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Bluescope spends a billion in US because “cheap energy”

Add another billion to the cost of the Renewable Energy Target?

Bluescope Steel LogoIn the last few days Bluescope Steel (formerly BHP) has confirmed it will spend US$700m (AU$1b) to expand it’s North Star steel mill in Ohio. So there are multiple headlines. But back in February CEO Mark Vassella explained exactly why they were thinking of it, and his first reason was “energy prices”. Last week, high energy prices were even “a tragedy” for Australian manufacturing. This week however, he’s clarified his position by muddying it up. Now there other reasons and the solution is to fix our gas prices. He’s backpedaling and tossing quotes that happen to help the renewables industry.

Perhaps he’s been heavied by his PR and strategy team? Now he’s saying that energy costs matter, but labor costs do too and “we weren’t ever going to put another steel mill in Australia”. He’s even saying energy costs “did not play a role” — the complete opposite. These will become the quotes the renewable energy fans rely on. Apparently, now what he really wants is cheaper gas — which requires a socialist government-driven solution to fix gas prices, and it’s safe for anyone to mention anything that requires bigger government. It’s not so safe for him to say “get the government out of our electricity market”, “axe the RET”, or “Australia has too much red tape, and too many regulations.” And he doesn’t say that.

Nor does he point out that if we burned more coal, we wouldn’t need to use much expensive gas to make electricity, we’d have cheaper electricity and we could sell more profit-making gas overseas. (But Jo does and you can quote me.)

Which world does Australia get richer in: Burn more coal or fix gas prices?

h/t to Eric Worrall at WUWT, RicDre, and Lance

BlueScope close to $1b US steel mill expansion

Feb 25 2019, Simon Evans, Australian Financial Review

The chief executive of Australia’s largest steelmaker, BlueScope, says much cheaper energy in the United States is a major driver of the company’s preparedness to invest in a $1 billion expansion of its star performer, the North Star steel mill in Ohio.

North America was providing far more growth opportunities than Australia, Mr Vassella said.

He said energy prices in the US were only a third of those in Australia and New Zealand, and that was a big plus, along with North Star’s proximity to customers and the strong market for steel products, which has benefited from trade sanctions that favour US steelmakers in supplying automotive companies and building products.

“It’s part of the package of a competitive business model,” he said. “We’re still paying too much for energy in Australia.”

Last week the CEO was still saying that energy prices were a tragedy”

Aug 16 2019, Simon Evans, Australian Financial Review

BlueScope chief executive Mr Vassella said the $1 billion expansion of the North Star mill, to be fully up and running by 2023, was the largest capital investment the steelmaker would likely ever make…

Mr Vassella lamented the state of Australian manufacturing as the sector battled high energy prices and said one of the main drivers of the North Star expansion, which will increase capacity by 40 per cent, was that energy costs in the United States were substantially lower.

“That’s a tragedy quite frankly for Australian manufacturing,” Mr Vassella said.

BlueScope also operates the Port Kembla steelworks in New South Wales, which underwent major cost-cutting and restructuring in 2015. Mr Vassella said he worried a lot about manufacturers in Australia who were BlueScope’s customers and were facing ”demand destruction” because their energy costs were too high.

As Trump would say …”Winning!”

As ScoMo won’t say: “Losing!”

See his latest muddy quotes below where he contradicts himself:

BlueScope steels against US downturn

Aug 20 2019, Nick Evans, The Australian article:

He seized on low energy costs and lower labour costs that made it “compelling” to build additional capacity at its North Star steel mill in Ohio.

The Ohio-based North Star delivered a record annual profit of $654.7m last financial year, up 52 per cent, in a year in which profits fell across BlueScope’s Australian and New Zealand steel businesses and its building products divisions in Asia and the US.

While Mr Vassella renewed his criticism of Australia’s energy market, again joining the legion of key manufacturing bosses to condemn high domestic energy prices and call for a domestic gas reservation policy to drive down local power prices, he said energy prices did not play a role in BlueScope’s decision to expand its US presence.

“Let’s be clear: we weren’t ever going to put another steel mill in Australia — it wasn’t an Australia versus the US decision, it’s probably more of a statement about how business-friendly it is in the US,” he said.

Perhaps someone pointed out how his earlier comments were “gold” for skeptics and terrible for the green-left-labor politicians he doesn’t want to get offside? Besides, he doesn’t want a Divestment campaign running against Bluescope. The company does use a lot of coal…

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