Good morning, everyone. Good morning.
Good morning.
Hello. All right. Good morning, everybody. It's lovely to see you all. My name's Mark Vassella, and welcome to all of you. We also have quite an extensive BlueScope team here today, so feel free to grab anybody if you've got any questions. Some of us are in high vis. Some of us know nothing about steel making, but there's a whole bunch of people here that know plenty. Some of us are not in high vis, you're Don and Mark. There's a whole range of us here. Anybody that wants to, if you've got any questions today, please feel free to grab one of us. Welcome to Port Kembla, which is a critical asset in the BlueScope portfolio. An asset that will celebrate its 100th anniversary of steelmaking in 2028, which is a pretty remarkable effort.
An asset that was awarded ResponsibleSteel Certification this year. That's. We're only the fourth steelmaking business globally, and the first in the Southern Hemisphere to achieve that accreditation. An asset that's part of a suite of BlueScope assets that were recognized by the World Steel Association as a sustainability champion in 2022. All quite relevant to the topics of conversation today. We've got a full and informative day for you guys, and we hope you enjoy it. Now, to commence the day, it actually gives me great pleasure to introduce Uncle Richard Davis to perform the Acknowledgment of Country. Uncle Richard is the Chair of the Illawarra Aboriginal Corporation and actually worked at the Steelworks for some time, and I'm sure he will share that story.
It's a privilege to have you here today, Uncle Richard Davis. Welcome.
Good morning, ladies and gentlemen. First of all, I'd just like to thank Mark, BlueScope Steel for inviting me here today, to do Welcome to Country on behalf of the traditional owner of the land that we're meeting on. I think in this day and age, it's important that we acknowledge the First Peoples of this nation. It will always be Aboriginal land, whether people believe that or not. That's their views. I think that BlueScope is a you know, a leading company in the world. I think, you know, talking to their people over the last couple of years, I think they're instrumental in trying to you know reconcile work with Aboriginal communities, and I thank them for that. Thanks, BlueScope.
Yeah, look, I worked at BlueScope, sorry. You know the names. Yeah. Yeah, for 11 years, yeah, as a tradesman assistant, just a laborer, which was a good training ground for me as a person. Young bloke, 19-year-old, and you know, working with all different cultures, different people from all parts of the world was a great opportunity to you know, to get to know other cultures. I was talking to the couple of blokes earlier, and it was a good training ground for me because it taught me about mixing and you know, accepting people who they are and people accepting me who I am and all that kind of stuff.
It was a great training ground and, being lucky enough to move on and do what I do now. I'm an Aboriginal business advisor. I know it's a big change from a tradesman assistant to a business advisor, but, you learn yourself along the way and, you know, I'm helping Aboriginal people start their own businesses and, you know, it's a great opportunity that I provide out here for people so. I've been lucky enough to support and help a lot of Aboriginal people start their own businesses and which is we don't talk about. There are Aboriginal people that have their own businesses, coffee shops, Aboriginal culture, art and craft, wood cutting. You know, there's a range of Aboriginal people that own their own business.
As I said, we don't talk about it enough. We tend to be a bit more kept to ourselves and just do what we gotta do, move on in life. Look, a Welcome to Country is very important. As I said, a showcase that we're getting better as a nation. We're understanding that Aboriginal culture is the first people to this nation. I think it's appropriate too that a big company such as BlueScope wants to reconcile because the land that they operate on is traditional owner land. I think by, you know, wanting to give back and wanting to support Aboriginal culture, I think it's very important showcasing other people around, other companies around the world that it can be done, it can happen, and we can work together.
Because at the end of the day, we're all human beings. It doesn't matter where you come from, who you are, what culture you are, we're all gonna go to the same place. While we're here, let's respect, understand each other's cultures, work together, make our society a better place for everyone. We can move forward as a nation and as a community and as a world. Unfortunately, there's things around the world that don't go too good. We live in a place that is a very good place. I think we take it for granted that Australia is the biggest island, and we're isolated from a lot of the unfortunate things that happen. Let's not take it for granted.
Let's work together, look after each other, because we, as I said, we're all going to the same place at the end of the day. Life can change. Think about it. Life can change. I'll do my welcome, and then we can move on and, yous can get on with, investing. Is that right? Yeah. Hopefully more. Yeah, I'll do my welcome and then, yeah. Yalanga Nangami, Nalamai Hui, Migas, Girigas, Nangang, Nangde Lili, Nangabang ni Yalabi, Delaboradi Nangang, Banjang ni Malay ni Ewing, Migas, Yalanga. Welcome to country, welcome to land. The land we are meeting on today is the land of the Dharawal people. The Dharawal nation covers from the south of Sydney to the Shoalhaven River, Southern Highlands.
If you stay rural, that could be, I suppose, a 200 km-300 km radius, I suppose, of land that we're on, the Dharawal nation. Within the Dharawal nation, we have 13 Aboriginal tribes, clans that have occupied this land for, you know, people say we've been here for 60,000, 70,000. I think it's probably close to a 100,000 year. We are the oldest living culture in the world. The Aboriginal people out back, I'm talking about out in the Uluru and places like that, Captain Cook didn't know them until, you know, 200 years later. The people like me, my culture, we were the first people to be, I suppose, conquered, if that's a word that I can use. I, you know. Yeah, we are the oldest living culture in the world.
I'd like to pay my respects to my elders, past and present. This is where it gets a bit emotional for me because they are my heroes. They are the people that show me who I am, as an Aboriginal person, to be proud as an Aboriginal person in my own country. Without their perseverance, their fight, their endurance, walk the walk, talk the talk, I don't know where we'd be. That's why I think it's important that organizations such as BlueScope think about that. My past elders, what they've gone through. I'm a lucky bloke, I can do what I do. I can have the things that I have. My past elders weren't lucky enough to do that. It's about working together, supporting. The land that we have here is very important. We're going back to the land, so let's look after the land.
That's where we're going. We're all going back to the land. BlueScope, other big organizations around the world, think about your responsibilities. Investors, you know, we need investors to invest in BlueScope and places like that. Think about our responsibilities to the land. Think about our responsibilities to communities. Aboriginal people are part of that community. Look, I can talk for a little bit longer, but I don't wanna get too emotional because it can get emotional when you talk about the culture. I just wanna plant a seed here to people, investors, BlueScope. Look, we're human beings, so let's make sure that we look after each other, as I said earlier, respect each other. We don't have to be the best of friends. It's just about respect and understanding the past. Learn about the past, the Aboriginal culture past.
I'm an Aboriginal person. It's not just me as an Aboriginal person, but it's people such as yourselves. Learn about it. What happened? The good, the bad, and the ugly. Don't just learn about the good stuff. Learn about what happened. The unfortunate things that happened. Aboriginal people were, you know, murdered and things like that. I know it's hard to say, but yous need to understand that that's what happened in the past. Learn about it so we can rectify that, move forward. It's not a blame game. There's no blame game here. What happened. That's the past. Never forget the past. Think about the past so we can move forward. I don't know if I'm making any sense, but if we can do that, then we make our society, our place, a better place for all of us. Thank you very much.
Thanks, Richard. That's very powerful. Thank you. Uncle Richard's playing a key role for us in the Project Emily project, which is how we're gonna repurpose 200 hectares of land around this facility, which you guys will be driving around today. He's a key connection for us with the local community and the role that the local community will play in that particular project. Before we start, just some housekeeping. Firstly, from a safety perspective, obviously, in the event of an evacuation, which we're not planning, just please remain calm and we'll meet out the front on the grass near the car park. The bathrooms are on the other side of the foyer, clearly marked. You've got a brand-new COLORBOND color water bottle on your seats, so please feel free to take that.
We've filled it with water, and it's drinkable. There's water refill stations outside. We're trying to steer away from plastic, so please refill at your leisure. Wi-Fi details are also on your seat, so if anybody wants to, log into the Wi-Fi, please feel free. We actually have some COLORBOND goodie bags. You've now got yourself a limited edition, I'm told, COLORBOND hoodie, and if the size is wrong, please let us know. Someone from Investor Relations or a BlueScope person will help you out, and if you can't get your size today, or if you can't convince one to someone to swap with you, then we'll post one to you. Let us know. Congratulations, you now own a COLORBOND hoodie. A quick run-through of today's schedule. We've got two presentation sets.
We'll wrap up both of those presentation sets with some Q&A panel, so you get a chance to talk to the incredibly impressive people you're gonna see today. We'll split that with some morning tea, including some real coffee, which is a treat, and lunch, and then after the presentations this afternoon, we're gonna put you on buses and do a site tour. Let's get underway. Sorry guys, I should have been running the slides. I'm gonna start today, an introduction here to the first session by talking about what matters to us in terms of our sustainability outcomes. Firstly, I'd say that sustainability is at the core of what we do. We take an ambitious, but pragmatic and realistic approach to sustainability. During the last year, we reassessed our materiality, sorry, sustainability topics.
We talked to BlueScope leaders, other stakeholders, we researched emerging themes, and we sought independent views. That review elevated social impact, human rights and energy transition, with climate an obvious and key area of interest. Our sustainability objectives and outcomes were updated accordingly. Our commitment to the governance of our sustainability outcomes is ingrained in the BlueScope culture with strong governance structures and processes. Our board and our board sub-committees have a strong sustainability focus, and I'd like to acknowledge John Bevan, our chair, and our recently appointed director, Jane McAloon, who've joined us this morning and are sitting in the back row. Nice to have you guys here. We've got a small and talented corporate team that are subject matter experts, but what's most important are the significant resources in the business units that are focused on sustainability every day.
When I say that, I think it's important to understand that sustainability is part of our DNA, and the reason for that is doing things more efficiently, doing things safer, faster, using less, whether that's energy, raw materials, or anything else we consume in our processes, is part of a continuous improvement culture. Now, I don't wanna sound trite about this, but while many of these practices have been rebadged as sustainability outcomes more recently, for our business, they've long been best practice and part of what we do every day. Given we're a relatively small part of a very large global industry and metals complex, we see collaboration as a core part of our approach to sustainability. We recognize that we can't do it all on our own. Yet in many ways, BlueScope punches well above its weight.
We're one of the largest coater and painters of steel for the construction industry globally. We partner with peers, customers, suppliers on research and development activities. We have fabulous relationships with some global steel companies such as Nippon Steel, Tata Steel, ArcelorMittal. We're represented as members of key organizations such as worldsteel , where I sit on the board, and ResponsibleSteel as a founding member. In fact, in relation to the decarbonization of the steel-making process specifically, I think we're uniquely positioned to play a significant role in that transition. Think about it. We've got decades of history and experience in blast furnace, electric arc furnace, and in New Zealand, direct iron reduction steel-making processes, experience that few other steel-makers have.
We're local customers and operate in the market of the largest raw material suppliers to the steel industry in the world, and our country has enormous potential in terms of renewable energy, and we operate with a set of values and adhere to a system of law that make us a company easy to deal with. This is why we're being sought out by some of the most significant players in our industry to play a role in decarbonization. Collaboration and the outcomes that we'll achieve align perfectly with our desire to make an active contribution to sustainability more broadly as part of our purpose, which is to strengthen our communities for the future. We've progressively developed a strong suite of transparent, honest and credible disclosures, all of which are aligned with key industry and global frameworks and standards.
To be clear, what you'll hear from us in all of our disclosures is an educated and informed assessment by our subject matter experts and experts that we talk to around the world. What you won't hear is something that we don't think is real or achievable. Now, I'm thrilled today and very proud to give you guys access to a diverse and talented team of subject matter experts who are, in my opinion, second to none in the industry. We've got a huge amount of bench strength addressing sustainability, both in the leaders and the individuals you'll see today, and their teams, but also within each of our businesses, and I'm confident that we've got the capability across our business to deal with our sustainability agenda.
I'd now like to give you a bit of a perspective of the steel industry more broadly, and the headline for me is, steel's going nowhere. Steel is an essential material critical to the transition to a low-carbon world. It's a fundamental input to the renewable energy infrastructure industry. Steel's strength, durability, adaptability, and recyclability make it vital. If something's not made of steel, it's made by something that is made of steel. It also drives economic prosperity, with steel demand set to grow for the next 30 years or more. Steel underpins the transition to and the achievement of a low-carbon world. As you can see from this chart, energy transition is incredibly steel-intensive. Australia's renewable targets will require an extra 2 million tons of steel to 2030, and an extra 10 million tons of steel to 2050. Steel's gonna underpin our sustainable development.
The strength, durability, and recyclability of steel means it's inherently circular. It's central to the circular economy, and BlueScope's playing a role in this circularity through increased scrap recycling and the use of scrap. Witness our recent acquisitions in the U.S. Responsible sourcing, product optimization, and greenhouse gas emission reductions, digital and modern manufacturing technology, life cycle assessments, and design life optimization, extended use, reuse, or remanufacture of our products. Circularity can be enhanced in all phases of the cycle. Finally, to scrap. Another headline, if I may. Scrap has a role to play in decarbonization, no doubt, but we can't scrap our way to net zero. The global scrap pool is a function of and limited by steel production over the last 50 years. We can't change that.
There is simply not enough scrap to meet the current and growing future demand for steel. That strong demand outlook means this problem isn't gonna go away. I'm gonna stop there and hand over to the team. In short, from my perspective, the steel industry is not going anywhere, and it has a fundamental role to play in the transition to a low-carbon world. I think BlueScope is uniquely positioned to play a role in that transition. Thanks, all, for making the effort to be here today. I trust you're gonna find it's a valuable and informative day, particularly in relation to our sustainability efforts. I'm now gonna hand over to Chris Page. Chris, over to you.
All right. Thanks, Mark. I'm Chris Page. I'm the Head of Future Technologies for BlueScope. I'm part of the climate change function. You'll hear from my boss, Gretta Stephens, soon. What I'm here today to talk to you about is a bit about how we think the industry's gonna evolve over the next few decades, and we'll ultimately talk about what role we think we're gonna play in that as well. There is a long path to get to where we are, and I'll try to explain in my best way, in the best terms to put in context where the steel industry is today and how difficult that transition's going to be for us.
I just wanna sort of remind everyone at this point today that in the world, the steel making in the world today, 70% of it is made through the blast furnace process. The reason for that is it's actually the most developed and efficient process that there is. The first blast furnaces started 500 years ago. In the last 100 years, the amount of automation and technology that's gone into their development has now made them one of the most efficient industrial processes that's ever existed. If you look outside the blast furnace, there's the EAF process, which uses scrap as its input. There's been enough scrap developed through the world, enough steel made over the world's history to start recycling it, and it's that proportion of the make that comes from scrap.
The blast furnace process also uses scrap, so we use about 25% of scrap in our process today. An EAF is able to use a lot more than that. There's a lot of interest in this DRI process going forward, but the DRI process in itself is only representing about 5% or 6% of the total steel make in the world today. It's a very burgeoning sort of industry. It's not highly developed, but there's a few locations where it makes sense to make DRI, and that's typically where natural gas is abundant and cheap.
I would also say, like at this stage, the International Energy Agency has also sort of had a look forward of where they think the blast furnace production in the world will be in 2050, and it assumes under a number of scenarios that it'll still be about 40%-50% of the world's steel make in 2050. It has a role to play, and what technology will become predominant is yet to be decided. In terms of the process of the steelmaking value chain, the reason we're gonna focus on the blast furnace is it actually represents about 90% of emissions through that process, so that's why we're talking a lot about it.
Out of the entire value chain, that's where we're really creating a lot of the emissions. Now, this is a my sort of ham-fisted way of trying to explain to you about what the challenge is going to be in converting from using carbon as a reductant to using hydrogen as a reductant. Now, I've represented two processes here. A blast furnace and a DRI process, and both of them use carbon. The reason is that when you put carbon together with iron ore, Fe2O3 or some other form of FeO, you end up with iron and carbon dioxide ultimately, and that's where the emission comes from. Now, the beauty of that reaction is it's exothermic. Now, what does that mean? It actually adds heat to the process. It's a fuel to the process.
When that reaction occurs, the process heats up. In a blast furnace that's critical because we're running liquid iron. Now, if it doesn't heat up enough, it stays solid and it won't run out, and that blast furnace process relies on that iron. There's a limit to how much we can move away from carbon in that process. It's integral to that blast furnace process. In the DRI process, it also performs the same benefit, the exothermic reaction creating heat, and even though it's a solid state reaction, it actually runs as a semi-liquid. It makes it flow really easily out of the process. If it gets too cold, it gets sticky and it sticks to the walls and it doesn't come out and you clog it up and you can't run it anymore.
