Key hopes Glenbrook steel mill will stay

Key hopes Glenbrook steel mill will stay

A wait-and-see approach is being taken by the Prime Minister over a claim by a major steel company it could close the Glenbrook mill if it can't meet a $54.7 million shortfall.

BlueScope Steel yesterday announced it would be reviewing its New Zealand operations, run under subsidiary New Zealand Steel, as well as Australia.

It says falling demand out of China means it will be cheaper to source steel substrate from overseas unless it reduces workforce, environmental and tax costs.

BlueScope managing director and chief executive Paul O'Malley says there needs to be more "flexible and productive" approach to labour to keep the Glenbrook mill open.

If it doesn't make up that AU$50M shortfall, the second option is to close the mill which would cost between 500 and 1000 jobs.

John Key says if that comes to fruition, he would be concerned about the job losses.

"But, let's wait and see. Those sort of claims have been around for a long period of time. International steel prices are pretty weak, but hopefully they'll stay," he said at his post-Cabinet news conference.

The company hadn't raised the specific issue of government assistance recently, but there had been "some discussion" about jobs. However, he said talk of closing the mill was new.

EPMU spokesman Joe Gallagher says it is an "unsettling time" for potentially affected workers, but is hopeful the jobs will say.

"Obviously these are challenging times with steel price being down and iron ore price being down, there are global challenges for New Zealand steel, we need to work through with them how to provide job security for that work force and wider community in general."

Mr O'Malley says the New Zealand management has a plan in place and is confident it will be able to cut costs.

However, the warning about the closure of the mill was a "call to arms".

"The call to arms is to understand there's a significant challenge. The management team is on it, but we can't gild the lily and say there isn't a big issue that needs to be addressed."

Changes could include sourcing more cost-effective raw materials, renegotiating freight contracts and work practices and flexibility on how maintenance and capital work can be done.

The Australian arm of the company needs to save more than AU$200M a year. Aside from Glenbrook, the company also runs the nearby North Waikato North Head mine and the Taharoa mine.

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