NEWCASTLE ANALYST SITE TOUR
18 March 2010
Disclaimer
This presentation contains certain forward-looking statements with respect to the financial
condition, results of operations and business of OneSteel and certain plans and objectives of the
management of OneSteel. Forward-looking statements can generally be identified by the use of
words such as ‘project’, ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’,
‘may’, ‘should’, ‘will’ or similar expressions. All such forward looking statements involve known and
unknown risks, significant uncertainties, assumptions, contingencies and other factors, many of
which are outside the control of OneSteel, which may cause the actual results or performance of
OneSteel to be materially different from any future results or performance expressed or implied by
such forward looking statements. Such forward-looking statements speak only as of the date of
this presentation. Factors that could cause actual results or performance to differ materially
include without limitation the following: risks and uncertainties associated with the Australian and
global economic environment and capital market conditions, the cyclical nature of the steel
industry, the level of activity in the Australian construction, manufacturing, mining, agricultural and
automotive industries and, to a lesser extent, the same industries in Asia and New Zealand,
commodity price fluctuations, fluctuations in foreign currency exchange and interest rates,
competition, OneSteel's relationships with, and the financial condition of, its suppliers and
customers, legislative changes, regulatory changes or other changes in the laws which affect
OneSteel's business, including environmental laws and the Carbon Pollution Reduction Scheme,
and operational risk. The foregoing list of important factors is not exhaustive. There can be no
assurance that actual outcomes will not differ materially from these statements.
2
Page 2
Presentation Outline
Market Mills – Andrew Roberts (Chief Executive Market Mills)
•Market Mills Overview
•Key Strategic Imperatives of the Market Mills Business
•Role of Grinding & Rail and Ropes Businesses in the Market Mills Portfolio
•Outlook
Grinding and Rail – John Barbagallo (General Manager Grinding and Rail)
•Grinding and Rail market and operations overview
Ropes – Stuart Callender (Manager Wire Ropes)
• Wire Ropes market and operations overview
Recycling – Greg Waters (Chief Executive Recycling)
•Recycling market and operations overview
3
Page 3
Market Mills - Overview
 OneSteel’s Manufacturing segment comprises:
• Market Mills
• Whyalla Manufacturing
 Market Mills includes the following business units:
•
•
•
•
Rod and Bar
Wire
Tube Mills (Australian Tube Mills and LST)
Grinding and Rail
 Most of our business is predominantly Australian based, with an
international footprint presence through:
• Grinding media production in Cilegon, Indonesia
• LiteSteel Technologies, in Virginia USA
• OneSteel Grinding Systems in Kansas City, USA
4
Page 4
Grinding and Rail & Ropes
position in OneSteel
Iron Ore¹
Iron ore mines
Recycling
Iron ore lump
Australian Recycling
International Recycling
Iron ore fines
(USA and Asia)
Lower grade ore
Dolomite mines
Manufacturing
Whyalla Steelworks
Structural Rolling Mills
Rail Products Facilities
Slabs & Billets
Steelmaking by-products (e.g. coke)
Australian Distribution
Metaland
Piping Systems
Sheet, Coil & Aluminium
Steel and Tube
Australian Reinforcing Company (ARC)
OneSteel Reinforcing
Laverton Steel Mill
Electric Arc Furnace
Laverton Rolling Mills
Sydney Steel Mill
Electric Arc Furnace
Sydney Bar Mill
Waratah Steel Mill
Electric Arc Furnace
Bar Mill, Forge
Rail
Grinding Media
Grinding Media (US)
Newcastle Rod Mill
Wire Mills
Newcastle Wire Mill
Geelong Wire Mill
Wire Ropery
Australian Tube Mills
LiteSteelTM Technologies
¹Pellet plant financial results will be included in the Iron Ore segment for the full year ended 30 June 2010 as a result of change in management structure and to align with accounting
standard requirements
5
New Zealand Distribution segment not included (represents OST’s 50.3% shareholding in Steel & Tube Holdings Limited)
Page 5
Grinding and Rail & Ropes position in Market Mills
Market Mills Operating Units
Raw Materials
OneSteel Recycling
Laverton
Laverton EAF
EAF
Billets
700ktpa
External Scrap
OneSteel Whyalla
Sydney
Sydney EAF
EAF
Billets
670ktpa
Billets
630ktpa
Rod / Y-Bar
Wire
Wire Mills
Mills
220ktpa
••Wire
Wire
a
OneSteel Whyalla
OneSteel Recycling
External Hot Roll
Coil
External Hot Roll Coil
••Fence
Fence Posts
Posts
Waratah
Waratah EAF
EAF
Billets /Ingots
300ktpa
Product
Product Mills
Mills
••Sydney
Sydney Bar
Bar
••Laverton
Laverton Bar
Bar
••Laverton
Laverton Rod
Rod
••Newcastle
Newcastle Rod
Rod
OneSteel Distribution
1.7mtpa
Direct Customers
••Wire
Wire20ktp
Rope
Rope
External Bar (USA)
Channel to Market
Waratah
Waratah
Bar
Bar
320ktpa
320ktpa
ATM
ATM
••Structural
Structural Tube
Tube
••Precision
Precision Tube
Tube
LiteSteel
LiteSteel Tech
Tech
••Grinding
Grinding 160ktpa
Systems
Systems USA
USA
Direct Customers
•• Waratah
Waratah 270ktpa
Grind
Grind Media
Media
Direct Customers
••Rail
Rail
••Forgings
Forgings
55ktpa
Direct Customers
OneSteel Distribution
Tube
660ktpa
Direct Customers
LSB 50ktpa
Direct Customers
6
•Capacity tonnages are nominal base plate capacities based on 7 day operations
Page 6
Market Mills Business Units Overview