It's really sort of a critical element in the ironmaking process, whether that's blast furnace or whether that's DRI. We think there's a belief that we can use hydrogen in the process, and the reason is if you look at that reaction, you can see that you can actually just create iron and H2O, and that's why we think there's a way forward for us to decarbonize this ironmaking process. The difference between carbon and hydrogen is that hydrogen is an endothermic reaction. It's actually sucking heat out of the process. If we were to put a lot of hydrogen into the blast furnace, the liquid will solidify and it will stop running, and we won't be able to do that.
We do believe we can put hydrogen in that blast furnace process, and we're gonna be trying that in the future years. There is a limit to how much you can do that. People are talking about DRI and using hydrogen, and it is much more amenable to using hydrogen because it is solid state. In fact, the way the DRI process works today is that it cracks natural gas. They get natural gas, they crack it forms H2 and CO, and those two molecules will then work on the iron. In essence today, it is already using a significant proportion of hydrogen, but that carbon still plays a critical role.
Even some of the more advanced sort of people that are the groups that are looking at using hydrogen in the DRI, they're still using more than 20% of natural gas in that process. It plays a really critical role in it. For us, that's a real big challenge for how we're gonna move forward. In terms of the steel industry's decarbonization, I just wanna point out a few what are the big main challenges are here. Now, scrap is a great way to decarbonize, but there just isn't enough of it. That's the challenge. There's not gonna be enough scrap to make that demand. If we could just move to EAFs using scrap, that would be fabulous and it would be very easy, but that's not how it's gonna play out.
For us, cracking the code is gonna be absolutely critical. How do we make sure that we design the technology that we need to be able to move towards using more hydrogen in the ironmaking process? There's also a raw material issue, which I'll get into a bit more detail about. Probably even more challenging is the renewable energy challenge that's gonna face us. Creating hydrogen is extremely energy intensive and the scale in which we're gonna need hydrogen, my colleague Anna is gonna talk about soon. In terms of raw materials that are used today, I just wanna sort of draw some attention to the supply that exists in the world today.
There are two predominant types of ores that are around, hematite and magnetite. Magnetite is the type of ore that you use for the DRI process, and if you wanna actually stick that straight into an EAF, it has to be very high quality. That high quality magnetite only represents a very small production, a very small amount of ore production today, something like 5% or 6%, and it actually represents about 15% of seaborne ore trade today. If the world wants to move to that very high quality magnetite ore, it's gonna be a very big challenge. Most of the ore that exists today is the hematite type, which comes out of the Pilbara. It has a higher gangue content, and the issue with that. When I say gangue, it's got some impurities in it.
The issue with that is that when it goes through the DRI process, which is a solid state process, it doesn't come out. You need that very high quality ore to use for DRI. Now, we think there's a way to get around that, and I'm gonna talk about that in a minute. Just why won't we just move to that magnetite? It's one, there's not availability of it. The cost to process magnetite is much higher. The complexity of the process is much higher. It's just the resources of it that's available in Australia today.
We've got 30 billion tons of hematite type ores available, and it's about 9 million tons of that magnetite, and it's actually harder to access as well. Now, in terms of how we're gonna solve that problem around that raw material availability, we're actually uniquely positioned in BlueScope in that we actually run a process in New Zealand called the DRI melter process. What that melter does is it takes the DRI product, it melts it electrically, and by doing that, you're able to float that impurity out of it, and you can take that away as a slag. Now, today, there's not many places where there's an integrated process that does that, and certainly not with the hematite-type ores.
The industry has to work out how to make that an integrated process, and that's one of the challenges that BlueScope's looking at. Now, in terms of the DRI-EAF, most of the projects that you'll hear around green steel today are around that DRI-EAF. They're gonna need very high-quality ores, which are very difficult to get your hands on, and then they're still gonna have that challenge of the carbon and hydrogen in that DRI process. There is still a lot of development work to go on to solve that problem. Now, there's a couple of other sort of processes that exist out there that people would have heard about, the Boston Metal electrolysis process. They're in very, very early stages. They're running pilots on their process.
The DRI process has been around for 60 years, and it's still nowhere near as developed as a blast furnace process. I think that's gonna be the challenge for those types of technologies. We're certainly gonna be playing a role in making sure we're watching how they develop and may even sort of help try to help do that development, but it's a long way off compared to the ones I'm talking about DRI. In CCUS, the scale is just not there today. The scale to do it in a blast furnace is just not there. It'll play a role potentially in the future, but not soon. I'm gonna hand over to my colleague, Anna, and she's gonna talk a bit about renewable energy and hydrogen.
Hi, everyone. I'm Anna Matysek, and I'm Head of Climate Change, and I also work in the climate change team for Gretta Stephens. Chris has just talked about two of our five key enablers to our decarbonization pathway, namely the technology piece, and also the raw material side of things. I'm gonna talk to you about two more. Firstly, competitively priced firmed renewable energy and also availability of industrial-scale commercial green hydrogen. Both of these things are gonna be really critical to our future decarbonization pathway. Of course, that's not particular to BlueScope. You know, that's a set of issues that's pretty familiar to a whole range of industrial assets right around Australia and indeed the world, as we speak.
If we start with renewable energy, if we wanted in the longer term to move our operations here at Port Kembla to the hydrogen DRI pathway that Chris just spoke about, we'd actually need 15 times our current electricity usage to make that happen. Of course, to underpin that and support that, we'd need around 5 GW of renewable energy generation assets to feed that consumption. Now, Australia's share of renewables is growing, but it's still got a really long way to go. You can see on the chart here, you know, relative to somewhere like Europe, we're still a little ways behind. That's also the case when we look out to the future.
When we look at 2030 projections, Elands is one example suggesting that in New South Wales will still only be at about 65% renewable generation share at that point in time, so a little way to keep going. Of course, as that share of renewable energy generation grows, we also have to grow the firming capacity. It's pretty well understood, I think, that that relationship between the growth in renewable generation share and firming capacity isn't a linear one. We've got, you know, a significant sort of challenge ahead of us there as well, not just us as BlueScope, but, you know, the economy generally. That reliability of energy supply is absolutely critical for a business like BlueScope.
We're a 24/7 operation, and that means we have to see that continual flow of energy coming through the system. The chart sort of speaks to a day-night type issue, but of course, it's not just a day-and-night issue. That can be, relatively speaking, sorted out with some short-duration storage. We also need to be covering the interseasonal variability that requires long-duration storage assets so that we can, you know, deal with, for instance, those scenarios where we might be going for a whole week without significant wind. In terms of cost, when we look ahead at the hydrogen-based technologies that Chris was talking about earlier, what we see is that for iron and steelmaking purposes, the price of electricity that we need to make those commercially viable is actually very, very low.
Affordability, of course, is at the heart of our business. You know, we are of course competing in a commodity-based sector, and we have to be, you know, globally competitive because we're trade-exposed. Australia's got lots of natural advantages, as we all know, in terms of renewable energy resources.
We do have, I think, still quite a bit of work to do as a country to drive those green electricity costs down to internationally competitive levels if we want to see the type of electrification of our economy that many people talk about and also to really help kickstart that green hydrogen economy as well. Now if we move to hydrogen as an enabler, assuming that does become technically and commercially viable in the longer term, then you know, we're going to need lots and lots of green hydrogen. What does lots and lots mean? To put that in perspective, what we'd need is around 1.5 GW of electrolyzer capacity to feed that technology process.
You know, that's quite a lot when you sort of think about the fact that the biggest electrolyzer in Australia today is about 1.2 MW. Today, we don't have very much green or blue hydrogen in the system, as I'm sure you're aware. It's not available at scale. Most of the hydrogen that we have available is coming from steam methane reforming of natural gas. To shift that market and build green hydrogen supply chains, we're gonna need economy-wide solutions. We're gonna need the build-out of very large scale and efficiently planned renewable energy generation, and we're gonna need that generation to be close to the end users of the electricity and the hydrogen. We're gonna need efficiency improvements in electrolyzers at the same time as seeing the capital costs come down.
We also need to see a range of off-takers, for that hydrogen because of course the price at which hydrogen becomes commercially viable, is very different for different sectors. Now at BlueScope, we've got a vision, to build that kind of hydrogen ecosystem in the Illawarra and to take advantage of the projected growth in steel demand that Mark talked about earlier, all whilst decarbonizing our business. As I said, to pursue that hydrogen DRI pathway, we need lots and lots of hydrogen to support it. But in the initial instance, what are we doing today? We're starting modestly. Our proposal is to build a 10 MW electrolyzer, that would be powered by renewable energy.
What that would enable us to do initially is to inject hydrogen into the blast furnace in a trial sense. It would also help us with some natural gas blending in and around our site here at Port Kembla, and we could also use that hydrogen in transport uses, both within our site and external to the site. Over time, I think there's lots of opportunity. We see a lot of opportunity to expand that hydrogen production, and in the initial ramp-up phase, we would use that hydrogen to feed our proposed pilot DRI plant that we're looking at in concept phase at the moment with Rio Tinto.
We've also got a couple of big power generation assets here in the Illawarra that have big hydrogen ambitions, so some of the hydrogen could go to that, and in the longer term, potentially also for hydrogen export. The Illawarra Hydrogen Hub, as we're calling it, is very well aligned with the New South Wales Government's hydrogen strategy. It could also form very easily the heart of a clean manufacturing precinct here in the Illawarra, and it's also highly synergistic with the renewables fabrication plans that we've previously announced and talked about for BlueScope to supply additional steel into the wind, solar, and transmission infrastructure end users.
To help us deliver on that vision, we're working already with a cross-section of stakeholders, a wide range all the way from industry through energy and research. Of course, we're also exploring seeking government funding to help us with that vision. Finally, just to recap on what you've heard from Chris and I today, we're gonna continue to work on the four critical enablers that we've covered off on today. We're also going to continue to advocate for really clear policy that supports decarbonization investment and ensures a level playing field for low-emissions iron and steel making. This includes avoiding the risk of carbon leakage, where local production is, you know, essentially replaced by higher emissions imports.
I'm now going to hand over to Gretta, who's going to give us an update on our climate action progress.
Thanks very much, Anna, and welcome everybody. I'm Gretta Stephens, Chief Executive of Climate Change and Sustainability. You've just heard from Chris and Anna on a lot of the underpinning detail, but what I'm going to do now is just take us a step backwards and recap our climate strategy more broadly, and particularly as we've got a number of new faces in the room. As you may recall, we published our first climate action report this time last year. Although, as Mark has pointed out, we've been reducing our greenhouse gas emissions for many years as just part of continuous optimization and good practice in our business, publishing this report was a milestone that let us actually lay out our climate strategy, and it's across six key areas.
I think you've already heard a bit about reducing greenhouse gas emissions, the first one. Following the steelmaking reduction intensity target that we set in 2018, as of the publication of the report, we added two new, a target and a goal to that. One was a non-steelmaking greenhouse gas reductions target, which covers our midstream activities, and a net zero 2050 goal across all of our operations for Scope 1 and 2. The second component is around creating carbon efficient and climate resilient solutions for our customers. We're listening to our customers, and we're innovating in this space, and if you've had a chance to read the sustainability report that was released last week, there's some really great examples in there.
Things such as cool roofing solutions with lighter colors, increased solar reflectance, and high-strength steel grades that actually let you design for reduced steel usage in a construction project. Obviously, increasing the use of affordable and renewable energy, which Anna has described, but even just through our existing purchasing contracts, what we can do there. The use of quality and cost-effective carbon offsets. We really see these to close any residual gap at the end. Direct abatement is our priority. The case for local and sustainable steel. You will always hear us strongly advocating for the role that steel plays in the circular economy and the value creation that we create in our local communities.
As you read in the sustainability report, we estimate our operations generate about AUD 19.3 billion worth of value, and we employ local people, local payments to suppliers, and support local economies, and through tax contributions. Finally, we constantly monitor, manage, and engage throughout our industry and collaborate across a wide range of partners, which Mark mentioned earlier, and make the case for the right policy frameworks to underpin sustainable domestic steel making. Since the creation of our standalone climate change team in February of last year, we've built out what I would describe as a stellar team, and you've seen a couple already. Earlier this year, we joined with the sustainability team. This just gives you a little bit of a map of who's who, and you've seen Anna and Chris, and Tim is in the room here today.
You'll meet him as well. There he is. Our team structure is designed to support the executive lead team and the board in developing and implementing climate change and sustainability strategies. Again, as Mark said, climate change and sustainability is everybody's job in BlueScope. The key work of generating those projects and continuous improvement is done by the people out in our business units, in our operations, and they do a great job of that and execute those projects that you've been reading about and the case studies in that report I refer you to. This corporate team exists to augment that existing capability and passion out in the business units and provide an overlay to coordinate, support, provide subject matter expertise, and formulate that longer term strategic view. I'll move now to our. Which page I'm on? Our targets and our goal.
Sorry, I'm not wearing my glasses. Our targets and our goal set and track our performance against to reduce the greenhouse gas emissions across our business. It is important to note that our steel making emissions intensity reduction target, which was 12% by 2030, was set in 2018. It is an ambitious goal compared with other steel makers' midterm targets in terms of the size of its targeted reduction. It's really important in this space to compare apples with apples, and our endpoint that we're targeting is actually better than our starting point, where we started, is better than the endpoint that other steel makers are targeting. We are very optimized already, as you've heard a couple of times. Our starting point in 2018 was already substantially better than the industry average.
In terms of our performance against those goals so far, while our annual reductions are aligning with our target trajectory, it's important to note that we expect progress to be lumpy rather than linear, and there's a few reasons for that. As you implement decarbonization projects, you know, some of them take a few years in gestation, and then you'll get that step breakthrough. Also, there is inherent variation in industrial processes and production levels, which affect emissions intensity targets. Our non-steel making target is an example. We set that target this time last year, and we have spent this year developing a good pipeline of projects through our midstream business. There have been some great improvements made during the year, and that's been through the commissioning of projects that actually were initiated before the target was set.
Unfortunately, during the year, lower dispatches did negatively impact on that final intensity number, but it isn't reflective of the fact that there's really good decarbonization activity going on in that space. Some of you might remember this diagram from the climate action report last year, and this is how we've chosen to illustrate the decarbonization pathway to reflect the availability of technologies that can deliver emissions intensity reductions, both in the near term, the medium, and the long term. In the near term, we're working hard to optimize using our current processes, and these include things such as reducing waste heat, reusing indigenous gases for energy, and I'll talk about that a little bit more later, using more renewables, and increasing the amount of scrap we use to make steel.
In the medium and longer term, our focus is on those enablers that Anna talked about and working with our partners and collaborating to explore emerging and breakthrough technologies such as the green hydrogen DRI that Chris talked about and the hydrogen ecosystem in the Illawarra. How do we measure projects against such long-term goals? Well, one of the things that we can do is use our project pipeline as a leading indicator. The capital processes, a number of you will be aware, proceeds through some very defined stages of concept, pre-feasibility, feasibility, and execution. The final investment decision of note is at the end of the feasibility. We have projects in every stage of this pipeline, and that's one of the ways that we can track progress, is how well are we progressing our projects through.
In the concept stage, this includes projects such as our biochar trial, which we'll be running at Port Kembla, our collaboration to explore hydrogen reduction of New Zealand iron sands, which I'll talk about in a minute. In pre-feas, that includes projects such as a scrap melter and coke ovens gas injection here at Port Kembla Steelworks. Under feasibility, we've got our electrolyzer pilot, and we do have multiple projects in the execution stage, including solar projects across our ASEAN sites and the Western Port paint line upgrade. There are some more examples on my next two slides, but if you've got the full pack handy, slide 78 provides a lot more detail.
In terms of initiatives underway, there's some pretty exciting stuff underway at Port Kembla, and you'll see, as we drive around later today, there'll be, the locations of some of those will be pointed out to you. This is helping us in our exploration of emerging and breakthroughs. There's a lot going on, and we've touched on most of these already, so I thought I'd highlight just a couple that we haven't talked about. One is the digital twin model, and this is a lovely, intersection between our digital transformation and our climate action ambitions. It's been developed to support the evaluation of greenhouse gas abatement projects that involve the rerouting of different gas streams around the smelter. As I heard a great line yesterday, it's not called an integrated steelworks for nothing.
