Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


CORRECT: Fletcher to sell Pacific Steel to Bluescope

CORRECT: Fletcher to sell Pacific Steel for $120M to Bluescope

(Corrects to show net expense in third paragraph)

Feb. 17 (BusinessDesk) – BlueScope Steel, Australia’s largest steelmaker and owner of the New Zealand Steel mill, has agreed to buy assets of Fletcher Building’s Pacific Steel in a $120 million deal that will lead to the closure of Fletcher’s steel mill at Otahuhu at the end of 2015.

The transaction will leave BlueScope as the nation’s only steelmaker and requires approval from the Commerce Commission. The companies are aiming to complete the transaction in mid-2014.

Melbourne-based BlueScope will pay $60 million for Pacific Steel’s long-products rolling and marketing operations and pay about $60 million for the target’s working capital, according to a statement from Auckland-based Fletcher, which expects a one-time net expense of about $19 million.

Bluescope will pay half the $60 million price of the assets upfront and the remainder once it has commissioned a new billet caster, expected to be by the end of calendar 2015.

The Australian company will build the billet caster at the Glenbrook mill south of Auckland operated by its NZ Steel unit, spending about $50 million on the new plant, it said. Until then, Fletcher will continue to operate the Otahuhu mill and supply BlueScope with billet on commercial terms, Fletcher said.

“These are tiny plants on a world scale and this is how you allow manufacturing to survive here,” Philip King, Fletcher’s investor relations manager, told BusinessDesk. “The competition comes from imports.”

The shuttering of the Otahuhu mill is likely to see a jump in exports of scrap steel that used to be melted at the mill. BlueScope’s Glenbrook plant is essentially set up for iron sand processing. Fletcher owns 50 percent of scrap metal business Sims Pacific Metals.

The sale includes Pacific Steel’s rolling mill and wire drawing facilities at Otahuhu and its Fijian rolling mill. Once Bluescope’s billet caster is running, NZ Steel will supply billet to the rolling mills at Otahuhu and in Fiji.

The deal “will help make the New Zealand steel industry more sustainable,” said BlueScope chief executive Paul O’Malley. “The acquisition of the PSG downstream assets is an opportunity to better leverage our low cost iron sands and better serve customers with a full range of long products, together with our existing flat products.”

Fletcher chief executive Mark Adamson said most of the Pacific Steel rolling mill and wire drawing workers will be offered work by BlueScope. The deal doesn’t affect ownership of Fletcher’s steel distribution business, Fletcher Easysteel, or its reinforcing business, Fletcher Reinforcing.

Fletcher shares rose 1.1 percent to $9.58 on the NZX and are up 6.4 percent in the past 12 months. Bluescope was last at A$5.93 on the ASX, having soared 56 percent in the past 12 months.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news