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Market Mills Analyst Presentation Newcastle – 29 April 2005 Agenda Market Mills Safety Plan Market Mills Overview External Environment Market Operations Plant visits Î Pipe & Tube Î Wire Mill Î Rod Mill 2 1 Market Mills Analyst Presentation Newcastle – 29 April 2005 Agenda Market Mills Safety Plan Market Mills Overview External Environment Market Operations Plant visits Î Pipe & Tube Î Wire Mill Î Rod Mill 2 1 Market Mills Safety Performance Market Mills 2002 2003 2004 YTD LTIFR 7.2 (37) 1.9 (10) 2.1 (11) 0.8 (3) 29.2 (146) 18.5 (98) 15.3 (82) 12.1 (43) MTIFR 3 Market Mills Safety Plan – (Framework) CAPABLE PEOPLE CAPABLE LEADERS Role Clarity Holding Self & Others Accountable Rigour Behavioural Expectations Living the core values Passion for Outcomes Focussed Development CONSISTENT STANDARDS Consistent Response To Non-Conformance Engaging people For challenge GOAL IS ZERO Common Systems Quality Safety Obs. Risk Identification Incident Investigation Site/Unit “Top 5” Minicam/Icam Market Mills “Top 5” Rigorous Audit PSRM (SMS) CAPABLE SYSTEMS AND SUPPORT RISK DRIVEN EFFORT PREDICTABLE & STABLE PLANT & PROCESSES Reporting INVESTIGATION AND REVIEW 4 2 Market Mills Safety Performance Market Mills 2002 2003 2004 YTD LTIFR 7.2 (37) 1.9 (10) 2.1 (11) 0.8 (3) 29.2 (146) 18.5 (98) 15.3 (82) 12.1 (43) MTIFR 3 Market Mills Safety Plan – (Framework) CAPABLE PEOPLE CAPABLE LEADERS Role Clarity Holding Self & Others Accountable Rigour Behavioural Expectations Living the core values Passion for Outcomes Focussed Development CONSISTENT STANDARDS Consistent Response To Non-Conformance Engaging people For challenge GOAL IS ZERO Common Systems Quality Safety Obs. Risk Identification Incident Investigation Site/Unit “Top 5” Minicam/Icam Market Mills “Top 5” Rigorous Audit PSRM (SMS) CAPABLE SYSTEMS AND SUPPORT RISK DRIVEN EFFORT PREDICTABLE & STABLE PLANT & PROCESSES Reporting INVESTIGATION AND REVIEW 4 2 Market Mills Business Overview Australian based operations, manufacturing and converting hot rolled steel billets into rod, bar, wire and converting coil into pipe & tube products Domestically focussed, selling to a wide range of customers, both directly and through distribution channels 5 Market Mills Position in OneSteel OneSteel Market Mills Sydney Sydney Steel Steel Mill Mill OneSteel Billets Whyalla Steelworks 650ktpa Billets Product Product Mills Mills 500ktpa ••Bar Bar Rod / Y-Bar / Bar and Bright Bar ••Rod Rod OneSteel Distribution 240ktpa Wire Wire Mills Mills ••Wire Wire ••Wire Wire Rope Rope ••Pipe Pipe ••Tube Tube Direct Customers ••Fence Fence Posts Posts Note: OSMM is responsible for sales of Whyalla Structurals 6 3 Market Mills Business Overview Australian based operations, manufacturing and converting hot rolled steel billets into rod, bar, wire and converting coil into pipe & tube products Domestically focussed, selling to a wide range of customers, both directly and through distribution channels 5 Market Mills Position in OneSteel OneSteel Market Mills Sydney Sydney Steel Steel Mill Mill OneSteel Billets Whyalla Steelworks 650ktpa Billets Product Product Mills Mills 500ktpa ••Bar Bar Rod / Y-Bar / Bar and Bright Bar ••Rod Rod OneSteel Distribution 240ktpa Wire Wire Mills Mills ••Wire Wire ••Wire Wire Rope Rope ••Pipe Pipe ••Tube Tube Direct Customers ••Fence Fence Posts Posts Note: OSMM is responsible for sales of Whyalla Structurals 6 3 Market Mills Facilities Kwinana Kwinana BTM BTM Tube Tube Products Products 11 ERW ERW Tube Tube Mill Mill Newcastle Newcastle Rod Rod and and Bar: Bar: 11 xx