There's gas going in all directions, so you can't really assess, well, how about we use the coke ovens gas here rather than there in isolation. You actually have to look at the whole story. This is a full mass and energy model of this very complex process, and it enables us to understand the abatement potential of multiple projects and model and test a range of alternative combinations so we can narrow down on the best, most efficient, capital efficient, and best abatement opportunities. Another example on this slide we haven't talked about particularly is the trial of biochar, and that's essentially still a carbon source, but it's a non-fossil fuel carbon source, which may have potential to partially replace pulverized coal injection in the blast furnace.
Since the slide was made, we've now got 1,000 tons on the ground ready to go for that trial. Over in New Zealand, New Zealand's quite a different process. As Chris mentioned, we use local iron sands over there in a unique direct reduction process. It's a rotary kiln with thermal coal, followed by a melter process that helps to float out those impurities, and that produces iron, which then is mixed with scrap and turned to steel in a basic oxygen furnace. Earlier this year, New Zealand Steel announced a partnership with Victoria University of Wellington to assist them to accelerate the research that was already underway in the Robinson Research Institute to develop a process to use hydrogen instead of coal in the production of the iron from New Zealand iron sands.
The purpose of our funding is to help accelerate that research towards a future pilot-scale plant to test that technology, potentially based at the Glenbrook site. The specific focus there on New Zealand iron sands is because that's a unique process, that we already have over there that most of the research underway around the world is not necessarily going to support the reduction of those iron sands. I think the interesting thing when the R&D is done on this is we do actually expect some really, really good spin-offs that might help the broader hydrogen DRI technology development globally. In addition, New Zealand Steel is also currently evaluating technology options that can further enhance their decarbonization efforts, including the capacity to utilize significantly more scrap in the mix. Finally, to customers, and what are we doing in that space?
Well, we're listening to our customers, and we're continuing to innovate to meet their expectations for products that support improved sustainable outcomes, and including increasing demand for products with reduced embodied carbon and increasing energy efficiency. Our products and solutions are delivering these outcomes in sort of four ways as per the slide there. Advanced metal coating and painting technologies, which have both reduced environmental footprint in production, but also solar reflectance. Supporting longevity and durability, which improves life cycle emissions. Something that lasts twice as long has half the carbon footprint. Energy-efficient building solutions and products, and then infinite recyclability, but also adaptive reuse as steel structures are able to be repurposed. One example, which is on the slide here, is an efficient flooring system that's been developed.
It's got symmetric steel beam sections, and it's for mid and high-rise developments, and it combines strength, lightness, durability. It has the advantage of having high speed of, and ease of construction. It minimizes construction waste. It has inherent fire resistance. The climate spin on this one is it provides concrete savings of up to 60%. That significantly reduces the embodied carbon of the structure. Reduction of greenhouse gas via the use of steel is another approach, not just the reduction in the embodied GHG in the steel itself. When our customers ask us, what can we do to help decarbonize the steel industry?
We urge them to take a holistic view of where they purchase their steel from, and what are those steel companies' climate strategies, what actions are they taking, what are their broader sustainability credentials, and are they in line with recognized global frameworks such as Responsible Steel? We ask them to support their domestic steel makers on their decarbonization journey. Thank you very much for listening. I'd like to talk to you all at the break, and I'll hand over to John and Dave.
Thank you, Gretta, and good morning, everybody. I'm John Nowlan, and I look after the Australian Steel Products business. I'm going to talk today a little bit about Australian Steel Products and, between Dave and myself, we'll also talk about some of the projects that have been worked on, both from a product market development cost and also a carbon reduction point of view. First of all, just a little bit about an overview of Australian Steel Products. We're here today, we're going to visit Port Kembla Steelworks and our Spring Hill plant, so they're a pretty key asset in Australian Steel Products.
Overall, we've got over 100 sites in Australia, if you count our sites that are within the Coated Products Australia business, which is kind of our core steel making and coating and painting part of the business. We've also got our three downstream customer-facing businesses, Orrcon, BBC and BlueScope Distribution. Between those businesses, we've got over 100 sites, and we've got just under 7,000 people, employees of BlueScope within Australian Steel Products, and roughly half of those people are located here in Port Kembla between the Port Kembla Steelworks and the Spring Hill sites.
One of the reasons really that Port Kembla Steelworks is here today and has been successful, and it's a pretty important sort of part of our success for the future, the location from a location point of view, we're obviously on a deep sea port. The local metallurgical coal that's mined in the coal mines behind the Illawarra is a key strategic advantage for us, and we're pretty well located as far as the Australian domestic market goes in that sort of arc of where most of the Australian market is between Brisbane, Sydney, Melbourne and Adelaide.
We at Port Kembla Steelworks roughly last year we made just over 3.2 million tons, almost 3.3 million tons of raw steel in the last financial year. When we shut number six blast furnace in 2011, that sort of put us at a roughly 2.6 million tons, and that increase in productivity that's come over the last 11 years or so is primarily about blast furnace operations and stability on one hand, but also increasing scrap, which Chris talked about on the other hand, and that's really what's lifted our capacity and also our efficiency. The Spring Hill site that I mentioned that takes hot rolled coil from Port Kembla Steelworks. It's one of two major metal coating and painting sites that we have in Australia.
Spring Hill and Western Port is the other one. Both of them take roughly 1 million tons of hot rolled coil a year, and then some of it goes out as cold rolled. We metal coat. We have three metal coating lines on each of those sites, so a total of six metal coating lines, and then we feed into paint lines. One paint line that's located here in this case, but another one in Western Sydney and another one in Queensland. So that's sort of part of the value chain. I guess the other thing that I just wanted to mention was our downstream businesses a little bit more. They are a very important part of our business. They are customers, I guess, of the Coated Products Australia business.
They are also competitors of other customers of that business. From our perspective, they actually are an important part of what we try to do as far as really being a participant in the value chain and understanding where the opportunities are for market growth and market development and really understanding the end customers much better. Those extensive channels to market, which we participate in, as I said, is a very important part of our business here in Australia. If I just move on to another side of the business.
One of the big issues for us, of course, is keeping our costs under control and particularly our costs in the core part of our business in steel making or in iron making, steel making, and then metal coating and painting. That graph that you see on the left of the screen there is really an indication of where our cost structure sits from a cash break-even point of view. We've worked very hard on since 2015 of getting to where we are and maintaining that position because one of our key goals is to be able to maintain our Port Kembla Steelworks at a cash break-even positive at the bottom of the cycle.
That's something that we work hard on, and some of the projects that Dave will talk about in the digital space and the efficiency space, productivity, carbon reduction spaces is very much about maintaining our position there. There are a lot of synergies between our different parts of our business in Australia. But if I just focus on the raw steel making and the coating and painting, they operate in different parts of the cycle. There is some leveling of profitability as a result of the fact that we're actually in different parts of that business. An example of that, I guess, is COLORBOND. It's one of our jewels, but the pricing structure of COLORBOND is very different, if you like.
We're competing on an intermaterial basis, and it's a very different pricing structure to what some of the other commodity products operate at. What we're trying to do and what we are reasonably successful at is making sure that we're generating margins through the cycle and being able to generate returns that justify the reinvestment in the business, in all parts of our business. If I just move on to the market. One of the things that, as well as the cost side of the business, the other side of the business that we've worked very hard on, over the last 10 years is the Australian domestic market.
We are primarily here for the Australian domestic market, and the last two financial years, we've sold a little bit over 2.5 million tons of our steel into the Australian domestic market. If I go back to 2013, we're actually sort of below 1.8 million tons of our steel went into the Australian domestic market. That picture there shows just shows pictorially where we've been able to grow the Australian our Australian steel sales into the Australian domestic market, and it's across a range of product.
It's across COLORBOND, TRUECORE, which is essentially the house framing, ZINCALUME, our metal-coated products, TRU-SPEC, which is a core plate product which we have actually installed two lines now, to make that product, the XLERPLATE, which is our wide plate, and then some of the other uncoated products, the other black products that we've worked on. That growth in market is, I guess one of the platforms that supports the profitability and the future of the Australian business. There's actually a case study there on light gauge steel framing. That's our TRUECORE product, and you can see there, the growth that we've been able to achieve there.
Particularly over the last 12 months, tremendous amount of step up again in that product. That's, there's quite an amount of work that goes on to support that. It's not just about making that product. I mean, we've been working with the design, let's say the roll forming profile with the design sort of software for those frames with the equipment that actually manufactures those frames, the software for that equipment. We've been working with different institutions to train trades in how to use our steel framing products, the Australian standards. There's a whole raft of initiatives that actually underpin that growth.
It's not just about sort of us manufacturing the ZINCALUME steel that actually, the blue-coated, resin-coated ZINCALUME steel that goes into those frames. I mentioned before about COLORBOND. That's one of the jewels for us, and it's a product that we work very hard on from the marketing point of view, but we also have worked hard on it and we continue to work hard on it from the point of view of developing the product and making sure that there's actually very good substance to that product.
People may have seen that we've recently announced or we've recently refreshed our colors, and there's some new colors in the palette for COLORBOND, and I guess that's about recognizing the trends. One of the emphasis there is on the lighter colors which are more thermally and energy efficient. I mean, we've had a couple of colors in that range before. For example, Surfmist and Coolmax, but there's three colors there that are in that lighter side of the range, which is about energy efficiency considerations. It's also, I think the other aspect that we're working really hard on COLORBOND is the walling and the panel applications and the colors that suit those applications and the profiles.
If I just go back to our downstream businesses, the Lysaght and Fielders business, the BBC business, that's one of the areas that they work very hard on is the profiles and the roll forming applications that can actually put our product into not only roofing but also into walling and panels. I mentioned before about the growth in the Australian market that we've worked on with sort of understanding what our customers need, what we need to do to grow the Australian market.
I guess part of that is we also need to support that with capacity increases, and one of the things that we're working on at the moment is Metal Coating Line #7, which we're working on the feasibility study for an additional metal coating line which at this point in time likely to be located in Western Sydney, adjacent to our paint line at Erskine Park. That line would have probably 250,000 tons total capacity at full capacity, and the indicative cost is there. One of the reasons that we're working on potentially putting it there is that it's from a logistics point of view, it takes some of the constraints out of the logistics bottleneck that we've experienced in Port Kembla.
That paint line, nominally 120,000 tons capacity. That's the sort of capacity it's running at today. It would take at least half of what comes off the paint line, and it would. Some of the bare products would go into the Western Sydney market in any case. Really, that line is about supporting our growth initiatives that we're working on in the Australian market to make sure that we don't run out of capacity, metal-coated capacity, because metal-coated capacity is actually ultimately what also feeds our paint lines as well as some of the bare applications like the TRUECORE product. We're working on a new pipe and tube mill in Port Kembla. That's a 10 in mill.
It's a mill that would cover a range of products that currently come into the Australian domestic market. There's somewhere between 70,000 tons-100,000 tons of those products that come into the Australian domestic market today, but there is no capacity or there's no capability in Australia to make that structural tubing today. We want to get access to that market. I guess the other part of that is that if we go to the renewable energy sector, and Mark put a slide up about the amount of steel that potentially goes into the renewable energy sector, today in New South Wales, there is no supply chain into either solar farms for steel going into either solar farms or wind towers.
One of the big components in electrical infrastructure in solar farms is pipe and tube, and a lot of it is heavy gauge, larger diameter structural sections that there's currently no capability to make in Australia. We want to get access to that market as it grows as well. Then the final one that we've got there is the plate mill modernization. What that project is about is improving our capability on our plate mill so that we can put better, higher quality plate into both the renewable energy sector, but also off into the defense sector. That's a project that's about modernizing the plate mill. One piece of that is the Modern Manufacturing Initiative grant from the federal government.
There's several other pieces that we need to be able to put in place. For example, another piece, and again, going back to the renewable energy sector, there's currently no supply chain into wind towers in New South Wales. We're trying to attract a wind tower manufacturer into New South Wales so that our plate can find its way into the wind tower sector. I'm going to hand over to Dave Scott, and Dave will just talk about some of the digital technology rollout at the blast furnace and some of our efficiency improvements. Thanks, Dave.
Thanks, John. I'm Dave Scott. I'm the General Manager Manufacturing in Australia, and the Port Kembla Steelworks is the largest asset, manufacturing asset that we operate in Australia, and that reports into my portfolio. From the tour today, you'll see the size and complexity of our operations and really the opportunity that that has for us to implement digital technologies around robotics and automation and machine learning models, as we continue to modernize the Port Kembla Steelworks. I might just draw your attention to. Oh, I haven't changed. Sorry. Draw your attention to the case study that we have here on the slide. This is our BOF furnace where we make steel.
We implemented a project whenever we make a heat of steel, we have to take a chemical analysis of that heat and send it off to a lab to ensure that the chemistry is within specification for the customer. Once we send that sample away, we're essentially waiting there for the result to come back before we can tap that heat of steel out. The team worked on a machine learning model that gave us an accurate prediction of that chemistry that allowed us to reduce the time between, or the waiting time for that analysis to come back. What we actually delivered there was an 11% reduction in that time between heat to heat, and also about an AUD 500,000 saving per annum.
Really words on a slide here, what you don't see or what you can't feel is the infectious enthusiasm of the team that delivered this project. This was technology that we hadn't used before. It was the first time we'd used edge computing, interacting with cloud-based applications. It's a cybersecurity challenge for us around the data security. We had IT, OT specialists working with our operations teams, our materials engineers, technologists, and data scientists all coming together to deliver this fantastic project. You know, the smiling faces that I remember from this project is one of those lasting legacies that these type of projects leave within the organization. It's a fantastic project.
On top of that, we're looking to continue our shift from our asset looking after our assets from more time-based maintenance activities into more condition-based maintenance activities. Historically, we may have implemented a couple of sensors that we have to run electrical cables back to switch rooms into PLCs, create code in PLCs, create interfaces that operators could look at this data, quite a complex and expensive process. Now moving with digital technology, we've installed our own LoRaWAN wireless network. We have hundreds of sensors that we can sort of plug and play that transmit data wirelessly. We use a software package called Senseye that has advanced analytics and machine learning models that can pick up trends and alert us via text message, via email to abnormal operating conditions for a piece of our equipment.
We get this really holistic view of a condition of an asset. On top of that, we're also modernizing the way in which we do our inspections. Using tablets and the like, and allowing people to focus. It basically takes away some of that admin work and allows people to focus on the really important things in looking after the assets. We're currently running a trial in our Spring Hill plant, and we're looking to roll that out further across some of our other manufacturing sites. In terms of abatement projects across the Port Kembla Steelworks, we've got a range of near and longer-term abatement projects, and the team's touched on a couple of those already today.
The digital twin that Gretta talked about allows us to evaluate the greenhouse gas abatement potential of various projects. Increasing scrap use, we're currently doing a pre-feasibility study about what equipment we could store in the BOS area to allow us to melt more scrap. The next three projects on the list here refer specifically to initiatives that we're rolling out in the blast furnace reline. I'll just touch on them here 'cause I've got some more detail on the slides later on. Effectively, energy efficiency, we're looking at ways in which we can liberate more gas so that we can use that gas to generate more electricity internally, and also install additional generating capacity.
The blast furnace injection project there, as part of the blast furnace reline, we're looking at ways in which we can inject other materials into the blast furnace. We currently inject PCI coal into the tuyeres. If we can substitute some of that coal with alternate materials, we're currently investigating that, and coke ovens gas there is one of the things we're investigating as part of a pre-feasibility study. We're also looking at ways in which we can increase the amount of slag that we granulate and reduce our emissions of H2S. Gretta touched on the biochar trial. We're collaborating with ARENA and the University of Wollongong to potentially substitute biochar for some of the PCI coal that we inject.
Biochar is essentially forestry waste that we make charcoal out of. We've got about 1,000 tons of it on site here now, and we look to start doing a trial before the end of the calendar year. In terms of the Port Kembla blast furnace reline, so number six blast furnace reline, we've got a feasibility study that's well progressed and underway, and we hope to have a further update on the status of that reline in February 2023. For me, you know, the blast furnace reline is really twofold. It secures the financial. It's a financial security.
It underpins the Australian steel business, but it also provides that bridge between the way we operate now and the time in which it takes to get to some of those low-emission steelmaking technologies. We've already touched on that we see that at the moment the blast furnace is really our only way of making the iron and underpinning the Australian steel business due to that lack of scrap availability for prime scrap for EAF production, and we still see that green steel is some decades away. But really, you know, when we reline a blast furnace, we sort of have a 20-year horizon on the life of that asset. This doesn't lock us into that 20 years.
