The Port Kembla steelworks could close if BlueScope cannot find $200 million in annual cost savings in its Australian operations for the next two years.
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The news came as the the company announced a $136.3 million net profit - which is a $218.7 million increase on the 2014 financial year.
BlueScope CEO Paul O’Malley also announced a target of more than $200 million in ‘‘annual permanent cost reductions’’ in Australia by the 2017 financial year.
‘‘The strategic review is well under way and we are committed to the delivery of the targeted savings,’’ Mr O’Malley said.
‘‘If this target is not achievable, we will have no option but to move to external supply of quality hot rolled coil and billet steel feed with mothballing or closure of steelmaking.’’
Mr O’Malley said Chinese steel imports this year were the equivalent in output of 20 Port Kemblas.
He said at current prices it would be more competitive to source steel externally rather than make it in Australia and New Zealand - ‘‘unless we deliver a game-changing approach to costs to improve their competitiveness.’’
The company will provide an update on the success of its cost cuts by its annual general meeting in November, Mr O’Malley said.
However, Mr O’Malley said the company was still committed to finding a way keep the gates open - both at Port Kembla and its operations in operations in Glenbrook, New Zealand.
But he said the Port Kembla employees will need a different approach to work.
‘‘Our objective is to maintain steelmaking at Port Kembla and Glenbrook - allowing us to keep more people employed in the Illawarra and the Waikato, and retain exposure to the upside of improving margins without incurring significant restructure costs,’’ Mr O’Malley said.
‘‘We now urgently need firm commitments to a more flexible and productive approach to labour in the Illawarra and the Waikato.’’
Mr O’Malley also said the governments had a part to play in keeping the steelworks open.
‘‘We also need federal and state governments to contribute, for example by reducing payroll tax, EPA and WorkCover costs, and by using the EITE (Emissions-Intensive Trade-Exposed) framework to defer carbon costs until our major trade competitors, those that compete in our market face.’’