Rod Rod Mill Mill 11 xx Bar Bar Mill Mill Structural Structural Pipe Pipe & & Tube Tube 11 Coil Coil Slitter Slitter 44 ERW ERW Pipe Pipe Mills Mills 11 Auto HDG Auto HDG Bath Bath Testing Testing & & Pipe Pipe Finishing Finishing Wire Wire Products Products 11 xx Wire Wire Mill Mill 11 xx Fence Fence Post Post Plant Plant 11 xx Wire Wire Rope Rope Works Works BASC BASC 11 xx Tyre Tyre Cord Cord Plant Plant Sunshine Sunshine BTM BTM Tube Tube Products Products 22 xx ERW ERW Tube Tube Mill Mill Tube Tube Processing Processing Altona Altona BTM BTM Tube Tube Products Products Laser Laser cutting, cutting, heat heat treatment treatment & & machining machining Sydney Sydney Steel Steel Mill Mill Steelmaking: Steelmaking: 11 xx EAF EAF (60t) (60t) 11 xx Billetcaster Billetcaster (127x127 (127x127 mm) mm) Rolling Rolling Mills: Mills: 11 xx Bar Bar Mill Mill Geelong Geelong Wire Wire Products Products 11 xx Wire Wire Mill Mill Somerton Somerton Structural Structural Pipe, Pipe, Tube Tube and and Profiles Profiles 11 xx Coil Coil Slitter Slitter 11 ERW ERW Pipe Pipe Mill Mill 11 Profile Profile Mill Mill OneSteel OneSteel Martin Martin Bright Bright Bright Bright & & Chromed Chromed Bar Bar Kembla Kembla Grange Grange Oil Oil and and Gas Gas SPP SPP 11 xx ERW ERW Pipe Pipe Mill Mill 11 xx Testing Testing & & Pipe Pipe Finishing Finishing BTM BTM Tube Tube Products Products 22 ERW Tube Mills ERW Tube Mills Quench Quench temper temper line line Tube Tube laser laser cutting cutting 7 Market Mills Snapshop Market Market Mills’ Mills’ Projected Projected Sales Sales Revenue Revenue by by Product Product Category Category Steel Exports 5% Rod and Bar (Dom) 51% Pipe and Tube (Dom) 25% Wire Products (Dom) 23% Projected – 12 months ended 30 June 2005 8 4 Market Mills Facilities Kwinana Kwinana BTM BTM Tube Tube Products Products 11 ERW ERW Tube Tube Mill Mill Newcastle Newcastle Rod Rod and and Bar: Bar: 11 xx Rod Rod Mill Mill 11 xx Bar Bar Mill Mill Structural Structural Pipe Pipe & & Tube Tube 11 Coil Coil Slitter Slitter 44 ERW ERW Pipe Pipe Mills Mills 11 Auto HDG Auto HDG Bath Bath Testing Testing & & Pipe Pipe Finishing Finishing Wire Wire Products Products 11 xx Wire Wire Mill Mill 11 xx Fence Fence Post Post Plant Plant 11 xx Wire Wire Rope Rope Works Works BASC BASC 11 xx Tyre Tyre Cord Cord Plant Plant Sunshine Sunshine BTM BTM Tube Tube Products Products 22 xx ERW ERW Tube Tube Mill Mill Tube Tube Processing Processing Altona Altona BTM BTM Tube Tube Products Products Laser Laser cutting, cutting, heat heat treatment treatment & & machining machining Sydney Sydney Steel Steel Mill Mill Steelmaking: Steelmaking: 11 xx EAF EAF (60t) (60t) 11 xx Billetcaster Billetcaster (127x127 (127x127 mm) mm) Rolling Rolling Mills: Mills: 11 xx Bar Bar Mill Mill Geelong Geelong Wire Wire Products Products 11 xx Wire Wire Mill Mill Somerton Somerton Structural Structural Pipe, Pipe, Tube Tube and and Profiles Profiles 11 xx Coil Coil Slitter Slitter 11 ERW ERW Pipe Pipe Mill Mill 11 Profile Profile Mill Mill OneSteel OneSteel Martin Martin Bright Bright Bright Bright & & Chromed Chromed Bar Bar Kembla Kembla Grange Grange Oil Oil and and Gas Gas SPP SPP 11 xx ERW ERW Pipe Pipe Mill Mill 11 xx Testing Testing & & Pipe Pipe Finishing Finishing BTM BTM Tube Tube Products Products 22 ERW Tube Mills ERW Tube Mills Quench Quench temper temper line line Tube Tube laser laser cutting cutting 7 Market Mills Snapshop Market Market Mills’ Mills’ Projected Projected Sales Sales Revenue Revenue by by Product Product Category Category Steel Exports 5% Rod and Bar (Dom) 51% Pipe