Total
TotalMM
MMSales
SalesTonnes
Tonnes2009
2009~2MT
~2MT
~~3,000
3,000employees.
employees.
Over
Over1,000
1,000customers
customers
15
15sites
sitesin
inAustralia
Australiaand
and33Offshore
Offshore
Wire
Grinding and Rail
Tube Mills
• Newcastle Wire
Mills
• Geelong Wire Mill
• Newcastle Wire
Ropery
• Jindera Wire Mill
• Waratah EAF
• Waratah Bar Mill
• Waratah Grinding
Media
• Waratah Rail Plant
• Indonesian Grinding
Media (Cilegon)
• Onesteel Grinding
Systems (USA)
• Acacia Ridge Tube
Mill
• Somerton Tube Mill
• Sunshine Tube Mill
• Kwinana Tube Mill
• Newcastle Tube Mill
• LiteSteel Australia
• LiteSteel USA
Rod and Bar
• Sydney EAF (Approx
630ktpa)
• Laverton EAF (Approx
700ktpa)
• Sydney Bar Mill
• Newcastle Rod Mill
• Laverton Bar Mill
• Newcastle Contistretch facility
 50%
50%sales
salesinternal
internalto
toOnesteel
OnesteelDistribution
Distribution
 Current
Feed:
~
50%
Whyalla
Billet,
Current Feed: ~ 50% Whyalla Billet,25%
25%
Onesteel
OnesteelRecycling
Recycling, ,25%
25%external
externalrecycled
recycled
material
material
Products Produced:
Products Produced:
Products Produced:
Products Produced:
EAFS – Billets
Manufacturing Wire
EAF – Billets/Ingots
Structural Pipe and RHS
Bar Mills – Merchant Bar
(rounds,angles,channels,
flats,squares) and Reinforcing
bar (coiled and straight), Roof
bolt
Rural Posts and Fencing
Bar Mill – Merchant Bar,
Straight Reinforcing bar,
Roof bolt, Grinding Bar
Precision Tube
Rod Mills – Reinforcing Rod,
Rod for Wire, small rounds,
Coiled and straight
Ropes
LiteSteel Beams
Grinding Media Balls
Rail wheels and axles
Forgings and Cast rounds
7
Page 7
Market Mills – Focus and Deliverables
Strategic Deliverables
Strategic Focus
Delivering superior and
sustainable returns to
OneSteel shareholders by
holding leading market
positions in construction,
industrial and global
resource markets through
our manufacturing, people
and value chain
capabilities.
•
Accelerating our efforts to achieve injury free and
environmentally sustainable manufacturing
operations.
•
Customers – sustainable competitive advantage
through superior value propositions and effective
operational & supply chain performance.
•
Actively managing our market segments, businesses
and market mills portfolio to aggressively compete in
the changing global competitive environment.
•
Achieving the lowest total delivered cost better than
or comparable to our customers next best supply
alternative(s).
•
Simplifying how we do business to be more
responsive to customers, focus on what is critical
and eliminate waste.
•
Building an organisation that has and supports
committed & capable people to deliver business
outcomes.
8
Page 8
Market Mills – How we compete?
Market Mills competes via a business portfolio in two specific strategies, each with specific drivers, customer
requirements and value delivery systems:
1.
2.
Domestic Long (Structural) Products Market (predominantly Australian & NZ markets with international
competition)

