BlueScope pushes back Port Kembla’s blast furnace project, posts $802m profit
'Executive work' being done on energy precinct: CEO
BlueScope Steel has confirmed a delay to the critical No.6 blast furnace reline at Port Kembla, pushing the project’s high-stakes transition into early 2027.
The news comes amid strong reporting for FY26 with net profit hitting $802 million in the 12 months to June 30, having been $83.8 million last year. That means shareholders’ final dividend, will more than double from 30¢ to 65¢ a share.
The company’s revenue was up 2 per cent to $16.6 billion despite a 28 per cent fall in Australian earnings, a decline driven by record Chinese steel exports that have crushed Asian steel spreads.
The transition schedule for the $1.3 billion blast furnace reline has been pushed back to the second half of FY2027, with management citing the “scale and complexity of the project” and significant inflation in construction costs.
Managing director Tania Archibald told investors while she would prefer an earlier start, the company is prioritising operational stability: “If the cutover was to sort of occur ... at the end of December, for example, we would probably push it out into January, just because it’s important that the teams get a rest,” she said, referencing the complexity of managing 800 people on site.
Despite the delay, BlueScope maintains there is “no impact” to its operating risk profile because the No.5 blast furnace is “running extremely well for where it is in its campaign life”. Archibald said this gives the company “full flexibility in terms of the timing of the cutover”.
Port Kembla’s ‘energy precinct’
Beyond steelmaking, BlueScope is remapping its 1200-hectare land portfolio, with 200 hectares at Port Kembla recently rezoned to Special Purpose Zone (SP4) to streamline approvals for manufacturing-adjacent uses.
A core element of the strategy is the establishment of an energy precinct. Archibald revealed the company is doing “quite a bit of executive work” around options such as large-scale batteries. This precinct is also a long-range play for decarbonization. Archibald noted the company is “very mindful ... of the long-term energy infrastructure that would be required for an eventual change in steelmaking,” ensuring that necessary easements are preserved today for tomorrow’s “green iron” shift.
While Port Kembla is being reimagined, the company’s surplus residential land at West Dapto has already delivered a massive cash injection, yielding $76.5 million in proceeds this year.
Chief financial officer David Fallu signaled a shift in how the company views its remaining holdings. While West Dapto was a “straight sale” because it was already at “full value,” Fallu suggested other properties might involve partnerships.
“Where there’s still sort of more opportunity for value uplift, that’s where we’ll consider the partnership opportunities,” Fallu said. He noted that the Port Kembla rezoning was a “huge benefit” that removes uncertainties that typically “bring a discount to that property value”.
The plate mill modernisation
The $300 million plate mill upgrade at Port Kembla remains a rare bright spot in the local infrastructure timeline, with processing upgrades already operational. The next phase, focusing on a new furnace for product quality, is slated for completion in mid-2027.
This project is specifically designed to pivot Port Kembla away from low-margin exports toward the renewable energy transition. By producing heavy plate for wind towers and transmission infrastructure, BlueScope expects an EBIT uplift of about $50 million per annum.
The Australian Steel Products (ASP) division reported an underlying EBIT of $188.2 million for FY2026, down from $261.6 million the previous year. While record domestic volumes of Colorbond and Truecore steel (654kt and 155kt respectively) provided some insulation, the division is increasingly reliant on its property and value-added manufacturing pivots to offset a brutal global steel cycle.
As the company moves past “peak capex,” the Port Kembla works are being physically and economically rebuilt into what Archibald describes as the Group’s “core innovation and technical engine”.
Safety mandate after fatality
The briefing opened with a sombre remembrance of Jack McGrath, a contractor on the reline project, killed by a falling beam. Archibald stated that BlueScope’s safety performance “is not yet where it needs to be” and is a “stark reminder” of the risks inherent in heavy industrial transformation”.
SafeWork NSW has issued BlueScope with several improvement notices and its investigation into the matter is ongoing.