and Tube (Dom) 25% Wire Products (Dom) 23% Projected – 12 months ended 30 June 2005 8 4 Market Mills – Top 10 Customers by Revenue OSD SMORGON STEEL SOUTHERN STEEL GROUP DONHAD NEUMANN STEEL LANDMARK RURAL CO. ELDERS LIMITED WIRE INDUSTRY 9 Market Mills Products Market Mills sells a wide range of products to many different end users Product Distribution Channel End Use Rod Intra market mills business unit, Steel distribution companies, Direct to end user Reinforcing products (e.g. buildings), wire, chains for construction, manufacturing, mining and rural markets Bar Steel distribution companies, Direct to end user Reinforced products (e.g. buildings), grinding media, manufacturing, posts, machinery for rural, construction and mining Wire Intra market mill business unit, Direct to end user Springs, Rope, fences, posts, fasteners for manufacturing Pipe Steel distribution companies, Direct to end user Pipelines (oil and gas), buildings, fences for mining, construction and rural Tube Steel distribution companies, Direct to end user Furniture, shop fittings, fencing, outdoor equipment for the manufacturing industry 10 5 Market Mills – Top 10 Customers by Revenue OSD SMORGON STEEL SOUTHERN STEEL GROUP DONHAD NEUMANN STEEL LANDMARK RURAL CO. ELDERS LIMITED WIRE INDUSTRY 9 Market Mills Products Market Mills sells a wide range of products to many different end users Product Distribution Channel End Use Rod Intra market mills business unit, Steel distribution companies, Direct to end user Reinforcing products (e.g. buildings), wire, chains for construction, manufacturing, mining and rural markets Bar Steel distribution companies, Direct to end user Reinforced products (e.g. buildings), grinding media, manufacturing, posts, machinery for rural, construction and mining Wire Intra market mill business unit, Direct to end user Springs, Rope, fences, posts, fasteners for manufacturing Pipe Steel distribution companies, Direct to end user Pipelines (oil and gas), buildings, fences for mining, construction and rural Tube Steel distribution companies, Direct to end user Furniture, shop fittings, fencing, outdoor equipment for the manufacturing industry 10 5 Competitive Position Product Major Domestic Competitor Impacted by Imports Rod & Bar Smorgon Steel Yes OneSteel Competitive Advantage Range, service and technical support Channel position Wire Smorgon Steel Yes Technology and brand Channel position Pipe & Tube Smorgon Steel and Orrcon Yes Technology and quality Channel position 11 External Environment Market Outlook Continued strong demand Domestic situation – Residential construction forecast to decline but more than offset by Engineering Construction and Non Residential Construction Impact of exchange rate Input Costs Scrap Alloys HRS Coal – Leading to increased Billet Costs 12 6 Competitive Position Product Major Domestic Competitor Impacted by Imports Rod & Bar Smorgon Steel Yes OneSteel Competitive Advantage Range, service and technical support Channel position Wire Smorgon Steel Yes Technology and brand Channel position Pipe & Tube Smorgon Steel and Orrcon Yes Technology and quality Channel position 11 External Environment Market Outlook Continued strong demand Domestic situation – Residential construction forecast to decline but more than offset by Engineering Construction and Non Residential Construction Impact of exchange rate Input Costs Scrap Alloys HRS Coal – Leading to increased Billet Costs 12 6 Scrap Price History Source : Tex Report $US/t Jul-04 Jan-05 Jul-03 Jan-04 Jul-02 Jan-03 Jul-01 Jan-02 Jul-00 Jan-01 Jul-99 Jan-00 Jul-98 Jan-99 Jan-98 