Compelling Value Propositions (VP’s) and competitive market offers that underpin value and market
share for long products in the Australian & NZ markets.

OneSteel VP’s are delivered by quality, fit for purpose product, competitive offer, responsive and
reliable delivery performance leveraging off the integrated value chain to provide greater certainty in
our promise and assisting in managing risk with our customers
Niche Direct Markets (global by nature)

Positioned in strong and growing market segments globally, especially mining

OSMM Value Proposition to its customer’s is underpinned by high quality product, reliability of
service, life of product delivering uptime for customers and a strong and credible stand behind the
OneSteel brand.

Grinding – quality ball, high reliability of supply and competitive total delivered price

Rail – high quality wheel , made to customer specifications delivered on time at a value
driven price

Ropes – “cradle to grave”, high quality, customer specific design and solutions to
extend rope life
9
Page 9
Growing Markets – A Mining & Resources Opportunity
Australian Economic Growth Drivers are changing
Value Of Economic Output - 2018 v 2008
100
• The primary areas for Australia’s economic
growth expected to be in mining production
89
Large swing in the nature of
domestic growth.
80
60
40
(AUD Billion)
24
8
4
1
5
2
2
0
(60)
(55)
(80)
Source: OneSteel & NIEIR
qu
ip
es
t
tE
or
sp
an
Tr
Eq
iI
nv
Ag
r
ui
p
le
s
&
e
ct
io
ab
ac
h
M
Du
r
n
VA
(6)
om
ot
iv
Au
t
du
tm
iP
ro
Ag
r
es
In
v
ng
in
i
M
M
en
t
st
Co
n
st
Co
n
-R
es
No
n
on
st
Re
s
g
C
ct
du
in
i
(40)
En
g
in
ng
Pr
o
tu
r
uf
ac
an
io
n
VA
(20)
M
23
20
• NIEIR estimates the primary area of
economic growth is mining production with an
increase in expenditure of ~$90 Billion
between 2008 and 2018.
• This is expected to have a direct impact on
mining investment and flow-on impact in the
engineering construction segment.
• Segments of manufacturing and auto show a
decline by ~$60 Billion over the period 20082018, which are not significant market
segment drivers for Market Mills.
10
Page 10
Strategic Importance of Grinding, Rail & Ropes
 OneSteel Market Mills’ key market drivers
F Y 2 0 0 9 M a r k e t D r iv e r s ( D o m e s t ic V o lu m e )
M a n u f a c t u r in g
5%
A u to
2%
A g r ic u lt u r e
5%
M in in g
27%
R e s id e n tia l C o n s t r u c tio n
20%
N o n R e s id e n t ia l C o n s tr u c tio n
19%
E n g in e e r in g C o n s tr u c tio n
22%
Source: OneSteel estimates
Market Mills, and particularly Grinding and Rail & Wire Ropes, are very well
placed for the expected upswing in mining consumables and mining
investment over the short and long term
11
Page 11
Market Mills – Market Conditions
Short term:
• Small but steady increase in volumes expected in H2 FY10 in domestic demand
across most products and geographies, but off a low base
• Expect more material increase in volumes through FY11
• Resources and Residential construction continue to show strong levels of activity
• Rural markets showing some signs of improvement, however continued weakness
in manufacturing segments and privately funded non residential construction
• Building Education Revolution stimulus benefits expected in H2 FY10 – still slow
and Large infrastructure projects expected to provide benefits from FY11
• Imports in H2 FY10 are expected to be at normal (historical) levels.
12
Page 12
Market Mills – Market Conditions
Short term (cont):
• Production and operating levels are expected to lift slightly in H2 FY10. Some production in
H1 FY10 was used to build inventory in key products.
• Expected Sydney and Laverton EAF’s steelmake approx. 455 – 475kt for 2H FY10
• Expected Waratah EAF steelmake approx. 120kt for 2H FY10
13
Page 13
Market Mills – Market Conditions
Short term (cont):
•The demand for iron ore, coal and scrap, predominantly driven by China, is
expected to keep raw material prices high compared to historical levels, but with ongoing
volatility
- raw materials for steel are increasing - iron ore, coal and scrap
• The demand/supply balance from steel products will impact steel prices internationally,
with ongoing volatility, however, driven by current increases in raw materials, prices have
appeared to bottom and placing upward pressure on steel prices.
- international steel prices are currently moving up driven by raw material prices
- recent import offers showing increased prices in most products
14
Page 14
Market Mills – Market Conditions
Longer-Term:
• Increasing levels of confidence that domestic demand will increase volumes from
improved economic conditions and activity
• Prices for steelmaking inputs are expected to be high by historical standards although
with ongoing volatility, which will underpin improved prices for international and domestic
steel over the longer term
15
Page 15
NEWCASTLE ANALYST SITE TOUR
18 March 2010
OneSteel Grinding and Rail
Segment Structure
Iron Ore¹
Iron ore mines
Recycling
Iron ore lump
Australian Recycling
International Recycling
Iron ore fines
(USA and Asia)
Lower grade ore
Dolomite mines
Manufacturing
Whyalla Steelworks
Structural Rolling Mills
Rail Products Facilities
Slabs & Billets
Laverton Steel Mill
Australian Distribution
Metaland
Piping Systems
Sheet, Coil & Aluminium
Steel and Tube
Australian Reinforcing Company (ARC)
OneSteel Reinforcing
Electric Arc Furnace
Laverton Rolling Mills
Sydney Steel Mill
Electric Arc Furnace
Sydney Bar Mill
Grinding & Rail
Waratah Steel Mill
Electric Arc Furnace
Bar Mill and Grinding Media
Rail Products and Forge
Kansas City (USA) grinding media mills
Cilegon (Indonesia) grinding media mill
Newcastle Rod Mill
Wire Mills
Newcastle Wire Mill
Geelong Wire Mill
Wire Ropery
Australian Tube Mills
LiteSteelTM Technologies
17
Page 17
Grinding & Rail

