Full Year 2023 BlueScope Steel Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Peter Steyn - Macquarie Research - Analyst : Mark Vassella, you mentioned briefly the changing structure of the U.S. steel industry and certainly some more on foot. Could you give us a sort of a bit of a sense of how you think this potentially throws opportunity your way? Are there even assets that may present an opportunity for you as a consequence of further consolidation?

Question: Peter Steyn - Macquarie Research - Analyst : And then just changing gears completely, looking at the safeguard mechanism on some of the developments that we've seen in the second half, some commentary last week about carbon border adjustment mechanisms. How do you see the importance of CBAM, what happens into leading period while we wait for CBAM implementation in your view, Mark?

Question: Lyndon Fagan - JPMorgan Chase & Co, Research Division - Analyst : First question I've got is on Port Kembla. So now that you've got the reline approved, there's obviously a lot of packages here to improve efficiency, recover waste, et cetera. Is it possible to quantify any cost benefit that comes with making this a more efficient site that we can think about?

Question: Lyndon Fagan - JPMorgan Chase & Co, Research Division - Analyst : And sorry, are you measuring that efficiency as greenhouse gas emissions per tonne of steel production? Or is there...

Question: Lyndon Fagan - JPMorgan Chase & Co, Research Division - Analyst : And look, just a follow-up on North Star. So it was called out about the realized pricing difference in first half '24. Is it possible to be any more specific about what benefit that is providing there? And then the follow-on was with the delay to the expansion, should we be thinking about a follow-on delay to the debottlenecking as well?

Question: Lee Power - UBS Investment Bank, Research Division - Analyst : Just what I'm trying to think about the moving parts in the second half '23 and what that means going forward. So if I think about the guidance you had out there for the second half, you had North Star up 50%. So that was kind of implying closer to a $300 million number. And then it looks like it's been offset by a much better ASP result. I mean you talked to conversion costs higher in the U.S. and obviously spreads elements that kind of makes sense. In terms of ASP, was the difference just the better dispatches versus what you were going for, which is flat year-on-year? And if not, can you maybe talk to what else is going on in mix or something else that we should think about going forward? Mark Scicluna Yes. Thanks, Lee. So you've called out the right drivers around North Star. And I'll cover that and then I'll touch on ASP. I think from an North perspective, back in April, when we updated guidance, steel prices are up around $1,200 a short ton. They probably did fall away a bit quicker than perhaps we were expecting at that point in time, and now we're back around the $800 or short ton level. So that was the bigger driver in North Star compared to what we expected in April. And then over in ASP, the main driver was really around dispatch rate. So as you mentioned, back then we called to similar dispatches. We ended up about 80,000 tonnes higher than the first half. So we ended up doing a little bit better on dispatches, and that was really around that demand holding up and the dispatches improving from what we expected back in April. And the other driver was on the cost side, we actually end up doing a little bit better on the cost front, which helped contribute to the ASP outcome. So that are the 2 drivers, Lee.

Question: Lee Power - UBS Investment Bank, Research Division - Analyst : Okay. Awesome. And then just on the capital allocation. Obviously, the reline ticks up a little bit. I probably missed it somewhere, but the BlueScope Properties expansion, I think you had $275 million. Is that just all -- I know that's not in the chart. I think it was supposed to come in '23. Did that all get delivered in '23? Or have you just pulled back on that? And if so, why? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 21, 2023 / 12:00AM, BSL.AX - Full Year 2023 BlueScope Steel Ltd Earnings Call Mark Scicluna No. That's a good pickup, Lee. So that's largely deployed. So there's a little bit more to go, but nothing material. That's been largely deployed now, and that's why we removed it from the chart.