The Guardian February 21, 2001

Steel project raises big questions in NSW & WA

by Peter Mac

Last week's amazing announcement of a proposal to reinstate steel 
processing in a new plant at Newcastle has raised at least as many 
questions as it has provided answers.

The news has been welcomed by workers and their families in Newcastle, and 
the project also has major implications for employment in Western 

However, the very first question, and the one that leads in to virtually 
all the others, is how the project will be profitable in a highly 
competitive and oversupplied international market.

The company proposing to build the new plant, Austeel, claims to have 
financial backing from major transnational companies, including the 
Industrial Bank of Japan.

The total cost of the steel plant is estimated to be $2.8 billion, and a 
related iron ore mine in Western Australia and other costs will add a 
further $2.2 billion to the bill.

The NSW Government is to provide $240 million in funding for land purchase, 
earthworks and new port facilities, and will also provide major tax and 
stamp duty concessions.

Austeel will use the port free of charge until the company begins to show a 
profit, and will also be available for use by other local industries.

The project will be limited in scope, producing only the more profitable 
flat products, not the rod and bar steel formerly produced by BHP.

Austeel's spokesman, Clive Palmer, claims the project will use the latest 
technology to mass-produce steel at a low price. This means, in effect, 
that it will employ relatively few workers, compared to the old BHP mill.

The prospective level of employment to be generated by the project is a 
question of major significance.

The company has stated that some 10,000 people would be employed over a 
three-year period in construction of the plant, and employ 2500 permanent 
workers once it became operational.

However, the company also predicts that the project would provide a total 
of up to 20,000 new jobs overall.

The company has reached a tentative agreement with unions that there would 
be no individual workplace agreements on the site. No information has been 
forthcoming as to its commitment to protection of the environment. 
(Austeel's predecessor was notorious as a polluter of the environment.)

Apart from these questions, it's a case of "so far, so good", for this 
major industrial project. But it's early days yet. Industrial corporations 
are well-known for the breaking of promises made in the intial phases of 
such projects.

One would not wish to pour cold water on a project which has such potential 
for industrial growth and employment, and which has made such a promising 
start. However, it is realistic to raise the issues. We are, after all, 
dealing with the ugly face of major industrial capitalism.

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