Waratah Steel Mill
* Steelmaking
* Bar Products
* Grinding Media
* Railway Products
* Forged Products

Kansas City (USA)
* Grinding Media
* Mining
Cilegon (Indonesia)
* Grinding Media
* Mining

Market Segments
* Mining
* Rail Transportation
* Industrial
18
Page 18
Grinding & Rail – Markets & Customers
Market
Product
Major Customers
Mining
Grinding Media
Major copper and gold mining companies
Rail
Wheels
Axles
United Group, Queensland Rail, Kiwi Rail,
PN (Pacific National), Downer EDI Rail,
Wheelsets
Bradken, Gemco, Pilbara Rail, Bombardier Transport
Ingots
Rolls
Cast Rounds
Overall Forge, CGC Engineering, Ferrous Forge
Nippon Steel, Krakatau Steel, POSCO, Alcoa,
Australasian Aluminium Smelters
Industrial
The key market drivers for OneSteel Grinding Media businesses in
Australasia and the USA are predominately copper and gold.
19
Page 19
Grinding Media

Geographic Markets (major zones)
Eastern Europe
500 kT
North America
510kt
China
500 kT
Africa
250kt
South America
Australasia
320kt
520kt
 Grinding value proposition driven by supplying quality product with high supply reliably at a
competitive total delivered price.
 OneSteel operations predominately supply grinding media into Australasian and Nth American
markets, with the sales mix being ~ 65% and ~35% respectively.
Source: OneSteel Estimates
20
Page 20
Rail








