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Date: Melbourne and London, 10 December 2001

The following News Release was issued by BHP Steel on Monday, 10 December 2001.

News Release

BHP Steel, the largest steel company in Australia and New Zealand, today expressed concern at Friday's announcement that the International Trade Commission (ITC) in the United States had recommended to President Bush that quotas and/or tariffs be imposed on steel imports to the US.

The recommendations are the result of an investigation under Section 201 of the Trade Act into the current malaise affecting the US steel industry. A range of alternate recommendations were made by the individual Commissioners - these can be viewed at www.usitc.gov.

The United States is a significant market for BHP Steel which provides intermediate steel products (particularly slabs and coils) to the US steel industry. Last financial year, export sales to US customers were nearly 800,000 tonnes, generating revenues of around A$400 million, out of BHP Steel's total sales of about A$5 billion.

BHP Steel is also a 50 per cent joint venture partner in North Star BHP Steel, which produces 1.5 million tonnes per annum of steel coil in Ohio, USA.

President & CEO BHP Steel, Mr Kirby Adams said: "This recommendation by the ITC is not unexpected, give the extent to which it has been influenced by lobbying from United States steel companies.

"It is now up to President Bush to make a balanced judgement about appropriate measures to support the restructuring of the US steel industry, while acknowledging the need to reaffirm free trade principles which long-term allies like Australia share."

Many of the largest United States steel companies, based primarily in the Great Lakes and Mid West regions, are among the highest cost and most inefficient producers in the world. Twenty-three of them are currently in Chapter 11 bankruptcy and there have been reports that the US Administration favours closure of at least 20 per cent of the country's integrated steelmaking capacity.

By contrast, BHP Steel's Port Kembla Steelworks is one of the world's most efficient, with production costs amongst the lowest in the global steel industry.

Speaking from the meeting of the International Iron and Steel Institute, which is considering the global steel industry's collective response to the ITC recommendations, Mr Adams said, "If President Bush constructs a balanced set of measures, these events in the United States are potentially positive for the global steel industry in the medium term.

"A sensible response by the Administration will set parameters which will facilitate a large-scale reduction in global steel capacity and production over the next two to three years, as was done in Australia with the closure of the Newcastle Steelworks.

"A shotgun approach which targets all steel imports into the US indiscriminately, as some members of the ITC have recommended, would be contrary to the principles of free trade, and likely to precipitate higher costs for the US manufacturing sector and further trade retaliation.

"As the US industry restructures and some of its raw steelmaking capacity is appropriately eliminated, it will be increasingly important that the US steel industry has access to suppliers such as BHP Steel who can provide high quality feedstock (e.g. slab and hot rolled coil) for their downstream steel processing operations.

"We will be re-doubling our lobbying efforts with the US administration, and have received outstanding support and assistance from the Australian and New Zealand government representatives in Washington, Canberra and Wellington."

Separately, Mr Adams said it was of great concern that BHP Steel continues to experience industrial action in Australia over the issue of 'security of employment'.

"Those with any understanding of the difficulties faced by the global steel industry will know that we simply cannot guarantee security of employment. While it is not our intention to implement any mass job cuts, security of employment only comes from having satisfied customers who continue to buy our product," he said.

"Reliability of supply and the ability to resolve disputes without strike action are key planks in our ability to continue to serve our customers in this very competitive market."

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