Australia cannot take sovereign steelmaking capability for granted

By Anthony Micallef, Executive General Manager Manufacturing, InfraBuild

Australia is entering another major period of construction and infrastructure investment.

Across the country, we are building new transport infrastructure, energy projects, hospitals, homes and other critical infrastructure. In Queensland, a significant pipeline of construction lies ahead as the state prepares for Brisbane 2032. All of it will require steel.

The question Australia needs to consider is how much of that steel we want to continue making here.

It’s a question I discussed at the Australian Steel Institute Convention, at what is an important time for our industry.

Sovereign capability is about more than steel

For more than a century, Australia has built a significant domestic steelmaking capability.

InfraBuild’s own history stretches back to 1915, and our steel has helped build everything from the Sydney Harbour Bridge and Melbourne Cricket Ground to the roads, buildings and infrastructure Australians use every day.

Today, we employ more than 4,300 Australians, operate more than 130 sites around the country and have over 13,000 active customers. Our industry also supports a network of Australian steel fabricators, many of them small and medium-sized family businesses that have operated for generations and are under increasing pressure from low-priced imports.

That’s why we were disappointed by the findings of the Productivity Commission’s recent Interim Report. We are closely reviewing the report and will continue to engage in the remaining consultation process. But the report comes at a time when Australia needs to confront a broader question: what sovereign manufacturing capability do we want to retain in this country?

Without sufficient domestic steelmaking and fabrication capacity, Australia risks becoming increasingly dependent on overseas suppliers for the steel required to build our homes, hospitals, transport networks, energy infrastructure and major projects.

Recent experience has shown us that international supply chains cannot always be assumed to be available, reliable or predictable.

But sovereign capability is about more than having access to steel, it is also about retaining the people and knowledge required to make it.

Australia’s steel industry supports generations of manufacturing expertise across steelmakers, engineers, metallurgists, tradespeople, processors and fabricators. Many of the businesses within that supply chain are small and medium-sized Australian companies that have developed their capability over decades. Once that industrial ecosystem disappears, rebuilding it is extremely difficult and expensive.

Australian steel needs a level playing field

We have seen a substantial increase in low-priced steel products entering the Australian market, at the same time as market conditions for domestic steelmakers, processors and fabricators have become increasingly difficult.

Australian manufacturers don’t expect to be protected from competition. We expect to compete. But Australian manufacturers and fabricators need to be able to compete on a fair and level playing field.

We operate in Australia. We employ Australian people, invest in Australian manufacturing facilities, pay Australian taxes and manufacture to Australian standards. At InfraBuild alone, we have invested $747 million in Australian capital projects and paid $549 million in Australian taxes since 2019. We continue to invest because we believe Australian steelmaking has an important future.

That investment has a much broader benefit. Australia is preparing to spend hundreds of billions of dollars on the infrastructure it needs for the future. A strong domestic steel industry means more of that investment stays in Australia, supporting local jobs, businesses and communities, generating tax revenue and encouraging further investment in Australian manufacturing. If we increasingly rely on imported steel instead, more of that economic value leaves the country with it.

The opportunity in front of us

Despite these challenges, I remain optimistic about the future of Australian steelmaking.

Australia has a significant pipeline of construction ahead of it. There are major transport projects underway around the country, significant investment in energy and utilities, and a substantial pipeline of public infrastructure.

At InfraBuild, we are investing on the basis that Australian steelmaking has an important role to play in meeting that demand.

We are increasing steelmaking capacity at our electric arc furnaces in Sydney and Laverton, with a pathway towards greater self-sufficiency in commercial-grade billet. We’re investing in our mills, new product capability, automation and technology, and expanding our processing and distribution footprint in growth markets including Queensland and Western Australia.

We are realistic about the challenges facing the industry, but we are not standing still. Our 2030 Sustainable Future Strategy is focused on making InfraBuild stronger and more competitive, including investing in capacity, improving productivity and reducing our cost base so we are better positioned to compete and capture the growth ahead.

A choice about what we want to make in Australia

There is a tendency to think about sovereign capability when supply chains are already under pressure. But by then, it’s usually too late.

Steel mills cannot be switched on overnight. Neither can the network of processors, fabricators, suppliers and skilled workers that surrounds them.

The decisions we make today will help determine what manufacturing capability Australia retains in another 10 or 20 years. That is the message I’ll be taking to the Australian Steel Institute Convention on Tuesday.

Australia is going to need enormous quantities of steel to build its next generation of infrastructure. We have an opportunity to manufacture more of that steel here, using Australian scrap, Australian manufacturing capability and Australian workers.

We should be building on that capability, not allowing it to disappear.

Australian steel has helped build this country for more than a century. It should play an equally important role in building what comes next.