Rail’s value proposition driven by supplying high quality product, to specific
customer specifications delivered on time at a value driven price.
OneSteel produce predominantly premium quality forged wheel for the
heavy haul markets.
Rail sales driven by maintenance spend and capital infrastructure
investments.
Sales mix ~90% domestic and ~10% International (Canada and Sth Africa)
Nominal capacity of Rail Plant is ~105,000 wheels per annum.
• Market and customer demand have plant operating at 65% capacity
Rail sales comprise of loose wheels and wheel sets
Achieved AAR accreditation in October 2009 helping allowing overseas
market development activities
Strong relationships with Global Rail suppliers
• E.g. Trisource, Valdunes
21
Page 21
Grinding & Rail – Key Drivers
QUALITY







DELIVERY
PRODUCTIVITY
GROWTH
Safety Improvement with Injury Prevention Focus
Grinding Media growth strategies - growth with Indonesia market, position the
USA future volume opportunities and increasing our exposure into South
American markets.
Maintain our high market domestic market share for wheel’s and grow
international opportunities given our AAR accreditation
Continuous development of forged wheel quality to sustain competitive edge
Ongoing drive for cost competitiveness through people capability, productivity
improvement and manufacturing excellence.
Flexible manufacturing to capture market opportunities and / or respond
quickly to market changes.
Superior logistics skills to drive delivery performance outcomes
22
Page 22
Grinding Media Operations
Grinding Media Plants



Waratah
Cilegon (Indonesia)
Kansas City (USA)
Waratah


Feed from Waratah Bar Mill
No. 3 Ball Plant (SMALL)
Induction Coil Heating
Roll Forging – 25mm – 80mm diameter balls
Two continuous lines
Maximum capacity of ~150ktpa

No.4 Ball Plant (SAG)
Natural gas fired furnace heating
Die forging 80mm – 150mm diameter balls
Single production Line
Maximum capacity of ~120ktpa
23
Page 23
Grinding Media Operations
Cilegon





Commissioned in 1998
Capable of producing 25mm to 50mm
balls
Single line roll former
Maximum capacity of 30ktpa
Providing product into 11 mines
supporting the Indonesian Mining
Industry
Kansas City





Commissioned in 1996
Single furnace feeding either roll former
of upset forge machine
Maximum capacity of 160ktpa
Modern large scale, high productivity
operation
Purchase bars and convert into
grinding media
24
Page 24
Waratah Steel Mill
Rail Products







Ingots ex Steelmaking Plant
Cold Sawn to Feed
Reheated to 1150C in Rotary Furnace
Forged and rolled to wheel shapes
Heat treated and tempered
Machined, inspected and packaged
Products include;
– Loose Wheels
– Loose Axles
– Wheel Sets


105,000 Wheels total capacity
Recent Upgrade included
– Installed 5 new Diato automated saws
– Additional heat treatment furnace
– New CNC No 3 wheel machining centre
– Additional crane in steelmaking for ingot handling
– Association of American Railroads Accreditation (AAR)
25
Page 25
Waratah Steel Mill – Summary













Strong geographic location supplying into mining and rail customers
Strong value propositions for grinding and rail customers
High end quality products
Well known and experienced supplier
Quick ability to react to market changes
Highly skilled and flexible workforce
Lean workforce and support staff structures
Strong relationships with employees with good EBA agreement
Capable facilities with regular investment / upgrades
Can increase the output within market – up to 300K tonnes of steelmaking
billets, 270K tonnes of grinding media and 105k wheels in Rail
Strong Management Systems – i.e ISO 9001, ISO 14001, NATA
Continuous Improvement of people, quality, delivery and productivity
Integrated Mini Mill within OneSteel value chain including Whyalla, Rod and
Bar and Recycling
26
Page 26
NEWCASTLE ANALYST SITE TOUR
18 March 2010
OneSteel Grinding and Rail - Appendix
Grinding & Rail
Safety


Improved focus on injury prevention and employee development
DuPont Benchmarking and Philosophy
•

Safety Observations
•
•
•

Involve all employees with quality discussions and strong corrective actions
Codes of Practice implementation
Greater development of risk awareness for better workplace choices
Risk Reduction
•
•