Jul-97 Jan-97 Jan-96 Jul-96 $460 $440 $420 $400 $380 $360 $340 $320 $300 $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 $80 Jul-95 $/t Asian HM1 Scrap Price January 1994 to April 2005 $A/t 13 HRC Price History Source: CRU 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 Japan Export Antwerp Jan-05 Jan-04 Jan-03 Jan-02 Jan-01 Jan-00 Jan-99 Jan-98 Jan-97 Jan-96 Jan-95 Jan-94 Jan-93 Jan-92 Jan-91 Jan-90 Jan-89 Jan-88 Jan-87 Jan-86 Jan-85 Jan-84 Jan-83 Jan-82 Jan-81 Slab Jan-80 US$ FOB Hot Rolled Coil & Slab Prices to April 2005 (HRC - Antwerp and Japan, Slab - Latin America) 14 7 Scrap Price History Source : Tex Report $US/t Jul-04 Jan-05 Jul-03 Jan-04 Jul-02 Jan-03 Jul-01 Jan-02 Jul-00 Jan-01 Jul-99 Jan-00 Jul-98 Jan-99 Jan-98 Jul-97 Jan-97 Jan-96 Jul-96 $460 $440 $420 $400 $380 $360 $340 $320 $300 $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 $80 Jul-95 $/t Asian HM1 Scrap Price January 1994 to April 2005 $A/t 13 HRC Price History Source: CRU 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 Japan Export Antwerp Jan-05 Jan-04 Jan-03 Jan-02 Jan-01 Jan-00 Jan-99 Jan-98 Jan-97 Jan-96 Jan-95 Jan-94 Jan-93 Jan-92 Jan-91 Jan-90 Jan-89 Jan-88 Jan-87 Jan-86 Jan-85 Jan-84 Jan-83 Jan-82 Jan-81 Slab Jan-80 US$ FOB Hot Rolled Coil & Slab Prices to April 2005 (HRC - Antwerp and Japan, Slab - Latin America) 14 7 Key Markets Segment Manufacturing Share Distribution 57% Rural 65% General Manufacturing 59% Mining & Resources 52% Reinforcing 47% Automotive 74% 15 Innovation and Brand Names OneSteel has strong brand names that are recognised by customers for their quality Merchant Bar and Structurals Pipe and Open Profiles Rural Products A Way of Doing Business Hardware Products Advanced Technology provides platform for new generation of products eg. Coloured wires 16 8 Key Markets Segment Manufacturing Share Distribution 57% Rural 65% General Manufacturing 59% Mining & Resources 52% Reinforcing 47% Automotive 74% 15 Innovation and Brand Names OneSteel has strong brand names that are recognised by customers for their quality Merchant Bar and Structurals Pipe and Open Profiles Rural Products A Way of Doing Business Hardware Products Advanced Technology provides platform for new generation of products eg. Coloured wires 16 8 Market Initiatives Segmentation Market Focus Price Share Dumping 17 Manufacturing Excellence Areas of Focus Labour Productivity Process Capability Asset Utilisation OEE Leading Lower Conversion Cost Specific Initiatives SBM throughput reliability Throughput rate improvements NRM + NBM Power consumption initiatives Sydney Melt Shop P&T Maintenance initiatives NWM & GWM Roster Changes Vertical payoffs and mechanical descaling 18 9 Market Initiatives Segmentation Market Focus Price Share Dumping 17 Manufacturing Excellence Areas of Focus Labour Productivity Process Capability Asset Utilisation OEE Leading Lower Conversion Cost Specific Initiatives SBM throughput reliability Throughput rate improvements NRM + NBM Power consumption initiatives Sydney Melt Shop P&T Maintenance initiatives NWM & GWM Roster Changes Vertical payoffs and mechanical descaling 18 9 OEE Measure Market Mills Market Mills OEE (Availability * Rate * Yield) Average of New castle Rod Mill, Bar Mill, Sydney Melt Shop, Sydney Rolling mill, New castle P&T 1,2 & 4 Mills, Oil & Gas, Somerton 7 & 8 Mills, New castle FWG, MW & Ropes MM OEE Ju l-0 Se 1 p0 N 1 ov -0 Ja 1 n0 M 2 ar -0 M 2 ay -0 2 Ju l-0 Se 2 p0 No 2 v0 Ja 2 n0 M 3 ar -0 M 3 ay -0 3 Ju l-0 Se 3 p0 N 3 ov -0 Ja 3 n0 M 4 ar -0 M 4 ay -0 4 Ju l-0 Se 4 p0 N 4 ov -0 4 12 per. Mov. Avg. (MM OEE) 19 10