You know, we see that with financial security also comes flexibility, and it'll allow us to pivot and adopt those new technologies as they become commercially available. I think the important thing here to recognize is that while ever we're running a blast furnace, the importance of available prime metallurgical coking coal to operating a blast furnace is essential. If you think about coal and the coke that we make out of the coal, why it's so important, steel is an alloy of iron and carbon. We need carbon in the iron to make steel. Secondly, you know, as Chris has touched on, we need thermal energy to run our process, so the carbon provides that thermal energy.
We need it to act as a reductant to strip those oxygen atoms off the iron ore so we can get the iron out. Importantly, coke also provides a structural element inside the blast furnace. Coke is one of the only materials that we put into the furnace that is still solid at temperatures greater than 2,000 degrees. The coke forms a structural matrix that supports the thousands of tons of material that we charge into the top of the furnace to make iron. It also provides that voidage to allow the wind that we inject in to actually pass through the process.
Coke is a very important part of any blast furnace operation and linking that back to the importance of having metallurgical hard coking coal and the availability of that for the blast furnace campaign is very important. We're continuing to collaborate with government, all of our technology vendors and local industry groups around making sure that this project is executed well. Is that the blast furnace slide
In terms of the blast furnace reline, there's sort of a couple of different elements of the actual reline. There's the traditional reline component, so these are in the orangey color. Essentially, we need to replace all the internals of the furnace, so there's some large refractory carbon blocks in the hearth. You know, we've got temperatures, as I said, in excess of 2,000 degrees, so we'll break all those refractories out and replace those refractories. We'll also replace the internal cooling elements called staves, so large water-cooled elements that protect the shell of the furnace. That's a traditional reline. We'll also upgrade a significant amount of the systems that we've got.
I can still remember the 1990s, but when you walk into the control room of that blast furnace and you see some of the computers there, it's amazing as to how far we've come. It looks like a bit of a museum piece. We need to upgrade some of that, all those facilities. Importantly, it's the abatement technology there as well that we'll be investing. I sort of touched on it previously, but the addition of the waste heat recovery system, as I said, we inject wind into the blast furnace. That wind, we have to get it to a temperature of 1,200 degrees. If we're able to, we do that by burning gas into a refractory element called the stove.
If we're able to grab that combustion waste gas that comes off those stoves, pass it back through a heat exchanger that preheats the air coming in, means we need less gas to actually preheat those refractories. We can reuse that gas elsewhere in our process to generate more electricity. The installation of the top gas recovery turbine, so all the gas that comes off the furnace, we clean it, we scrub it. We plan to install a top gas recovery turbine. It's basically a turbine that relies on the change in pressure of the gas going through the turbine to spin the turbine, and it'll be hooked up to an alternator and will generate electricity.
We think that we'll be able to generate about 13 MW of electricity out of that, TRT, the top recovery turbine. On top of that as well, it's a new slag granulation system. Replacing the old one that was. We've actually had to actually store coal there now, so we're building a new one. This will allow us to, with new technology, it will allow us to reduce the visible emissions that come out of there, and we'll also be able to condense the plume, the steam plume, and capture some of those H2S emissions and keep them in the slag rather than have them in the atmosphere. That's probably about it. I'll hand back to John.
Mark spoke about Project Emily. This is the Port Kembla master plan. Over the next 18 months or so, we have got a process going on to basically develop a vision for the roughly 200 hectares of land that surrounds Port Kembla Steelworks, that's outside of the, I guess, the core operating areas of Port Kembla Steelworks. It's land that is currently utilized, but it's not utilized, I guess, in a way that we couldn't shift it, or we couldn't change the use of it into something that's a higher value use. Essentially, we've engaged a group of European architects and urban designers, the Bjarke Ingels Group, to assist with that process.
I guess Mark mentioned that we've got a 100-year anniversary coming up in 1928. I mean, part of this is trying to think about what the next 100 years might look like for Port Kembla Steelworks, especially given the transition in technology that's gonna need to take place, the change in the infrastructure and ecosystem that will need to occur around Port Kembla Steelworks. We want to get input from the community group, including obviously our First Nations people, as part of that process. These, the Bjarke Ingels Group, they have got experience in reimagining and revitalizing sort of previous industrial sites.
Now, just to sort of put this site into context, I mean, there's a picture on that slide about the size of that land holding and the Melbourne CBD. It's a very, you know, it's quite a sizable piece of land. It's actually got four railway stations that are located adjacent to it on the Port Kembla sort of to Sydney electrified line. That sort of harks back to, I guess, when Port Kembla Steelworks had somewhere north of 20,000 people working here. It's got a six-lane highway that runs adjacent to and through those pieces of land. It's a pretty valuable piece of land. I guess I forgot to mention the port, obviously, as well, that's right there adjacent. I guess that's what the project is.
It's an 18-month project to try and develop that vision and to get input from the community in doing that. I guess in summary, for Australian Steel Products, I think you've sort of heard quite a bit about what we're focusing on. Our key issues is that we are a business that's an integrated business, and we're resilient through the cycle, delivering returns through the cycle. That's really important as far as our investment, not only in sustaining our business, but also in, as Dave Scott talked about, in what's gonna need to happen with the transition of technologies over the, you know, coming decades.
We have worked very hard on structurally increasing the Australian domestic demand for our steel products, and that's a really important part of what we do, as well as maintaining our cost structure and keep making sure we're competitive and efficient. We are working on growing capacity in some of our key assets in order to support that work that we've been doing on growing the market demand. Some of the robotics and digital work that we're doing is about sort of the whole slate of initiatives that we're working on to improve our efficiency, improve our carbon footprint, improve our customer service, and our response to our customers.
I guess one thing that I would add to that is a lot of that technology is becoming cheaper to invest, and some of the drivers to put it in are increasing. So there's a very nice intersection with the robotics and the digital technologies. We're continuing to work on both the near-term and the longer-term abatement projects. So there's a lot of work going on to meet our 2030 targets, both in our front-end Port Kembla Steelworks, but also in our midstream businesses, our coating and painting businesses. They are what I would call incremental improvements or incremental technologies. Nevertheless, they're significant. Then we've also got the work that Chris described about the longer-term breakthrough technologies, particularly in the iron-making space. Dave mentioned number six blast furnace.
It's really about sort of maintaining the financial performance of the business and building a bridge to when these new technologies are both technically and economically viable. That's still got a road to go, we believe. The last thing is that we're actually working on trying to develop a master plan for some of this excess land that takes into account where the business will need to go, the needs of the community, and what other industries might be able to be here that might complement what we do here in Port Kembla. Thank you. I think we might have a Q&A session here.
Is this one working? Sounds like it is. Oh. John, I'd like to have you come back up again for the Q&A, and I'm also gonna have Gretta, Anna, and Chris come up as well. Morning everyone. I'm Tim Rodsted, Head of Sustainability. I also report through to Gretta. I've met a number of you before through some of the investor roadshows we've had over the last couple of years, and for those I haven't, great to meet you. We've got about 15 minutes, I think, for Q&A now. We'll have some from the webinar coming through onto the monitor here. But equally, for those in the room, just please raise your hand up. We've got some mics that are kicking around with Michael and Mark.
Please just state your organization and your name before we kick off. I think we're ready to run down the front here. Michael.
Cheers. Thanks very much. Simon Thackray from Jefferies. Just want to touch on a comment you made wherever you are, Mark, before in the introductory and something that John said. The renewables demand for steel, incremental demand, 2030, and I think you said incrementally 2050, 10 million tons. But then John, your revelation that pipe and tube and plate, there's no local sort of manufacturer or supplier of, for windmills or for solar, and you're importing. Is all that steel for renewables being imported? That's the first part of the question in New South Wales, more broadly in Australia. Two, is there gonna be a mandate for the use of Australian steel for renewables?
Is this on? Yeah. Yeah, so in New South Wales today, there is currently no supply chain into either the wind towers or the solar farms in New South Wales. In Victoria, there is a supply chain via Portland into the wind tower industry in Victoria, and there's actually one into Tasmania as well, but currently not in New South Wales in either wind or solar. I guess that's what we're trying to get that supply chain established both. I guess in the wind tower space, it's about the towers and it's about the manufacture of the towers, and in the solar space, it's about the components that go into those solar farms.
Torque tubes is one of the pipe and tube pieces, the torque tubes that the solar panels actually sit on and rotate that follow the sun is one of those. Today, there isn't the capability in Australia to actually manufacture that size of torque tube.
Simon, it's about building on that structural domestic sales base again. We can add capacity to do that. We're also working hard with governments on local content. For example, New South Wales, for someone to come and set up that wind tower manufacturing capability, they're naturally asking for some sort of indication around domestic content, so that they don't set up a business that's fundamentally at risk. We're working with government on that. We haven't got where we want to just yet, but we're getting a very positive response from the state government here. There's already minimum local content requirements in states like Victoria. Yes, that's part, public policy is part of this.
Sorry, if I could just add. Just to expand that a little bit further though, in terms of WA, you know, when we'd had the LNG boom, it was imported steel for reasons we understood in terms of the spec, but when we're talking about renewables in Western Australia, and these are big projects, what's the position for Australian steel in WA for renewables?
Yeah. Well, those things are, as I currently understand, they're a state-by-state proposition. I guess we are working on it in Western Australia as well. I mean, we're working on it in every state, to be honest. I mean, Victoria is in a reasonable situation, but actually, still in Victoria, in solar farms, there's no supply chain. You know, that's about an Australian manufacturing capacity as well as a local content issue. I mean, we're working on it in New South Wales, we're working on it in Queensland, we're working on it in Western Australia as well. I think right now we're making pretty good progress in New South Wales, as Mark said.
Again, just this is another opportunity we see to grow our domestic sales. A real opportunity. There's no reason our steel can't be used in any of those projects. There's no reason other than the supply chain ability to service them. That's. We see that as a real structural opportunity again.
Thanks, Simon. Another question on the floor.
Thank you. Peter Wilson, Credit Suisse. Just regarding the vision for the Port Kembla hydrogen hub, that versus green iron exports out of the Pilbara, can you maybe just outline the advantages, either you know technical or economic of a Port Kembla-based iron making versus importing from the Pilbara?
Chris, do you want to take that one?
Yeah. I'll have a crack at that one. There's a couple of challenges in the Pilbara. It's not to say that won't be the case, that they'll make green iron there. The challenge in the Pilbara is around distance and capital cost. It's very hard to get people into some of those remote locations and to have a workforce in those locations. The other aspect that I would say is the difference that we have and advantage that we have is the technical capacity of iron making capability and access to universities and places where people want to live to support the type of complex operation that iron making is.
The Pilbara certainly will have advantages in terms of it's got the raw material there, and it's got lots of space to build out a renewable energy sort of infrastructure. The challenges are nonetheless not any simpler. Like, it's still a technical challenge. You've still gotta have a lot of people to do this. When that renewable energy transition sort of builds, getting that energy across locations is gonna be as difficult in the Pilbara as it is here. Maybe there's a few less properties to move through, but you're still gonna have that challenge of doing that. Certainly the way that that renewable energy builds out will be critical to where the future ironmaking will occur.
Thanks, Peter. I might just go to one of the questions coming through on the webinar. This one's from Jodie Barns, who's now at UniSuper. Can you provide some more color regarding the ambition in our emissions reduction targets compared to peers, given the comments on starting from a lower baseline than the global number, and the number of global peers getting SBTI verification? Who wants to start with that one? Gretta?
Well, I might start on the first part, but I think I'll hand to you for the SBTI component of that. I guess really, it's not for me to speak about the quantum of reduction that certain peers have committed to. I guess what we're just urging analysts such as yourselves to look at is, you know, the actual substance of where, you know, what baseline year has been chosen, where were they in that year, the reduction target they've committed to, where does that take them to.
Because when we've plotted that out for ourselves and competitors just to understand how we fit in the space, I think it's coming off a more optimized base means you've got less room to move because it's you can't just do 30% by 30% regardless of where you start, because all these blast furnaces are essentially, in large part, the same process. If you start with a highly unoptimized process, you've got a lot more scope. The other thing is, it's really important to look at what the makeup of the steel-producing assets are inside the overall emissions intensity of any given steel maker, because most steel makers will have a combination of a blast furnace and electric arc furnace, and some are achieving reduction targets just through changing the relative production proportions through those routes.
It's really about digging under the surface of what underlies those targets. For more specific comment on SBTI, Tim's on the technical working group.
Thanks, Gretta. I think you've touched on a little bit around the process route piece too as well. The steel SBTI or the science-based target initiative's approach has been around for a couple of years. There's been some challenges with it. Essentially, many of the organizations that have been certified under that are your straight sort of EAF sort of scrap producers. What's been emerging over the last little while around these initiatives is how do we get to an apples for apples comparison, as we've heard today. A big part of that is around the raw material mix that's coming through, but equally around the vertical integration of the different sort of operations and sites.
Essentially, if you're less vertically integrated and therefore not producing iron, your emissions intensity on a Scope 1 and Scope 2 basis looks a lot smaller. Responsible Steel and now SBTI are looking at how do we actually bring that sort of apples for apples approach. It's sort of starting to look at more of the Scope 3 coming in as part of a mandated process around the SBTI process. Still very much in its early stages. I'm sitting on the expert advisory group along with a number of other steelmakers. I think they're aiming for sort of a pilot or at least the draft to come out by the end of this year.
It's still a work in progress, and we'll say a little bit more on that, Jodie, over the next couple of months. Okay. I think we had another question up over the back here first.
Thank you. Simon Mawhinney from Allan Gray. Just, Gretta, on your steel intensity comments, are BlueScope's aspirations specific to Port Kembla, or do they also benefit from the mix change as North Star becomes an increasing part of the production output?
Our steelmaking intensity target is set at BlueScope Group level. We also will be including a change in mix as part of achieving our emissions intensity target at group level. Having said that, our individual business units have their own internal targets to meet, so every business unit will be pursuing direct carbon abatement projects. Yes, the change to increase production of EAF at North Star is a component of that target.
I see you don't disclose the emissions breakdown between North Star and Port Kembla in your sustainability report. Might you going forward?
Yes, we might consider that going forward. We haven't at this stage because it's really early days, as you saw on my slide around projects in concept and pre-feas, et cetera. You know, a lot of projects come through concept stage and don't proceed, and some do. I think it's important for us to better understand our project pipeline there.
Can I just add to that? I think part of the one of the other drivers in terms of what would cause us to think about disclosing the emissions of the individual sites is we want that clearer methodology across the steel industry. Because at the moment, you're not comparing apples with apples. Going back to the work that Tim has been doing with the science-based initiative, before that, the net zero steel.
Net zero.
Zero Steel Pathway Methodology Project. It's really important that we have a clear, consistent, agreed methodology so that you can then have confidence in what you're actually looking at. I think we're probably a year or two away from having that. Yeah.
Okay. I think up over the back here. We've got a microphone.
Hi. Megan Kirby-Lewis from Barrenjoey. Just a question, just on the blast furnace reline project. How should we be thinking about the impact on the production level as that transition and post-transition occurs? I guess the reason that I ask is just the comments around the incremental improvements that have been made over the years. Should we be thinking that 3.2 million tons is reasonable going forward? As a follow-on, just given some of the new technologies being trialed in the new blast furnaces, any potential impact on operating costs that you could, I guess, speak to?
John, do you want to take that one?
number six blast furnace, the capacity or the inner volume of it is actually slightly smaller than number five, but more or less not much different. Its production capacity when it was shut down was slightly ahead of number five. Number five, a lot of the work that we've done on it has pretty much brought it up to the level that number six was at. I think it's kind of a like for like swap. From an operating cost point of view, I would say they would be very similar. There will be some improvements in efficiency on the new furnace. I would say at this point in time, though, that's not material.
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Yeah. It's Owen Birrell from RBC. Just a couple of questions on the greenhouse gas emissions from some of these strategies you've got. The one that intrigued me the most actually was the plate mill modernization project. You've talked to a 40% reduction in greenhouse gas emissions on that part of the mill. Just wondering what you're actually doing there and what percentage of total Port Kembla emissions is that project?