Drive to develop an interdependent safety culture characterised by commitment and
dedication
OH&S committees actively involved in developing Top 10 Risks
Injury and near miss analysis to improve workplace conditions
Involvement of Employees
•
•
•
OH&S Committee development and benchmarking
Safety Leadership Training
Working Together Course for Front Line Leader development
28
Page 28
Waratah Steel Mill
Environmental Initiatives
Environment

Systems compliant with the ISO:14001 International Standard
Energy



Waratah participates in the EEO and NSW ESAP Schemes
Use Badische Stahl-Engineering for International Benchmarking
Energy Management Systems in place
Energy Tracking System developed
Energy reduction targets in business plans
Energy Efficiency Engineer and Technical Energy Groups at site level

Energy Improvement Projects:
EAF Electrode Control System
EAF Primary fume system Variable Speed fan drives
EAF Secondary fume system, flow profiling of fan suction rate
Waste

Over 75% of the sites waste is beneficially recycled. (i.e. Slag, Mill Scale, EAF dust)
29
Page 29
Grinding & Rail
Our People
57
44
53
Grinding & Rail (Australia)
OGS Kansas City
Cilegon
Contractors
720
Our Employees


821 Full Time Employees
53 Full Time Contractors at Waratah Steel Mill
30
Page 30
Waratah Steel Mill
Steelmaking


58 Tonne Electric Arc Furnace
Ladle Furnace Billet Caster
•
•

Ladle Furnace Degasser Ingots
•
•
•


Feed for Waratah Bar Mill
Cast Rounds for Aluminium Smelters
Feed for Rail Plant, including axles
Feed for Cold Mill Rolls
Product for Customer Ingots (up to 35t
ingots)
Commissioned 2000 with 300ktpa
capacity
Scrap source from Hexham
31
Page 31
Waratah Steel Mill
Bar Products



In-line Bar Mill operation
Size range 20 – 100mm diameter bar
Products
• Grinding Media feed
• Carbon and low alloy rounds
• Squares and Billets for ASI channel


Commissioned 1991 with 320ktpa
capacity
Reheat Furnace
•
•
•
•
•
Walking Hearth Furnace
Natural Gas Fired
Hot Rolling Mill – 16 stands
Finishing End with bundling and tying machine
Warehouse
32
Page 32
Waratah Steel Mill
Forged Products







Ingots ex Steelmaking Plant
Heated to 1200DegC
Forged under 25MN press
Forgings heat treated and rough
machined
Rolls heat treated, induction hardened
and finish machined
Forged axles to Rail
External markets
60% cold mill rolls
40% engineering
33
Page 33
NEWCASTLE ANALYST SITE TOUR
18 March 2010
OneSteel Wire Rope
Segment Structure
Iron Ore¹
Iron ore mines
Recycling
Iron ore lump
Australian Recycling
International Recycling
Iron ore fines
(USA and Asia)
Lower grade ore
Dolomite mines
Manufacturing
Whyalla Steelworks
Structural Rolling Mills
Rail Products Facilities
Slabs & Billets
Steelmaking by-products (e.g. coke)
Australian Distribution
Metaland
Piping Systems
Sheet, Coil & Aluminium
Steel and Tube
Australian Reinforcing Company (ARC)
OneSteel Reinforcing
Laverton Steel Mill
Electric Arc Furnace
Laverton Rolling Mills
Sydney Steel Mill
Electric Arc Furnace
Sydney Bar Mill
Waratah Steel Mill
Electric Arc Furnace
Bar Mill, Forge
Rail
Grinding Media
Grinding Media (US)
Newcastle Rod Mill
Wire Mills
Newcastle Wire Mill
Geelong Wire Mill
Wire Ropery
Australian Tube Mills
LiteSteelTM Technologies
¹Pellet plant financial results will be included in the Iron Ore segment for the full year ended 30 June 2010 as a result of change in management structure and to align with accounting
standard requirements
35
New Zealand Distribution segment not included (represents OST’s 50.3% shareholding in Steel & Tube Holdings Limited)
Page 35
Overview of OneSteel Wire Rope (OSWR)

Strong presence in mining segment

“Cradle to Grave” strategy with our mining customers

Plant Capacity ~ 20,000 tonnes
• Plant currently operates at 80% utilisation

Locations - Mayfield NSW.

Employee Numbers – 104.

Established – 1924.

