Steel producer Bluescope has taken up to $60m in tax deferrals to keep its Port Kembla mill open, and has acquired 100% of the North Star refinery in the US.
BlueScope has been battling in recent months to avoid shutting down its Port Kembla facility, which employs 4500 workers.
The company announced on Monday it would keep the plant open, with NSW treasurer Gladys Berejiklian announcing a tax relief deal.
Berejiklian said the company would be allowed to defer payroll taxes of up to $60m over three years, then would be able to pay that deferred tax back over a ten year period from 2020 to 2029.
While many criticised the move for being protectionist – particularly against competitors in China, the country Australia recently agreed to a significant trade deal with – Berejiklian justified the jobs the tax relief would potentially save.
“These measures will help BlueScope maintain its Port Kembla operations amid tough global business conditions,” the state treasurer reasoned.
“We have always said the NSW Government is committed to playing a strong role in securing the future of the Illawarra and this package does just that.
“The situation faced by BlueScope in the Illawarra is unique, and that’s why the government has chosen to provide this deferral to support the continued operation of the steelworks.”
Berejiklian said the government has held talks with BlueScope management, workers and related unions.
Minister for industry, resources and energy Anthony Roberts said the government would work with the Commonwealth and all stakeholders to support BlueScope workers.
“The Illawarra has undergone extensive change when it comes to its traditional drivers of employment, but it continues to have tremendous potential,” Roberts said.
“The Illawarra is transitioning towards new growth employment sectors such as Information and Communications Technology (ICT), health, advanced manufacturing, education and like all regions, will be eligible for Jobs for NSW funding.”
On the same day it accepted the tax deferral measures, BlueScope announced it will acquire Cargill’s 50% share of the North Star BlueScope refinery business in the US – bringing its ownership to 100% – for US$720m.
“This transaction will give us 100% ownership of an asset that is highly regarded within the US steel sector,” BlueScope managing director and chief executive Paul O’Malley said.
“Full ownership enhances BlueScope’s portfolio value and optionality and improves business flexibility.
“The North Star business delivers on our strategy of being cost competitive in steelmaking and is best in class.”
The North Star mill in Delta, Ohio employs 380, and produces two million tonnes of hot rolled coil per annum.