If I just go to the first part of the question, the biggest part of that plan is to actually replace. There are currently two pusher furnaces on the plate mill that reheat the slabs before they go into the plate rolling process. The plan is to replace those two pusher furnaces with one walking beam furnace. I guess the improvement in efficiency is about two to one. Improvements in technology, burner design, improvements in furnace design, that sort of thing. That two furnace operation going to one, actually, there will be equivalent, probably better throughput from a sort of operating point of view with that new single furnace.
As far as the improvement in Port Kembla Steelworks, I think I'll have to ask Chris this. I think that's something like a 1% intensity improvement.
Yeah.
Just to put that in context. I mean, yeah. It's a more efficient use of the indigenous gas. In other words, the coke oven gas. It means that coke oven gas gets diverted to electricity generation rather than reheating slabs in the plate mill furnace. That's roughly the order of it. Probably speaks to the overall challenge of the intensity reduction in Port Kembla Steelworks. Like, that's a pretty significant project, yet that's where it lands as far as the intensity improvement.
I might just ask a further question, if I may, in terms of the greenhouse gas emissions. The strategy to, I guess, upgrade blast furnace six with all of these new initiatives, obviously very theoretical at this stage, but do you have a sense of how much greenhouse gas emissions you're going to reduce by transitioning from five to six?
Yeah.
It's a good question. As Dave Scott sort of explained earlier, the coke plays a critical role in the blast furnace process. So the amount of emissions reduction isn't gonna be a big number. It's
It depends on how many of the newer breakthrough technologies become viable to be implemented, it could be up to 30%. If CCUS then becomes a thing that can be implemented as well, it could go beyond that. It is a challenging process to decarbonize, primarily because of the central role that coke plays in how it operates. Certainly that number, that percentage is a big number in terms of tons of CO2. We're talking about many hundreds of thousands of tons of CO2 reduced by moving to these new technologies on number six blast furnace.
I think maybe just to add to what Chris said.
When Chris and Gretta talked about that 12% intensity improvement, if I just go to the Port Kembla Steelworks for a minute, I mean, there's a piece of that which is about improving the efficiency of the use of indigenous gas and waste heat. There's a piece of it which is about scrap, increasing the amount of scrap that we melt, and that's primarily in steelmaking. There's a piece of it which is about the decarbonization of the grid. We're talking about Scope 1 and Scope 2 emissions here. The technologies that we are adding to number six blast furnace will help us meet that 12%. Just to put that in context.
Thanks, John. I think we've got another question waiting patiently at the back there, please.
Hi, everyone. Camille Wynter from UBS. We know that the government is currently reviewing the submissions as they look to tighten the Safeguard Mechanism. What type of engagement have you had with the government on this, and how are you managing this risk?
Thanks, Camille. Anna?
Yeah. Thanks, thanks very much. Good question. We have had some engagement, as you might expect with the government already on this. You'd be familiar with the fact that it's still very, very early stages in terms of that consultation process. They've, you know, got the green paper out, and we've put in a submission on that. I think, you know, as Gretta spoke to earlier, our emissions reductions over time will not be a linear sort of trajectory. We're obviously advocating, you know, through our submission process that that is taken into account along with our trade exposed emissions intensive, you know, status. Making sure that, you know, we're not subject to carbon leakage through any of that Safeguard Mechanism developments as it progresses. Still very early stage.
I think the white paper's coming out in December. We'll have more consultation with the government as we go through that process.
Thanks, Anna. I think we've got hopefully one more question and maybe one more if we've got time.
Great. Yeah. Chris Schade from Martin Currie. This one's for Chris Page. You mentioned carbon capture and storage as having some opportunities for Port Kembla, but also some challenges, particularly around scale. Can you just go into what those challenges are and then talk to, you know, what the opportunity would be if those challenges were solved to reduce emissions here at Port Kembla?
When you talk about carbon capture and storage, just without the utilization part, you actually have to have somewhere to put it. Typically, where people are talking about doing that are sort of geographical formations. There's nothing here local that's suitable for that type of thing. So for us here in Port Kembla, it's about the utilization sort of pathway. The technologies that are available in that space are nascent.
They're just starting, and they're at a very small scale. You know, for instance, some people are talking about using some biological organisms to sort of convert that CO2 into a synthetic aviation fuel. That's starting. That's something that's starting now. That needs to be developed. The pilot plants that are on that, they're running a very small amount of CO2 through those processes. Now, we're talking, you know, right here in Port Kembla, we have millions of tons of CO2 to deal with. It's not going to deal with that yet. Now, if we're able to sort of implement some of those other breakthrough technologies like that DRI, then our carbon emissions come right down. It may play a role in those circumstances, I believe.
Maybe the two technologies will meet in the middle, and we'll have a scalable solution to that. It's a long way off. It's a big challenge, but it's certainly a part of the technology scene that we're active in and keeping a very close eye on.
Yeah. The actual capture piece, is that technically feasible, or is that also a big challenge?
Capturing it is okay. Look, we vent all our gases through pipes. So technically capturing it is feasible. But the volumes storing, you know, that's where the challenge comes in, and that's what's not solved yet.
Thanks.
Sorry, Tim, we've run out of time, so we're gonna have to head off for a quick break. Everyone is still gonna be around here for the rest of the morning and also on the tour. Please feel free to ask questions as you're going through, and equally sort of follow up with the Investor Relations team as required. We're going to go for a short, very short break, given where we're at time. Quick bathroom break, grab a bit of food, stretch your legs, and then come back here in about five minutes, if you could. Thank you.
All right, everyone, please find your seats. Okay, thanks everyone. Okay. We might get moving 'cause we're a little bit behind schedule, as we tend to be with these sort of things and the enthusiasm. I'm gonna hand over now to Deanne Howard, so, the Head of Health, Safety and Environment. Deanne.
Thanks. All righty. Thanks Tim. As Tim said, I lead the health, safety, environment function here at BlueScope across the global footprint. I'm based here in Port Kembla, so it's really lovely to have you all in person here. As many of you know, we've got a really long, proud history of managing health, safety, environment across BlueScope. The safety and health of our people is absolutely paramount, as is our focus on protecting the environment in which we operate in. Last year, for those who have watched the webinars from last year, I talked a lot about how we've been evolving our approach to health, safety, environment, and how we've been integrating a number of the contemporary HSE and leadership philosophies into our way that we manage health, safety, and environment here.
Internally, we call that our HSE Evolution, and part of the reason why we say evolution is 'cause it's building on some of our strong foundations. Really proud that in the last 12 months we've been recognized by worldsteel for recognition in terms of excellence for health and safety in culture and leadership. What's been really great about that is worldsteel have taken a number of the principles that we've got in our HSE Evolution program, and they've actually built those into a new training program that they've been rolling out across steel companies globally around the world. Really wonderful to see the impact that we've been creating and the ripple effect for some of our peers.
We're also proud that we've had quite a number of our industry partners, supply chain partners, and contractors also part of our HSE Evolution program. We've had about 150 of those attend our workshops with Dr. Todd Conklin since the inception of the program in 2020. Certainly we work very hard in our networks to create that momentum and to support other organizations who are on the same journey. Within BlueScope, we're now at the point of embedding and operationalizing our HSE Evolution. Today we're gonna have Brett Tarrant, who's one of our managers here, talk about how he's been doing that in his area.
Before I hand over to Brett, just a quick recap in terms of our program of work here, and the slide that I've got up on the screen gives you a few words about what it's about. I'd also encourage you to have a look at the webcast from last year and our sustainability report that gives a really good overview about our evolution. Two of the models that are quite key to our evolution is around the black line, blue line model that you see on the screen. The better questions, stronger solutions. The black line, blue line model looks at the normal variation of work that happens every day across our business.
You know, it helps us to learn from our people around where the blue line, which is the normal variation of work, may be going above or below the black line, which is looking at the way work is designed or the way that we think work is done, and where our opportunities to strengthen some of our controls may be, which is the green. Our better questions, stronger solutions is a really simplistic and easy and effective model for asking questions. It's around asking what's the stuff that could kill you or harm the environment, or for the four Ds, what's dumb, difficult, dangerous or different about the job that you're doing today?
Both of these models at their heart have a real basis on creating psychological safety to really encourage the diversity of thought of our people, and to make sure that all of the ideas that are brought forward are included and listened to. With that, I'm gonna hand over to Brett, who's gonna talk a little bit about how these models work in practice from his perspective. Brett's our manager for coke and iron making here in Port Kembla. He's also worked as the vice president of manufacturing for our NS BlueScope business in the U.S. before returning home. Thanks, Brett.
Thanks, Deanne. Morning, everyone. I've worked for BlueScope for 28 years and really my journey in our safety or part of my safety journey was started with DuPont. Three years ago, I was in the first session that we had with Todd Conklin in the U.S. and yeah, I was one of the people in the room questioning the value to BlueScope because we're actually excellent at safety and what we've done in the past isn't wrong. My application of these new principles over the last few years in the U.S. and back in Australia has showed me that it's about making shifts within our successful frameworks to get better. At the heart of it is actually becoming a better learning organization and there is applications well beyond safety for this stuff.
For safety, it's about coaxing out the information that we don't already see to build that capacity around our significant risks and injuries potential that we have. So we've got the blue line and the black line there, the better questions. What's not up there is our new safety fundamentals that we're rolling out for our leaders as well at the moment. The blue line, black line, I've probably lost count of the number of times I've drawn it on a handrail or in the dirt when I'm out talking to people. What resonates with me is that every time I go through it with people, they really understand and agree with the concept of that's how complex and variable work happens in our workplace.
An example, I guess, is, and you all gonna get pretty up close and personal with this equipment when I take you out to the blast furnace later on. We have the 28 tuyeres that go around the blast furnace. Every stop that we do, we have to change eight to 10 of those tuyeres, and it's hot and heavy work. It's in a tight environment. There's time pressures, all those things, lots of risks. Using some of these models, we spoke to the team and really tried to explore, okay, what worries them in doing that task?
We got a lot of dangerous and difficult in terms of what came back to us, and especially in terms of when things don't go to plan, the blue line, people potentially getting in the line of fire and significant hand risks, back risks and those sorts of things. We got the people who do the work together and we talked about, well, what can we do different? As usual, when you go down that path, we got a pretty simple and elegant solution of supporting with a little chain winch, those big, heavy, you know, it's bolts like this and hundreds of kilos of steel that they're dealing with. That means if something goes wrong, everything's okay. It's supported in the right way.
A couple of weeks ago, we had our most recent shut and I went out and asked the people doing the work, not involved in the solution, what they thought. You know, are we on the right track? You know, does it make sense? And I got a pretty forthright guy that I was talking to, and his comment to me was, "You know, you guys do some pretty stupid crap in terms of safety from my perspective, but this is not one of them. Right? It makes my job easier, it makes my job safer, and I'll use it every time." And you know, that's at the heart of what we're trying to chase down with these new philosophies, is building the solutions that make sense to the people doing the work.
For me, over the last few years, I've really had the chance to reflect on the questions I ask, how I listen, and I think I'm more effective because it's about building trust, right? Finding the next blue line, and the next blue line, and the next blue line, especially with our significant risks. It's about learning in a different way. Coming back to that learning organization mindset. It's about inspiring people to think about their own work in a different way and willing to talk to us about that, and it's certainly about inspiring them to be involved in getting better. It's the building trust, the learning better together, and the building capacity, and that's how I think we'll continue on our improvement on the safety journey. Okay. Thanks, Deanne.
Thanks, Brett. Okay, I'm just gonna move on a little bit to talking about some of our metrics and just our approach here at BlueScope. I spoke at length about this last year as well. We continue to see value in tracking both lag and lead indicators. The lag indicators are important, obviously, looking at a historical performance. But lead are really around us supporting improved capability and improved risk control effectiveness. It's around the future, the lead indicators. They're very complementary to each other. For our two leading indicators that we've really highlighted this year, one's around building capability. We've had over 1,300 of our BlueScope leaders, plus our ELT and our board, all attend HSE Evolution workshops to grow that capability.
In terms of building capacity, our flagship program for this has been around our HSE risk control improvement projects. We had 243 of those across the organization this year. Those 243 projects really focus on a number of our critical risks across the business and strengthening the controls that we have in place. Out of those 243, we had about 180 alone were focused on some of our top ranked risks around falls, mobile equipment interactions, cranes, working on live equipment. Another further 48, that was too hard to put together, were focused on manual handling, and that's part of our broader injury profile, as well.
The picture you can see here on the slide is an example of one of our risk control improvement projects. This one's at the coil plate line here in Hot Mills in Port Kembla. This is around de-banding the coils that we have. Many of you would know that a coil is a bit like a clock spring, so when it's not contained, it has the potential for stored energy. To mitigate this risk, an operator would make sure that the tail of the coil is weighed down by the weight of the coil before it's unstrapped. The strapping itself would have some potential for elastic energy as well as it comes off.
Our operators would be obviously kitted out in PPE, gloves, face shields, Kevlar sleeves to make sure that they were safe. Our Hot Mills engineering team looked at this risk and set out to look at better ways to mitigate against it. They designed a system of work where the coil is actually, through a laser, monitored to make sure that the tail of the coil is always positioned at the bottom and the weight of the coil's on the top. Then a laser signal and a robot work together to identify where the strapping is and to then cut that strapping and put it into a bin. What's good about this project, it's eliminated the need for an operator to interact with the coil and any of the equipment.
It's also removed entirely the risk of stored energy from the tail of the coil, as well as the elastic energy from the strapping when that's come off. It's eliminated also some of that manual handling, and the potential for lacerations from removing the strapping. A fantastic project all done in-house by one of our teams. For our lag indicators, we continue to review TRI, or Total Recordable Injuries. What we really focus on though is making sense out of those injuries. The severity, so what actually may be both potential and actual severity. We have an injury profile, as I said, that's predominantly lower severity, so lacerations, minor musculoskeletal injuries.
In FY 2022, although we had 2.5% of our Total Recordable Injuries were actually what we'd consider higher severity, and the potential to potentially be a fatal incident, but were not. In terms of overall numbers of injuries, I think we recognize that we're not where we want to be. We still are injuring people, and we don't want to do that. I'm also very cognizant, FY 2022 as FY 2021 was pretty tough years, with the pandemic, the disruptions that that's caused across our operations. We've had obvious impacts, due to absenteeism, as well as labor shortages in a number of our areas, across our business. That's been a real challenge for us.
We've had floods, we've had supply chain issues, and all of that has been on the top of some pretty strong domestic demand and overseas demand for our products. It's in that context that I think it's been a real testament to BlueScope that they've managed to maintain a very strong focus on their leading indicators. There's been a lot of commitment across the business for capability, as well as the risk control projects and getting those into place. It's also a testament that our injury profile has remained relatively stable in the last couple of years, and the severity has been relatively low. I'm pleased with that. I'm just gonna move on to my final slide here, which is around environment.
You know, we're immensely proud. I think I've used the word proud a few times today of ongoing commitment to the environment. You know, certainly we've had a framework in place for about 10 years or so around our environmental risks, around land, air, water, waste, noise, emissions, energy. This year we revised those aspirations to make sure that we were bringing in some more guidance to the business around some emerging risks around biodiversity, cultural heritage, moving towards a circular economy, and reinforcing our net zero 2050 targets as well. We've got a great culture at BlueScope. For many years we've had environmental projects as at the heart of what we focus on.
We've had about 125 of these projects over the last couple of years, more than 100 people sort of involved in them. The one that you can see on the screen, I'll just talk to briefly 'cause you'll see it out in the plant tour this afternoon at the blast furnace. The blast furnace team have really been looking at improving the hot metal temperature control. One of the things that they've done is track all the historical weather patterns. The team have been able to predict and reduce a buffer of steam required to stabilize the moisture content in the furnace. Less moisture in the furnace means less energy is required to produce the iron.
This initiative has reduced the steam injection and has subsequently reduced the blast furnace fuel rate. For our annual production rates, that's equated to approximately 19,000 tons less of coke per year and reduced our CO2 emissions by just under 70,000 tons per year. You know, in my more simplistic terms, that's an equivalent of taking about 15,000 cars permanently off the road, and that really resonates with our people. That's only one example of one of our environmental projects that we do right across the business every single day and have done for a long time. It really is a testament to the people that we've got in our business, the capability of those people and their commitment to us and the long game for BlueScope.
That's probably a perfect handover to Rebecca, who's gonna talk about people, diversity and inclusion.
Thank you, Deanne.
