseous oxygen
123
Page 123

BlueScope Australia & New Zealand (BANZ)
Investor Briefing Day
30 May 2013
BlueScope Steel Limited. ASX Code: BSL