Monsters of Rock: BlueScope's $1 billion blast furnace rebuild indicates 'green steel' isn't coming anytime soon

BlueScope Steel (ASX:BSL), the steel business carved out of BHP (ASX:BHP) two decades ago will press ahead with a study on a $1 billion furnace reline at the Port Kembla steelworks.

It is a surefire indication those in the know do not view the transition to so-called ‘green steel’ as a near-term shift.

The reline of the mothballed number 6 blast furnace will have a 20 year life and cost up to $300 million more than BlueScope initially planned, setting the firm up to maintain its domestic supply of steel from 2026, helping BlueScope through the energy transition ahead of its 2050 net zero target.

BlueScope’s position is the furnace reline will provide a “challenging but credible timeline” for the development of low emissions steelmaking technologies.

“The reline does not lock BlueScope in to blast furnace steelmaking for the full 20 years if technology is ready earlier,” the company said.

“However, achieving this will be dependent on several enablers including access to low cost green hydrogen, firmed and affordable renewable energy, the development of suitable raw material supply chains and appropriate policy settings.”

It follows comments last week from South32 (ASX:S32) CEO Graham Kerr, a supplier of metallurgical coal to BlueScope, that coal would have a use in the steelmaking process for at least 20 years given the infancy of low emissions technologies like green hydrogen.

BlueScope is well stocked to deploy capital at the moment after reporting record first half underlying profit of $1.57 billion, up 373% on the same period in 2021.

That came off the back of a 62% increase in revenue thanks to strong demand and prices to $9.42 billion.

Its underlying EBIT for the second half of 2022 is expected to be $1.2-1.35b, second only to the half just gone ($2.2b) in the company’s 20 year history as a separate entity.

It will pay a 25c per share dividend and increase a buyback scheme that has already paid out $285m since August 2021 to allow a further $700m of buybacks over the next 12 months.

BlueScope Steel share price today:

IGO continues buying spree

IGO (ASX:IGO) is on something of a buying spree, following up its $1.1 billion cash takeover of Western Areas (ASX:WSA) with reports of a deal likely in the same ballpark to mop up Glencore’s CSA copper mine in New South Wales.

The battery metals miner confirmed its status today as the leading horse in the race for the Cobar mine, which produces around 50,000t of copper a year.

“IGO confirms that it is in exclusive discussions with Glencore in relation to a proposed sale of CSA. However, at this stage, discussions between IGO and Glencore are incomplete and IGO is continuing to conduct due diligence as part of the ongoing sales process. IGO has made no decision and nor has it entered into any definitive acquisition agreement with respect to CSA,” IGO said in a statement.

“IGO regularly evaluates acquisition opportunities against a range of factors and will only pursue an acquisition if it makes strong strategic and financial sense for its shareholders.”

The company was a junior gold explorer when it bought the Long Nickel Mine off WMC 20 years ago for $15 million.

It has since become a $9 billion company and hived off its gold interests last year to sharpen its focus on the key battery metals lithium, nickel and copper.

CSA would be the third major acquisition in a year by IGO, alongside WSA and its purchase of a 49% stake in Tianqi Lithium’s Australian business including its Kwinana hydroxide plant and share of the Greenbushes mine in WA’s South West.

IGO last week announced it had reached an agreement with Andrew Forrest’s Wyloo Metals, whose ~10% stake in Western Areas loomed as the major impediment to its takeover bid, to ensure its support for the scheme.