Thanks, Rebecca.
Oh, thank you.
Thanks.
Hello, I'm Rebecca Roberts, and I lead the people function for the Australian business. Earlier this morning, Uncle Richard welcomed us to Dharawal land, and I'd like to acknowledge that we are meeting here today on Dharawal country, and also to pay my respects to Uncle Richard as a local elder. I'd also like to personally thank him for his guidance, his advice, his counsel and his support as we embark on our journey to engage more with our local Aboriginal communities. I too am very proud to be here today to talk a little bit about our inclusion and diversity journey and our approach at BlueScope. At BlueScope, inclusion has been a core value and always has been. We are...
It is steeped in our purpose, where we talk about strengthening our communities for the future, and also in our bond where we recognize our people are our strength, but also that we work and operate in our local communities, and that therefore we need to be reflecting those local communities. Globally, we operate in 20 countries and over 100 operational sites. That means we have a tremendous opportunity to leverage that diversity of experience and of thought, and to help us become a more innovative and creative organization. To do that, we also need to have an inclusive environment, one in which people feel valued, feel that they can be trusted to speak up, and feel that they have a voice, that they can be heard and be listened to.
Our approach is very much steeped in a belief that inclusion and diversity is a strategic enabler. We've had a focus since 2016 that's been very deliberate and very considered to actually improve our gender diversity, because we saw that as having the biggest opportunity. Since then, and more recently, we've actually gone beyond gender, and we've started to work on other areas globally, such as disability, and also First Nations, which we're working on in Australia, and also in New Zealand, where we've recently been looking to work very closely with local iwi, and a cultural advisor from the local iwi to inform that engagement.
We've also been working in our North American business, and very proud to say that in the last year, we have actually had over 40% of our new hires come in from ethnically diverse backgrounds. We're very keen to make sure that we measure our progress, which we've been doing particularly up until now around gender. We want to hold ourselves accountable, but we also recognize that there's a long way to go, and in many ways, we're still at the beginning of our journey. Now, I'd just like to talk a little bit about the progress that we have made in terms of improving our gender diversity. There are some global figures on here.
We're very proud that we have a gender balance board of 50% and we welcome our new board member who's here today with us, Jane . We were also proud that we've achieved 40% representation at our executive leadership team level. Again, we also welcome a new ELT member, Divya today, who's here with us as well. That means that we have met our pledge and our commitment, which we joined with HESTA a year ago. We have more opportunity. It's much more of a challenge, I think, at other levels of the organization. We are making progress at the executive level. In the Australian business, we see more examples of women leaders coming through in the pipeline.
I was with the leadership team of Australia in Adelaide for the last two days, and we had the privilege of meeting three inspiring women leaders in our plants, operations, production, and also a sales manager, state sales manager for our distribution business. I guess we're most proud though, in terms of the progress that we made and have continued to make on our operator representation. Globally, over the last five years, that's gone from 6% to 16%. I'd like to move now toward some examples and some case studies in the Australian business, where I'm from. Our approach to inclusion and diversity in Australia is also informed by the global strategy, and we have three key areas of focus, being diversity, inclusion, and culture and communities.
In terms of diversity, gender balance remains a priority for us, and I'll share some information you'll see there in terms of our own progress on gender diversity. The operators' base was very low within Australia at 3% only five years ago, and we've managed to triple that to 17%, which we are proud of. In my next slide, I'll show as a case study perhaps some of the approaches that we've taken to improve that. We're also working very hard in terms of diversity reflecting our communities and with our First Nations framework. We have a very diverse group of people across Australia. You would have seen from John's slide the number of locations we have. We have geographical diversity, but we have a diversity of culture.
We have over 102 different cultural backgrounds across our 7,000 employees in Australia. We have 79 different languages other than English, and we have 59 different countries of birth. Again, you know, that diversity in order for us to really make sure that people are able to reach their potential, we need an inclusive environment. One where people are valued, where they can speak out, and where they can be heard and listened to. Brett just gave us a wonderful example there in terms of that approach with safety. We also have a diversity in terms of age in our Australian workforce. Everyone from school leavers who we bring in as apprentices and cadets every year, all the way through to people who are transitioning into retirement in the near future.
We work hard to try and support people at those different life ages and stages. A big part of that support is actually around our approach to flexible working, and well before COVID, we introduced our B-Flex guidelines around flexibility. One example of that is in our Hot Strip mills, where we actually have a job share between two team members who are operators. One who's returned from parental leave, and one who is wanting to cut down on their hours because they are looking to transition to retirement. A wonderful example of where our approach has enabled flexibility to actually meet the needs of those two team members, but also for us to retain those team members when in other cases we may have lost them if we hadn't managed that flexibility.
I'll talk a little bit more around the First Nations framework shortly as well. In terms of, let me explain a little bit more in terms of the case studies here that we have. First of all, the first case study is, well, how did we manage to triple the number of women operators in our business over the last five years? This actually entailed a complete rethink about our approach. One of the fundamentals here was that we no longer ask for experience in industry. We no longer ask for forklift operator licenses. We try and modify our adverts to be appealing to a range of people in the community, and we make sure that we don't refer to that industry experience.
Our campaign's called Blue Boots, and we talk about blue being the new black, and we talk about a pair of blue boots waiting for you. We specifically targeted through social media areas where women would be looking through, and with the hope that we can actually encourage, through those adverts, an interest in BlueScope and an interest in coming and exploring a little bit further with us. That seems to be working. We also then go through a very considered approach in terms of recruitment and that whole process. We encourage our candidates to get to know us and to really have a good understanding of the capabilities required for the work and also the working environment. We have video interviews, we have on-site visits, and we have interactive assessment centers.
Our last Blue Boots campaign in Port Kembla, we had 1,100 applicants. This was only in the last few weeks. Given, you know, that you hear consistently around the shortages and the difficulty of getting candidates, we're very proud that so many people were interested in applying for BlueScope. Of that group, 59% were women, 1% gender fluid or non-binary, and so pleasingly, 16% were Aboriginal, which is the, probably the highest that we've ever had, and I think is a tribute to some of the work that we've been able to engage in with the local communities to try and explain the opportunities, the fantastic opportunities we have here.
Again, a credit to Uncle Richard Davis and other elders who are supporting us in getting that message out. We've also, in terms of second case study, this is a bit of a milestone for us, which we met last year, when we had three women, all-women team in our BOS, which is our basic oxygen steel making. This is at the heart of the steelworks. This is where the iron becomes steel. You'll see here, Jill, Ruby, and Kiana. Really interesting backgrounds. Ruby was an engineering cadet, and in here she's an operations coordinator. She's since moved to a technical coordinator, and she has full accountability for scrap into the BOS.
Doing so therefore contributes to that greenhouse gas emission reduction. Kiana came from an IT background, and Jill ran a coffee van. Examples of the sorts of backgrounds that are very diverse and different that we encourage people and candidates to come from. Out from the plant, you'll see people who nurses, former air stewards, baristas, retail, so great, tremendous diversity. You won't see these three together today, unfortunately, but that's a good news story because two of them have actually been promoted and gone to even greater responsibilities in their roles. The third piece I'd like to just highlight is initiatives working with local communities and schools.
Because we believe that we, A, we need to give back into the community, but B, we also have a responsibility to make sure that we are really targeting our young people and making sure that they are aware of the opportunities within industry, within manufacturing, and specifically within BlueScope as well. We're in partnership with the New South Wales Government, and we're working closely with three schools in the Illawarra. One of our senior leaders, Simon Took, who you'll meet today, is the sponsor for this. What that means is many of those young people are coming on to plant to understand exactly what it's like to work here and those opportunities. We're also having an opportunity to give back into the curriculum to make sure that it's real life.
A really critical initiative there too. That takes me to our First Nations framework, which we very proudly launched internally in August. This has been a work in progress for the last two and a half years. We had a strong foundation, I think, to build on, 'cause we've for a number of years now, we've partnered with organizations. We've brought interns into our plants, and we have also had a very strong partnership with Jawun, which Jawun partners with industry, with companies, and with business. We partner with them in the NPY Lands in Central Australia, and there we support local communities and organizations towards empowerment and self-determination.
Over the last 6 years, we've had more than 30 secondees, actually on country for 6 weeks, and using their BlueScope capabilities and skills, and experience, they're giving back into major projects for those organizations. Dave and I had the privilege of being there, a few weeks ago and meeting those organizations, meeting some of the secondees that were up there at the time, and we were so proud of the feedback that we got from those organizations about the value add and the, how appreciative they are of BlueScope people. Both their empathy, but their pragmatic can-do and the lasting impact that that has made on those communities. You'll note too that with the framework, you'll see a beautiful piece of artwork there. We had that specially commissioned.
It's using all standard BlueScope COLORBOND colors. You'll see the big circle with the concentric backline circles. That is BlueScope. Then you'll see the other circles, which are our different sites and locations, which are all connected. You'll see the green leaves, which are representative of rebirth and nurturing and growth and those relationships with our local Indigenous communities, and the hands that connect and our appreciation for that. Our framework covers four key pillars. At the heart of that is community. That is around how do we engage? How do we have those respectful conversations? How do we listen? How do we learn? And in many cases, how do we unlearn? Our Jawun partnership has also helped us very much with that approach as well.
Employment, I mentioned that 16% in our last Blue Boots campaign identified themselves as Aboriginal or Torres Strait Islanders, which I think is a terrific improvement. We're working closely here in the Illawarra with local indigenous employment agencies, the Yilabara and Warrigal, excuse me, and we actually went out and met with them, and we met with potential candidates and actually helped them in terms of what that process would look like, helped them with the interview type questions and gave them some practice. I think that has all helped as well.
Now that we have about 17 new people to join, we're going to also work around some cultural awareness with our leaders and employees to make sure that it's a culturally safe place for people and that they do feel welcomed. We're also working on a broader employment strategy with Julie Moore, a local elder who's working with us from the National Indigenous Australians Agency, and she's also helping us develop a procurement strategy, and she's out there in the community, speaking to local communities, local Aboriginal companies around the opportunities at BlueScope and assessing capability and where we might have greater connections. We've joined Supply Nation as well, and we've had a 10% increase in spend since we've joined them.
We spend something like nearly AUD 7 million with Aboriginal companies across Australia. Very importantly as well, we have a strong focus on employee engagement, developing cultural awareness. We celebrate NAIDOC Week, and this year we encourage people to learn much more about country and the acknowledgement of country. I hope that gives you some insights in terms of our approach, but also the progress that we've made in terms of inclusion and diversity. We are very much at the beginning of that journey, and we acknowledge that we have some ways to go, but we're proud of that progress, and it's a very exciting future. Thank you, and I'll now hand over to Andrew, who is going to talk about supply chain sustainability.
Thanks, Rebecca. Hello to everyone. I'm Andrew Watson. I'm Head of Group Procurement for BlueScope, and I oversee our supply chain sustainability program. Our approach to supply chain sustainability is governed at the group level by group-wide standards and processes, and with a lot of training and support provided again at the group level. The actual mechanics of our work is driven and led within business unit and country procurement teams across our operations. Our local procurement teams lead engagement with suppliers and understand the operations of our suppliers on the ground. I guess the core of our focus has always been to engage with suppliers that share our strong values and who are committed to sustainable business practices and also responsible sourcing themselves.
At a high level, we've mapped the principal country of supply for suppliers that make up the top 90% of our spend across our global business and have worked through those suppliers in order to prioritize our engagement. This approach is, you know, of course, it's predominantly focused on our tier one suppliers. However, there are some instances where we have engaged with and assessed tier two suppliers and will continue to do that on a risk basis. At a high level, our process is captured on this slide. We prioritize our engagement with suppliers based on risk, but also on leverage. We wanna be putting our resource into the areas where we see the greatest risk and where we believe we can have an impact.
Globally, we spend over AUD 13 billion and deal with tens of thousands of suppliers, so that prioritization piece is really important. We engage with suppliers because we need our suppliers to understand our expectations and requirements, and ultimately, we need our suppliers to develop systems to identify and mitigate and manage and remediate their own risks in their supply chains. This understanding and engagement is a really important element of our approach. Of course, we do assessments and we assess both to provide feedback to the suppliers, but also to guide our own decisions. You know, this assessment, it's important to identify gaps for improvement opportunities for both us and our suppliers, and also to understand best practice.
Our preference for that assessment process is for independent assessments, because of their integrity and consistency, and also so that suppliers can share those independent assessments with other clients. Lastly, we work with our suppliers to improve both our processes and theirs. Our focus through this work is on improvement rather than removal of suppliers. Needless to say, you know, we're very dependent on our suppliers and it's in our interests to see their businesses improve and thrive in the right way over the long term. I think the next slide. Sorry. Yeah. The next slide captures some more details about our assessment approach, and the data on that slide is available in our reporting.
What I did wanna focus on though on this slide is, just spend a little bit of time talking about the importance of partnerships in this field of work. Of course, many of the key ESG risk factors that we're focused on are complex and dynamic. They vary significantly by geography, and the risks can also change quickly depending on external factors such as economic change, conflict, and of course, pandemics. In order to stay abreast of this, and to have some ability to gain a deeper understanding of specific risk factors and events on the ground. It's really important for us to have close relationships with partners who have that on-the-ground experience and intelligence.
Over the last several years, BlueScope has established some really strong partnerships with leading ESG organizations whose experience and in-depth knowledge enable us to guide our own program and to identify the risks that we need to focus on. In 2018, we partnered with ELEVATE Limited to build our assessment framework, our assessment processes, and our supplier code of conduct. Today, we still partner with ELEVATE to understand our global risk landscape and to undertake social impact audits at both supplier and BlueScope sites. EcoVadis were founded in 2007, and they're the world's largest and most trusted provider of business sustainability ratings. We use EcoVadis as our primary supplier assessment tool. We use various counterparty risk monitoring platforms such as RDC GRID, EiQ, and 360° Watch.
For deeper dive assessments, we use a number of specialist organizations, including Control Risks. We use RightShip to vet vessels based on environmental and working conditions criteria. As a founding member of ResponsibleSteel, we've partnered with other industry and civil society stakeholders to develop the performance and transparency standards required for responsible sourcing and production of steel. We're members of Be Slavery Free, and we're active members of their Fight Club. Be Slavery Free are able to bring the human element to the table from their own experience in working with victims of modern slavery, debt bondage, and their close contact with survivors. We're also active members of the UN Global Compact Network Australia and actively participate in their modern slavery community of practice.
While, you know, there's probably a lot more work to do in this space, you know, particularly in our capacity in the remediation area, we're committed to continually enhancing and adapting our relationships with key ESG organizations to help us fill out our program of work. This next slide is largely taken from our recently released modern slavery statement. It shows what we feel are our key slavery risks, modern slavery risks in our supply chains. I've listed, I guess four or five of the key risks there. On-site contract and labor hire services are high risk for us, particularly in locations with a high prevalence of foreign and domestic migrant workers and also poor labor regulations.
This is a high risk because we aren't in control of the recruitment engagement process for workers. We rely on our partners to do this. It's an area where we're piloting the use of deep dive labor hiring contractor audits in several locations to develop a better understanding. Raw materials can be high risk because of remote locations in high-risk countries and also because of high-risk processing activities. We have a focus on our raw material supply chains for some time and continue to concentrate on assessments, particularly in higher risk geographies. This is also a particular area of focus for the new ResponsibleSteel product certification standard, and we welcome its intent of encouraging the mining industry suppliers to pursue certification through mining industry specific standards.
In shipping and logistics, of course, can be high risk due to the isolation of workers, and also poor regulation. Again, this has been an area of focus for us for some time. Lastly, manufactured goods. Manufactured goods are probably the most difficult responsible sourcing supply chain because of the multilayered nature of that industry, and reduced visibility and leverage as you move down through layers in that supply chain. Our predominant approach here is where possible to engage with reputable suppliers who have mature supply chain management systems and strong controls in place. However, it remains an area of concern for us and many other businesses around the world as concerns persist in the major manufacturing markets of China, India, Malaysia, and Thailand.
I guess, you know, much of the initial focus of our supply chain sustainability program of work have been on mapping and assessing the profile of our direct suppliers. We're striving to enhance this in a number of ways. We're now seeking to better understand the risks beyond our tier one supply chain. This includes engaging with traders and brokers to ensure effective due diligence on their source suppliers, and in some cases, working with them on assessments of that supply chain, assessments and audits in some other key or high-risk tier two suppliers, verification of responsible sourcing approach in our key raw material supply chains, and partnering with key suppliers on improvement opportunities. The other key factor here is we're also seeking to develop further understanding of responsible sourcing risks within our own BlueScope teams.
