Australias Bhp Sees Possible Deals In Asia

BHP Steel, Australias biggest producer of raw steel, said companies might be tempted to jointly build big traditional steel mills in the rapidly growing region instead of going ahead as expected with a rash of smaller new-technology plants.

We may see some of the major steel players in the world seriously considering international alliances where they come together to build steel facilities in the developing economies of the world, BHP Steel chief executive Ron McNeilly said.

Traditional steel mills are in some ways better suited to Asia than the new-technology electric steel-making furnaces, which use large amounts of steel scrap as a feedstock, he told Reuters in an interview.

 

The realities are there is not enough scrap in Asia, McNeilly said. But big traditional steel plants required billions of dollars of investment, he added.

The funds required ... would just be too large for me to be willing to take that on independently or separately as a single project, totally exposed to all of the risks, he said.

But as a project in company with other people, its something that we most certainly would consider, he added.

McNeilly, who is overseeing over A$500 million (US$395 million) of investment in new value-added steel production in Asia, described plans by BHPs international rivals for major new steel capacity as talk.

Asian steel consumption is forecast by the steel industry to underpin strong world demand growth of almost two percent a year for the metal over the next four years.

BHPs rivals in the Asian region have announced plans for major new steel-making capacity, including plans by South Koreas Hyundai Group for a six million tonnes per annum traditional steel mill.

Theres certainly a lot of talk ... but there is not a lot of evidence of that (major new capacity) happening, McNeilly said.

But he predicted competition in world markets for steel products to remain intense as the north Asian steel-makers of Japan, Taiwan and South Korea vied with European and U.S. steel giants for the growth markets of Asia and Latin America.

The large successful players in the steel industry are looking for growth..., McNeilly said.

They are the people who are going to be looking for investment opportunities, for partners, for alliances with governments and for project opportunities in the region.