THE fate of more than 1000 Newcastle jobs hinge on the outcome of a $1 billion Asian bid for OneSteel’s parent company Arrium.
Giant south Korean steelmaker Posco, three Korean sovereign funds and Hong Kong trading company Noble want Arrium for the South Australian iron ore mines that feed OneSteel’s loss-making Whyalla steelworks.
Whyalla, in turn, supplies all of the steel used at the former BHP rod and bar mills at Mayfield.
The OneSteel side of Arrium lost $50 million in the year to June 30 and while most of the debate so far has been about the iron ore business, which made $300 million, and concerns are being raised about the potential foreign takeover of Australia’s steel industry.
Conversely, Posco’s supporters say the Korean giant’s international steelmaking expertise could help return Whyalla and the Newcastle rolling mills to long-term profit.
Describing the takeover bid as a matter of national importance, outspoken Queensland MP Bob Katter said yesterday that Arrium and Australia’s other steelmaker, Bluescope, needed to remain in local hands.
‘‘A country that cannot produce its own steel does not deserve to be called a developed nation,’’ Mr Katter said.
‘‘This is not being xenophobic, this is about Australia’s national sovereignty.
‘‘Posco wants Arrium for its iron ore assets. It’s already one of the world’s biggest steelmakers. Its output dwarfs OneSteel. If they wanted to they would utilise their trading arm to capture the Australian steel market and then progressively close down plants if they could make it cheaper overseas.’’
Mr Katter said he was working the Arrium bid into a federal parliamentary bill aimed at overturning the recent sale of cotton farm Cubbie Station to Chinese owners.
The Posco/Noble bid of 75¢ a share values Arrium at about $1 billion, a far cry from the $5 billion or more that OneSteel was worth when it merged with Smorgon Steel in 2007.
Newcastle MP Sharon Grierson said that while the bid would need to pass the Foreign Investment Review Board, she preferred to see the steel industry remain in Australian hands.
Rejecting the Posco bid, Arrium chairman Peter Smedley said the Australian company had ‘‘a world-class mining consumables business and an attractive iron ore business’’ and its steel business had ‘‘significantly improved’’.
The diminishing importance of the steel business was obvious in Arrium’s recent annual report, which was titled ‘‘growth through mining and minerals’’.
The report said the OneSteel side of the business lost $50 million in the year to June 30, and conditions remained ‘‘challenging’’, thanks to weak demand and the high Australian dollar.
The main union at OneSteel, the Australian Workers Union, is playing down any concern after talking last week to Arrium managers.
The union’s Newcastle secretary Richard Downie said OneSteel’s move into iron ore meant it was in a stronger position than the other former BHP steelmaker, Bluescope Steel, which operated the Port Kembla steelworks.
He said that if Posco and Noble came back with a higher bid, there was probably little that could be done to stop it if the Arrium board recommended it and the Foreign Investment Review Board did not stop it.
Hong Kong-based Noble and Steelmakers Australia director Will Randall said the consortium members were ‘‘long-term investors in Australian development’’.
Mr Randall said the consortium could make Arrium a ‘‘more competitive steel producer’’.
Sources close to the bid said Arrium needed to open its books to the bidders to allow them to see the real state of the steel business.