It's, in fact, very similar to our principles and approach for safety. It requires
The education and empowerment of our people on the ground to identify and recognize risk, and it requires that we provide them with the tools to call out, escalate, or mitigate those risks when they see them. I've captured on the slide here a great example of this from our team in Malaysia. In this case, our Malaysia procurement team collaborated with security suppliers to ensure the fair treatment of Nepalese migrant security guards working on BlueScope sites. Some important controls were agreed with the security suppliers and have now been implemented and those controls cover key risk areas for foreign migrant workers in Malaysia. Fees for recruitment, travel, and working visas are all borne by the security provider.
Freedom of movement is managed through providing access to safe storage for all of the workers where they can store passports, visas, and personal valuables, and none of those are retained by the security provider. Contracts are agreed with workers in their local language, so that they understand the working arrangements and appropriate working hours and payments for overtime are included in all of those working agreements. This really important initiative was possible due to the increased awareness and capability of our local procurement team in Malaysia to identify those modern slavery risk factors in their local context and act on it.
I guess I'll sum up by saying I'm really proud of the work and the progress that we've made in this space, but also very mindful that, you know, in some areas I think we're scratching the surface and we've got a lot more to do. Particularly understanding lower levels in our supply chain. I'll be very happy to answer any questions you've got, and I'll hand over to Tim for the Q&A session. Thank you.
Thank you, Andrew. I'll have you come join us up here as well, and I'll invite Rebecca and Deanne up to the panel and Tania Archibald, who I forgot to introduce on the previous panel, but I think she's around. No, she's not joining? Sure. Okay. All right. On to the next panel. I might jump to the floor first if there's a couple of quite a few questions on this side of the room. Mark.
Okay. Yeah, thanks. Anderson Chow from Jarden. Just quite interested to know the increased level of automation that you touched on briefly. Can you give us a sense of what level of automation are you currently running at for the steel products business and, you know, is there sort of a good global benchmark or are we the global benchmark? And then related to that, you know, could you sort of from your past experience, you know, talk about or quantify, you know, what sort of increase in production output or cost savings that comes out of this increasing automation? Thanks.
All right. I feel like I need to phone a friend on that one, Tim. Sorry. That's all right. I'm not sure. Can I call on John or Dave at the back of the room who might give a bit more of a context on that one? I was talking from a very much health and safety perspective in some of the risk control projects. There's certainly been a big parcel of work going on across the whole business around automation, not only for health and safety, environment benefits, but also production and efficiencies. Do you want me to defer to the back of the room or what would you like to do, Tim, on that one?
No, I think we'll come back to that one when we have a conversation about innovation after this.
Oh.
We can probably touch on that.
Perfect
that answer afterwards as well.
Your question was too soon. Thanks, everyone.
All right. Oh, sorry, over here. Sorry.
Hi. Emily Whelan from UBS. Thank you very much for your time today. I have a question about safety of contractors. I saw in your latest sustainability report that you don't split out full-time employees and contractors in your total recordable injury rate, but I was wondering if you could kind of colloquially give us a feel as to where the injuries are occurring. Is it contractor or full-time, and how you cascade the, you know, detailed safety programs down to contractors and subcontractors? Also noting that in the last couple of years, the fatalities and serious injuries look to be coming from the contractor workforce. Thanks.
Thanks. We include the contractor hours wrapped up, so the, there is some in there. We have about 5,000 contractors, 15,000 employees. If you look at that sort of ratio, those hours are split sort of 25/ 75. In terms of our contractors, you're right. They're slightly higher in terms of the actual frequency of injuries. In terms of severity, there isn't much of a difference from that perspective, as well. But obviously you'd be well aware of our contractor fatality from a couple of years ago, here in Australia. Certainly when things don't go well, they can definitely not go well for anyone, whether they're an employee or a contractor. Hopefully that answers your question.
Thanks.
Thanks, Deanne. I think over this side now.
Hi. Good morning. Julia Richards, Vanguard. Andrew, question for you. I'm just interested in terms of sort of the supply chain monitoring that you were talking about there. Keen to understand a little bit more about what the oversight of that supply chain monitoring looks like, how far down the supply chain you actually do that monitoring, and where there are any issues that are identified, is it focused on remediation or what would cause termination of an agreement?
Okay. Thank you. Yeah, so the most of the monitoring we're doing at the moment is in our tier one supply chain. There are probably a handful of tier two suppliers in that mix, and predominantly where we're buying through traders or brokers and, you know, we're aware of the tier two supplier in that case. Sorry, the second part of your question about issues identified, I think the monitoring that we do through EcoVadis and through, you know, some of the, I guess the internet-based monitoring tools, they typically don't sort of give you deep insight into, you know, a modern slavery issue or something like that unless it's become.
Unless it's hit the media or become a, you know, or going through a regulatory process. They merely give you insight into where there are process or policy gaps. They certainly, you know, if you see recurring incidents, you know, for an organization that sort of raises some alarm bells and gives you cause for concern. I mean, as I said during the presentation, our approach where we see those sorts of things is to work with suppliers on improvement and not sort of look to terminate supplier arrangements.
I can also say that, you know, we do factor in some of that information when we're going through sourcing processes and we have moved away from. Well, I don't think we've terminated any contracts, but we have moved away from some suppliers where we've not seen improvement in some of the gaps that we've identified.
Thank you. I'm Kirsten Callander from Victorian Funds Management Corporation, VFMC. A question for both Deanne and Rebecca. In light of the Respect@Work inquiry illuminating the gendered nature of sexual harassment incidents and poor psychological safety, I was just interested in whether you're thinking about evolving your safety reporting to disaggregate by gender and look at the intersection between this both perceived and actual psychological safety and sexual harassment with your diversity and inclusion leading and lagging indicators.
Yeah, certainly. Okay. In terms of the Respect@Work, yes, we are, we actually have a working group, a global working group that we're actually with our employees talking about what that actually looks like and what that might mean and how we might implement some of those. In terms of that broader picture, yeah, absolutely we do. We also monitor very closely any reports of any nature of grievance, whether that's sexual harassment or bullying. We report them, and then we monitor for trends, and we monitor for patterns and of course, yeah, we look at. I mean, we encourage that reporting, you know, as which was part of that Respect@Work.
We encourage the reporting. We encourage that speak up culture so that we can then identify where we have an issue, and then we can actually proactively deal with it.
Maybe just further to that, in terms of the reporting that Rebecca's talking about, that's quite public within our organization, probably not something we've publicly gone out with and linked to health and safety lagging indicators. Mainly for the reason that at the point it would become an injury or an illness is the point that it would come to us rather than a report or an investigation.
Thanks, both. David.
Good morning. David Wilson from First Sentier. Just a question for Deanne. When do you think we get to the point for across the steel industry where you get sort of common reporting around safety? 'Cause, you know, always this sort of apples and oranges being compared and, you know, and even going beyond that and even into the sort of other manufacturing areas. You publish your stats, Steel Dynamics publish theirs, Nucor publishes theirs, but it's very hard to get a sort of comparability.
A couple of things going on more broadly is that there is sort of a global standard being worked on for quite a number of years, and there's not a lot of consensus, if I'm really honest. That's broader than steel. I'm just saying that's generally. Certainly OSHA is probably one of the leading ones where there is a little bit of alignment on what they include and what they don't include and how they calculate. We probably would align more so to the worldsteel reports, but even then, there is a lot of difference between different steel companies. Part of the reason being is we all have slightly different risk profiles as well, so it's not always easy to compare.
We have different concentrations of contractor versus employees, and again, not easy to compare some of those. To be honest, I'm not sure that we will see that anytime soon. I think part of it is also tied up, if I'm honest, around a question around what does it give us in terms of indicating whether it really shows whether we're a safe organization or not, as well. I think there's this growing shift in the industry around that, and that question of what do the frequency rates really bring.
Thanks, Diane. Tim?
Yeah. Thanks, Tim. Question for Rebecca. What's your thinking around setting targets for those other aspects of diversity other than gender that you talked about, please?
Yeah. Absolutely, we're already looking to set some targets around, for example, the Aboriginal employment, that will be our next focus area for sure.
Okay. Actually, Rebecca, probably just another one. We get quite a few questions, and you touched on it a little bit about today with the First Nations framework. Just in relationship to whether we're pursuing a RAP.
We thought long and hard, and this, our framework's actually been developed over the last two and a half years. You'll see that framework in many ways resembles a RAP, so those four key pillars are also in our RAP. The way in which we approached it over those last couple of years is we've been having a lot of discussions with a variety of different local Aboriginal community organizations, particularly here in the Illawarra, where we have our very large asset and our site and a very large employer.
Those discussions were very informative, and what we discovered was that it's going to take us some time to really build that engagement and build that relationship, and we want to do that in a really sustainable way. We don't want to be, if you like, a one-hit wonder. We want to actually build this for the long term, for longevity. We have the support of those local communities to take this approach around the framework.
Great. Thanks, Rebecca. I think we've got one more question. Moana on this side of the room.
Thank you. Moana from Alphinity. This might be a question for Rebecca, but I was wondering how you get a sense of how effective your reporting channels are through your organization when you're trying to promote that speak up culture related to instances of sexual harassment, bullying, discrimination, and how you really view the actual use through the organization. Whether you're finding more incidents are reported through line managers or external ethics lines or internal sort of HR services?
Yeah. That's a really good question. I think in terms of encouraging that culture of being safe to speak up, it's multi-pronged. If you start, for example, as you say, with managers and with our front line leaders and team leaders, you know, we've always encouraged and expected our leaders to be walking the floor, to be talking to our people every day and walking that floor, both from a safety perspective, but also in terms of that's their ability to actually interact, to engage, to find out what's really going on. We have different needs in terms of not everybody will speak directly about an issue to their line manager. We acknowledge that.
Hence, we have that global ability to actually have that reporting through a hotline. As I said, we're encouraging that. We've had campaigns over the years to actually really make sure people are aware of that. In between, I think those two things is a program that we've piloted in the last year and we're about to roll out more broadly, which we've called Step Up, and that's really empowering our teams, our team members, along with their team leader, to have a safe and open conversation about how they're all going to behave, what they value, what's good behavior, and also giving people permission to call out bad behavior. I think that's going to be a really powerful tool.
We've had fabulous feedback from the teams that have gone through that, and I think that's going to be a really powerful tool that will help our broader team members and really improve and build on that culture that we have.
Just to add, I can't remember, Tim, if it's in the sustainability report or the modern slavery statement, but there's a great sort of case study on speak up champions in the ASEAN business where, you know, obviously, you know, some of the cultures' environments that that our business operate in, people don't wanna talk to their direct manager about issues, so there are some other contact points in the business for them to be able to do that with. And there's also in the modern slavery statement that's just been published some transparency about the number of sexual harassment and discrimination claims that have been raised in the business.
Great. Thanks, Rebecca and Andrew. I think we're out of time for questions now. We're gonna move on to the next piece. Thank you, panelists, for the Q&A, and thank you for the questions. Next, we've got Sean Wong to come up and talk about innovation. Thanks, Sean.
Thank you, Tim, and good morning, everybody. Sean Wong. I look after product innovation and technology based here in Australia. In the next 15 minutes, I just wanted to take you through a little bit of an insight as to what our innovation capability and capacity is and the direction that we're heading in. Hopefully that might answer any questions you may have. Innovation, I think if you think about what innovation is, think about the difference between invention and innovation. There are lots of inventions around the world. Every day, somebody's coming up with some new invention, but innovation really doesn't occur until you can match that invention to some sort of market desire that adds value, that generates value. I guess if you think about where are we going with innovation, it's probably worthwhile looking at where we've come from.
You've heard the word proud a few times this morning, and I'm gonna use it again, but we've got a long and proud history of innovation going back, you know, 60, 70 years. If you think about products like COLORBOND steel, it's now 66 years old as a brand, and you've got to look far and wide to find product brands that, you know, are that sort of duration and are still considered a leader in the market. In most of the markets that we operate in, it is still very much a leader. We do this, I guess, by continually developing the technology and either using our own technology or adapting technology from others. The important thing is that we understand the market need, and then we're matching those technologies.
If you look at our history, COLORBOND wasn't invented by BlueScope or BHP Steel, we were back then, or John Lysaght. It was actually invented and commercialized over in the USA, but we were quick to see the technology, see a market, and be able to blend the two. Yeah, that's been a critical step. ZINCALUME steel, as another example, wasn't invented here. We didn't invent it as a company. It was invented by Bethlehem Steel. It was actually shelved. It didn't have a market. They couldn't find a way to commercialize it as a replacement for galvanized steel. We seen an opportunity around light gauge products in roofing and walling, and this product matched perfectly from a technology point of view.
It was able to displace galvanized in that space, and we innovated ZINCALUME steel to the point at which we purchased that company, we acquired that company, and we've played a role in, I guess, rolling out GALVALUME as a trademark and a product globally. Next generation ZINCALUME steel is something we launched more recently, 2013, and that has been invented here. It's an example where we did invent the technology. We've patented, protected it, and taken that to market. I guess I'm just raising those as examples where it's not always our technology, but we do play a role where we either invent it ourselves or we acquire it from somebody else.
I guess we've got a long history of both products and solutions in terms of innovation with the many brands you can see on the page. The innovation pipeline, if I flick to that. Where are we going? It's important to think about, you know, we've got to address today's needs in terms of innovation, but we've also got to address and anticipate what the future needs may be, and that's much more difficult. Thinking about where we need to be in 10 years' time and trying to match the technologies we're working on today to be relevant and contemporary at that point in time is a real challenge. We take the hop, step, jump approach, so think about it incremental to breakthrough, hop, step and jump.
If we start with the hops, it's really important today and for today's business to ensure that we're tuned in with our customers and our markets, and that we're able to to find products and solutions that meet the needs of customers today. That can be pain points, they can be opportunities and growth. We do play a role where, if I take the Australian business as an example, we roll out 12-16 product innovations every year that are direct to customers or impacting the customer in some positive way. In the digital space, some of that's quite incremental or an op as well, and that can either be helping a customer or it can be helping our efficiency in either time or cost, which again translates out into the marketplace.
The steps are more midterm, and they're really about market inspiration as opposed to customer inspiration. These are the things that if you go out and ask the customers what they need in 5 or 6 years' time, it's not really tangible. It's really hard to get an answer. We're looking. I guess we're reading the tea leaves. We're looking at what the macro trends are doing around the globe. We're looking at where regulation's going. We're looking at the problems the world's suffering, and we're looking at trying to invent products or acquire technology that can place us in 5 or 6 years' time to ensure that again, we have a contemporary solution there. Some of the areas that we're working on in that space, energy efficiency, and I'll talk about that in another couple of pages. Sustainable coatings.
We're looking at increasing durability and lifespan, and we're already a leader in that space. You may have seen a couple of weeks ago, we launched our new COLORBOND colors, and we also uprated our product warranties to 45 years. That's just nudging the edge of a 50-year design life for our products, which is, you know, a pretty important step. That's underwritten by us and backed by us, not by somebody else, you know, we start doing this when there's a claim or a problem in the marketplace. I guess in the jumps, it's more challenging again. Trying to anticipate where the market is in 10 years' time and what consumers or customers may need is quite difficult. This is where, you know, we believe that it's not really market inspiration.
This is around strategy and technology. Where is the technology that's being unearthed and enabled? Where could that take us? It's also around just strategically, where do we wanna be in 10 years' time, and where do we wanna participate? An example there is, more recently, as in two weeks ago, we just finished our solar surface accelerator. That's an area. Solar surface is a real challenge. I guess we're all familiar with those generation one technologies that sit on top of a roof, those glass PV modules. They're great in terms of cost efficiency, they're great in terms of energy conversion, but they're not that integrated.
You know, they sit on top as a sort of an afterthought, and we've had continual feedback that we, you know, we need to have a product that has that integrated some way into the building or into the surface. We've been trying to come up with better solutions than that, and we have had a couple of runs at products that we've introduced into the market, and then we've backed out and shelved them because they either haven't had the right cost or price point, or they haven't had the right efficiency. They've looked better, but they haven't met those other needs which have been critical.