Sole Rope Manufacturing Plant in Australia.

Size range
- Rope 16mm to 200mm
- Strand 4.8mm to 102mm.

Accreditation - ISO 9001, ISO 14001 Compliant.

$24M of Investment since 2004
36
Page 36
OneSteel Wire Rope Value Proposition
 OSWR is a leading Australian manufacturer of mining and market rope products, based
on:
• innovative design,
• high quality product, and
• service solutions;
that delivers reliability, efficiency and cost effectiveness to our customers.
 Mining Rope Segments
•Draglines and Electric shovels
•Pendants for draglines, shovels
•Cable hauled conveyors
•Underground mining applications
 Market Rope Segments
•Electrical industries
•Agriculture
•Construction
•Highway infrastructure
37
Page 37
OneSteel Wire Rope Market Segments
•
Market Segments
• Mining Rope
• Market Rope
•
~70% of sales
~30% of sales
Strategy: Mining Rope – “Cradle to Grave”.
• Total Rope Management (TRM)
• OSWR responsible for Design  Manufacture  In Market Service/Solutions to
our customers
• Serviced by Field Service Managers in QLD and Hunter Valley
• Focused on improving machine uptime through improved Rope Life
•
Strategy: Market Rope
• Focused on “niche markets” where customers value quality/delivery/service at a
competitive price
38
Page 38
Domestic and International Markets
South East Asia
Philippines
China
USA
Sth Africa
Mining Rope
Market Rope
Domestic Sales ~90% International Sales ~10%
39
Page 39
Mining Rope
Dragline Ropes
Electric Shovel Ropes
40
Page 40
Mining Rope
Strand Pendants
Cable Hauled Conveyors
41
Page 41
Mining Rope Markets







OSWR has a leading market position in the Australian open-cut mining.
Current customers include BMA, Rio Tinto, Xstrata, Anglo and Westfarmers.
Export product to selected markets in South East Asia, South Africa, China
and North America.
OSWR is the number one supplier of Cable Hauled Conveyor Belt Ropes in
Australia.
OSWR have an onsite mines presence in the Hunter Valley (NSW) and the
Bowen Basin (QLD) to deliver “Cradle to Grave” support through the Total
Rope Management service package to its customers.
Growth has been focused on providing a full range of rope products to the
mining sector, with recent capital investment, including Plastication.
Competition from South African, European, American and Asian Rope
Manufacturers.
42
Page 42
Market Rope
General Purpose Ropes
Crane Ropes
43
Page 43
Market Rope
Road Barrier Ropes
Galvanised Sales Strand
44
Page 44
Market Rope Markets

OSWR supplies ropes into “niche markets” where customers purchase on quality,
delivery and service at a comparable price.

Supply a high percentage of the Barrier Rope currently used within Australia.

Competition mainly from Asian suppliers.

Export small quantities to South East Asia.
45
Page 45
Plant Capabilities
OneSteel has invested over $24 million dollars over the last 6 years
• 2004:
• 2006 & 2007:
• 2009:



$15m 8 Strand Closer.
$2.5m disc replacement and electrical rebuild of the two
Planetary stranders that feed the Closer.
$7m Plastication Line.
Produce Mining Rope in either 6 or 8 strand configuration depending on
customer needs.
Maximum weight of product produced 150 tonnes.
Rope length up to 10km
46
Page 46
Plastication






2009 $7m investment in Plastication Line
Significant value and customer benefits of long life rope through increased
uptime of customer equipment
Plasticated product 25mm to 95mm - 6 and 8 strand configuration.
Product is produced fully impregnated product in one pass.
Currently being trialled in-market
Small number of manufacturers with Plastication capability
47
Page 47
Manufacturing Process
(1) Wire
(2) Winding
(3) Stranding
(4) Closing
(6) Cut to
Length/Ferrule
(5) Plasticating
(7) Pre-stretching
(8) Socketing
(9) Testing
(10) Warehouse
48
Page 48
OneSteel Wire Ropes – Summary






Excellent exposure to mining market opportunities
Well known and experienced supplier to the mining market
Strong value proposition for customer through our “Cradle to Grave” approach
Leading edge manufacturing capability driven by recent investments
Leading edge product design and solutions e.g. Plastication
Integrated Value Chain – Whyalla to market
49
Page 49
NEWCASTLE ANALYST SITE TOUR
18 March 2010
Recycling
The way we are managing the business
Trading
Effectiveness
Customers
&
Organisation Safety Operating
Effectiveness
Excellence
Effective Cost Structure
Growth
51
Page 51
Good safety = Good business
Rolling MTIFR
Rolling Medical Treatment Injuries - Total OSTR
Linear (Rolling MTIFR)
50
45
40
35
30
25
20
15
10
5
Ja
n10
De
c09
Oc
t-0
9
No
v09
Se
p09
Ju
l-0
9
Au
g09
Ju
n09
Ap
r-0
9
M
ay
-0
9
Fe
b09
M
ar
-0
9
Ja
n09
No
v08
De
c08
Oc
t-0
8
Se
p08
0
Ju
l-0
8
Au
g08
 Core Value
 Supports/consistent with improved operations
and capability – lower cost
 Recycling completed critical risks and “Line of
Fire-lifesavers” to mitigate
 Safety Management System - NSW Self insurers
status maintained (OST savings = $m’s)
 Safety coach program designed to developed
leadership capability
 Shipping procedure reviewed and new procedure
rolled out across all exporting sites in
USA/NZ/Australia.
 Transport safety forum developed to improve
level of interaction – site based deliveries as well
as to/from 3rd party sites.
52
Page 52
Operational Excellence
Delivering Best Practice performance with our equipment and processes

Restructure of Safety & Operations Excellence support team implemented,
includes
•Lean team – working on key yard practices and equipment management
•Six Sigma program initiated (major assets) and first round of projects underway

Targeted to improve competitiveness and service to Customers and Mills
•Shredder availability
•Excavators/Bailers/Shears
•Transport (vehicle and bin usage, GPS planned)
•Maintenance cost reduction

Maintenance work management processes implemented across multiple sites
due to be completed on all major sites this year

Project office structure initiated for improvement projects
Delivers improved customer service, increases
asset effectiveness and lowers costs
53
Page 53
Trading Effectiveness
Longer term relationships reducing volatility risks while leveraging
increased (group) volumes
Originally: Independently actioned by each Region
Now:
 Central office in Hong Kong
 Represents all regions - USA/Aust/NZ/South Africa, Europe and SE
Asia
 Customer profile now shifting to Mills, smelters and small group of
Traders
Increasing opportunities to link with iron ore
 Selecting types of products to trade and risk profiles (volatility)
OST wide Shipping - Bulk and Container controlled through core group
 Consolidated Export desk in Australia and USA
Systems
 Completed Australian “roll out” of trading system (pricing, working
capital)
 USA roll out in 2010/11
54
Page 54
Intake – slow but steady improvement
Index intake tonnes - Total OSTR
1.4
NF
Boo
m
1.2
FE
Boo
m

NF volumes recover to pre GFC levels on back
of increase in commodity prices

USA
• Intake volumes close to pre GFC numbers
• Margins improving due to cost reduction and trading
• Yard improvements – major benefit during winter
months in moving material
• Competitive environment
FE
1.0
NF
0.8
0.6
FY06
FY07
(08 includes FY Tampa volumes)
FY08
FY09
FY10*
* FY10 – First half actuals annualised

Australia
• Intake eroded through
– Lack of arisings
– Competitive environment
– Containerised exports
• Slow improvement in volumes but still approx 20-25%
short of pre-GFC levels
• Victoria and South Australia under National average
• WA and Qld – Resource Industry activity increasing
and will generate additional material
• Return to “at-source” tonnes
55
Page 55
Hexham – Site Visit
History:

NSW Shredders originally located at Chipping Norton & Hexham
• EPA at Chipping Norton – Shredder relocated to South Australia
• Hexham Shredder relocated to WA

Hexham identified as NSW Shredder site
• Land available to support new larger Shredder
• Support Waratah Mill
• Proximity to export wharves
• Allow for growth
• Cost reduction
• Improved shred quality and yield
Shredder:




Largest Shredder in group
6500HP water cooled electric drive
Ability to produce up to 200t/hour on peak Mill demands
FY09 production approx 215kt
56
Page 56