You know, when it comes to figuring out what a solar surface of the future may look like, we're very familiar with companies around the world, research organizations, all the big universities, both here in Europe and the USA, that work on solar. We're familiar with the private research organizations, and we're collaborating or working with them regularly enough to know what's coming out of the labs and what might constitute an integrated photovoltaic solution. A lot of that's in the monitoring space. A lot of it still fails to come out of the labs. It's high risk, and many of those ventures tend to die on the vine. The Solar Accelerator was an opportunity for us to use BlueScopeX, our BlueScopeX partners, and try and unearth the startup ecosystem.
What is it that we may not know about that startups are playing with that may not be directly involved in the big research houses we work with or the universities? We put the word out globally, and we narrowed a bunch of applicants down to five, and we took five startups through our 12-week accelerator program for two purposes, really. One was obviously, you know, for us to help. We're an organization with good resources, and we're able to help some of these small startups. Secondly, for us to unearth some technology we may be able to invest in and co-develop.
What we found was a wide range of applicants, and the five that we narrowed down to were out of the USA, Australia, India, and Israel, and we took them through the 12-week program, and they pitched and they've got some discussions going now for investment. It's been a really good program, and we've helped five startups at least get through their next phase and help secure some funding and some deals, and we've learned a lot along the way in terms of technology. If I move on to our people. We are considered here in Australia the global center of excellence for metallic coated and pre-painted products, so that's our midstream business. Our team that's directly involved with research development innovation consists of 86 scientists.
We've got scientist engineers, and of those, about 40% have PhD or Master's qualifications, and we consider those the deep specialists. We manage the innovation through a portfolio management office. So we've got essentially a bunch of parallel programs we're running, and we use a governance stage gate system in terms of how we regulate, govern, and decide what goes and what doesn't go through the next gates. At the front end of the process, we're using design thinking, so human-centered design. With our markets, we're basically trying to tune into where are the trends and where do we need to go. We're continually investing in state-of-the-art equipment, and I think if you had a walk through our labs, you'd see that our equipment is, you know, up there with the best.
We've got similar to what the universities are running at the moment in terms of our material investigation techniques and methodologies. We've got accelerated corrosion and paint degradation testing that rivals the best in the world. We've got a lot of good equipment that our scientists use to, I guess, characterize and develop our products. We've got a pilot plant, and I guess we've got lots of collaborations going on. We've got active collaborations with seven universities in Australia. We've got four overseas collaborations with private research houses underway currently, and of course, we work with our suppliers. When I talk about, you know, invention versus innovation, the other half of the equation to innovation is understanding the market, and I guess this is something that I feel we're quite unique around.
Most steel companies will sell to a customer, and they kinda hands off from there, and it's up to their customer to go out and understand the value chain from that point forward and figure out what the customers want. We do work all the way through the value chain. From a technology point of view, we wouldn't get the insights that we get to enable us to make the products that we make if we didn't have the voice of not only our direct customer, but their customer, and the designers and the builders, the specifiers, and then finally the consumers. We're getting feedback continuously from those areas because we target communications from our direct customer right through the value chain to the end consumer.
Through the various marketing tools that we use, we're getting that continued feedback about what people want. It's a really important thing. I guess we've got to be clear on what our strategy is, and I believe we are, which targets and segments we're going after, and then getting, tailoring that communication, that message through to get the feedback that we need and also to be able to support the product development. It's one thing to hatch something in the lab, scale it up in a lab onto a pilot line, and then run some internal full-scale trials. Trying to introduce something that's significantly different and better into the marketplace at some point results in disruption.
At some point, someone in the value chain has to change what they're doing today versus what they were doing yesterday, and that means training, it means new systems, or it might mean a different service offer to the market. Whatever it is, it's disruption. I think the other thing that we do really well in innovation is with our sales, marketing, and supply chain teams, it's a cohesive cross-functional effort to go out and understand how this might be better for the market, but there's a bit of pain along the way. How do we help hold hands along the way and get it out to market with the least possible pain and get the transition to occur? That's often, again, where a lot of innovations stop dead because someone in the channel just says, "I don't want a bar of it. It's too hard.
Take me back to where we were. That little micrograph there, I guess, is an illustration of that. That's the size. That's a tenth of a human hair in thickness, that micrograph, and that's demonstrating just the sort of analysis that we get down to to understand paint degradation. That's a painted product, and in that particular micrograph, we're understanding after 24 months of exposure exactly what's going on at a crosslinker level, a resin level, down in, almost down to the molecular level. From there, we're basically engineering and reformulating to overcome, you know, that degradation process to keep the product lasting longer. I guess the final couple of things. Sustainable products. I mentioned earlier that this was one of our steps. We've been a leader in the market with this, I believe.
Thermatech technology we introduced in COLORBOND some time ago, and it's all about reflecting more solar radiation and having the roof absorb less solar energy, keeping the building cooler. We're currently working on the next generation of that, and obviously won't go into any confidential detail. But, you know, we've been a leader in this space for quite some time and hope that we continue to remain there. The ZINCALUME steel with Activate technology I mentioned earlier, it's another one that, you know, has been a real key one for us. From a life cycle analysis point of view, if you look at it across 18 categories, it was improved over our last product by 18%-43%, depending on which category you're looking at. A significant step forward, and we're now working on the next generation again.
In terms of leveraging our global footprint, the little map there, the dark blue shows you that we scale out. We work on technology platforms, and then we aim to scale them out, but we leave enough room to tailor them for each region. So if I just focus on one example, the dark blue COLORBOND. You know, here it's a product that's about durability and performance lifespan. But up in Asia, where there's a lot of carbonaceous fallout, it was about stopping it from staining and looking dirty very quickly. So while we had the basic platform of COLORBOND go into that region, we put another technology over the top, which we call Clean COLORBOND, basically to try and keep the product looking clean for longer against that carbon fallout.
Just an example of how we scale out and, you know, we continue to work on the platforms and develop them here in the Center of Excellence with a view to scaling them out through the globe and as relevant to the markets and the customers in those regions. I think that would probably finish me up there, Tim. I hope that's just given you a very quick summary of the capability and capacity we have, the Center of Excellence, our approach, which is quite unique in some ways, and some of the directions that we're heading in, particularly around sustainability and climate. Thanks.
Wonderful. Thanks, Sean. I'll get you to join us for the panel as well. Tania, I think, is joining us this time, not on the previous panel. Welcome.
Right. Is John joining us? No, I think we've got Gretta and we've got Mark gonna join in for this panel now. All right, do you wanna go that way?
Yep.
Okay. First question here on the floor.
Hey, I'm Chen from Bank of America. Just a question, from the technology side. I know you, BlueScope owns the brands, but how about the technology itself, the trademark and IP, does BlueScope own those? How do you think your competitors, how easily they can mimic the technology themselves? Thank you.
Yeah. It's a bit of a combination of both. In some cases, we do own the technology, and in other cases, we will either purchase the technology or we'll have some sort of joint collaboration agreement where we share the technology. From a competitor point of view, I think most times they try to get the same technology as us. We're often, if I take next-generation ZINCALUME as an example, we've been first to market on that. It's an alloy composition which is unique and proprietary. We've got 20 patents on that, and we have those patents, I guess, applied for and granted globally across our complete footprint. We launched that in 2013, and it's taken probably five or six years for competitors to start to reverse engineer that and develop something that's close.
Importantly, you know, our patents, I guess, give us that protection that we can sustain the premium position and be able to differentiate that by the technology and the trademark. So, you know, that's one example where we own it, but there are others where it's not our technology. Some of the paint companies own the technology, for example, but we will add the, I guess, the special sauce, herbs, and spices, if you like, and enhance their technology and have an arrangement where, you know, we have some exclusive purchasing advantage for a period, a small period of time. Yeah.
Thanks for that. Just a follow-up. Is there any economic benefits or cost, not having the technology, but purchasing the technology itself? How long would take, say, from the technology to a brand, and how long would take that you think your competitor would take from the technology to the brand, to the marketing? Thanks.
I don't think there's too many competitors that have the brand, you know, presence that ours have got in the sense of those technologies. By being able to get or own that technology or develop that technology, the advantage we get, I guess, is we're able to, you know, build the brands further. Even when the competitors, I guess, are handed that technology maybe five or six years later, or they've developed something similar, I guess we're already onto the next thing. You know, we try to keep that competitive advantage by continually developing the next generation as soon as we've launched the, you know, the previous generation.
Some of the feedback we get, Chen, from companies like Nippon Steel. I think because of our heritage has been in building and construction, our products, our branding has been a natural next step in that space. We have Nippon Steel say to us.
We don't get how you guys brand. We've never done that. We don't know how to do that. Part of, I think, the package that we bring in those relationships as well is our know-how and capability in that space. It's unusual for a steel company to have branded products like we do, and in many ways it's more of a building product space than it is a steel maker space.
Great. Thanks. I think another question over here.
Just a quick one. Anderson Chiu from Jarden. Are we likely to consider setting up an R&D center in the U.S., you know, given our growth ambitions over there and you know, especially the metal coated products? Thanks.
I don't know. I think I don't know if I'm qualified to answer that, but I think it's probably too early to know. We've clearly got to do a lot of work to, you know, make sure that we position the U.S. business really well. As to how much technology we need to invent there or take across and innovate, I think still remains to be, you know, something we need to work through. Yeah, I don't know, Martin.
As Sean said earlier, I mean, this is the center of excellence, no question. Part of our challenge as we grow is to stop leveraging on John and his business and apply those capabilities in other parts of the world, because it is a little unfair for the rest of the portfolio just to rely on John. There's a balance there between the learnings that come from the center of excellence versus our expansion in North America. We're very excited about the opportunity to take a branded and packaged offer to the United States. Currently, the market's very different there. It's a toll rolling process. You buy some steel from someone, you buy some paint from a paint company, and then Coil Coaters, the acquisition we've just made, puts it together.
We think there's a great opportunity for us to take some of our branded and packaged offer to the U.S. and offer a different alternative for the market.
Yeah, I was just gonna reinforce the point. There's a lot of IP, know-how, process understanding that needs to go from Australia to the U.S. for us to be successful. The capability, the understanding we have in Australia will transfer across. There's no doubt that that's a clear part of our strategy for the short, medium term.
Great. Thanks, all. Simon.
Yeah, thanks. Actually, Sean, good to see you again, mate. Push versus pull, right? I mean, we talk a lot about from the product end and the innovation and, you know, from, as a steel maker and a steel innovator. But you're actually a pretty strong marketing company as well. How much are you sort of getting the pull from the consumer end versus how much you're pushing into the market and how does that differentiate you, I guess?
Yeah. Thanks, Simon. It's a bit of a combination. If you think about that hop, step, jump I talk about, the pull is definitely from sort of some of the steps down to the hops. Clearly, we can see the pull there. When it comes to partway through the steps up to the jump, that's where we push. You know, that's where we've got to try and, I guess, read the tea leaves and look at where the macro trends are going, look at where regulations are going, keep our finger on the pulse of what's emerging from a, both a technology point of view, but also, you know, from a social and governance point of view, where are things heading?
That's where sometimes the market's not ready, and we've got to slowly find the way to push that out 'cause we know it's gonna be timed right. It's a bit of a balance.
If you took an example as a wrap on a house, right? I mean, you know, when we used to talk about COLORBOND a couple of decades ago, we were focused on the roof. Maybe John can answer the question. I mean, as a percentage now on the full wrap of the house, where has COLORBOND gone from and to in terms of penetration, do you think, John?
Yeah. I mean, the roof is still a big deal for us, and obviously we've been growing our share of the roofing market. I think as fast as we're growing, trying to work on the walling products and the cladding, you know, the roofing is actually probably still pushing out faster than we are in, from a total sort of tons point of view. The only other thing I'd add to that, I mean, TRUECORE, for example, I mean, you'd have to say that was a push that to start with. A lot of the work that we did developing that product and developing the building systems and that sort of thing. I mean, the last couple of years, though, it has been pretty strong pull, right?
Because of some of what's gone on in the timber industry and maybe the realization that maybe steel was a really good alternative. Yeah. The background was push, but pretty strongly the last two years, I would say, we actually had trouble keeping up with sort of the demand for our product and the demand for the systems and that sort of thing. Maybe the only other thing that I'd add to it is Sean works for Kippa. He's sort of got a bit of an overview of what we do right across Australia. There's a lot of work goes on in our downstream businesses, too. In our BBC business, like some of the walling and cladding profiles and the sort of market development there, it's come out of BBC.
You know, that slim floor slide that I think Gretta had up, you know, that sort of product, that building system, that came out of Fielders, right? Which is part of the BBC business. There's a lot of sort of work in those downstream businesses, working with customers and understanding what they need and then doing it themselves or feeding it back into Kippa about this is what we need.
Thanks.
Thanks, John.
I-
Over here. Yep.
Thank you so much. I have a two-part question on the funding and financing of the innovation projects. The first is, a few of the projects or potential opportunities you outlined have, I suppose, carbon savings or have a relation to the E part of ESG. How do you think about partnering with entities such as the CEFC, CSIRO on those projects? And then-
The second part is when you're going to develop projects or you're looking at efficiency, how do you think about the potential to generate carbon offsets or ACCUs under the efficiency program?
Gretta, Tania, both of you.
A couple of my friends going in from here.
Look, I can't really answer the question about the funding because the type of innovation that we've been talking about here is really, you know, that invention innovation stuff. We are involved in some CRC projects, and there's a portfolio of those in terms of looking at building systems and combined products. You know, that one example I can think of from last year's sustainability report was sort of a hybrid of steel and glulam beam type of thing. There is some of that. In terms of the generation of any form of carbon credit or carbon unit, we haven't gone there in terms of products. At this stage, it's probably more of a Scope 4 thing, which is sort of really emerging.
We're really focused, you know, our priority is our direct abatement of our Scope 1 emissions in the steelworks, so we're sort of starting at the big end. We do a number of things primarily with co-products, where we are actually taking action in our business to reduce emissions in other people's business, and I think that's part of that collaboration across the value chain, and I think that's where this product stuff comes in. No specific focus on trying to generate any form of credit for that at this stage.
I guess on the funding, just to take that further, there's a number of funding vehicles we use. I guess we start with, as John said, are paid for by the Australian business. The OpEx of my team is really coming straight from, you know, the Australian business. The projects though, depending on their scope, they could be funded directly out of the Australian business. Other times, you know, we'll take it to ELT and say, "This is a global project that really would benefit all of the BlueScope businesses, not just starting in Australia." That will be funded, you know, in a way that we transfer money between units and everybody kind of wears a bit of that funding. That's sort of internally.
Externally, we do use grants. We do work with the universities and we gain grants for it. The example there is the Steel Research Hub. We're on the second hub now, the second of; they're both five-year hubs. We completed the first one, where we had 14 different programs of work, partly funded by us, partly funded by the federal government, and we're now into the second round of those. That's the second sort of funding model. Then I guess the third is direct contract. Where we find interesting technology that we want to invest in, we may just work directly with that party and invest and co-develop that technology together.
I mean, there is a lot of stuff that we work on in Australia that gets transferred. I mean, there is not very much of it funded outside Australia, I have to say. Just going back to the carbon credits, I mean, we sort of, we're sort of faced with that issue in the Australian market quite a bit. I mean, it is something that we're working on with one subset of our product, and I won't go into that. I mean, one of the things that I would say that we see is, just as an example, there are some people who would say that 25% of scrap, they would allocate to that, to a certain amount of their product and make certain carbon claims about it. That's not our approach.
I mean, I think that's kind of the sort of thing when Gretta said before, just understand what really sits behind some of that accounting. It's pretty important because that's. People make claims about that 25% of scrap that they might put through an integrated steel process like ours, that's kind of dubious at best. I mean, the other thing that I'd add to it is that every bit of scrap that goes into our process, and I won't talk about anybody else's, was originally made by a blast furnace. We're recycling sort of what came out of a blast furnace historically.
Now, I've got to wrap up, Tania, but you look like you're pretty hungry to get in and have the last word.
No, I was just gonna put the tail on the funding question. Just stepping back for a minute. If it makes commercial sense, it's basically get on with it. You know, if it fits the strategy and it makes commercial sense. If it's something that looks way over the horizon but it's really interesting, this is where all of the innovation techniques that we've been learning over the last five, six, seven, eight years come to play because you don't need to make a big bet to understand if something's gonna work. All of the concepts around piloting, testing, running smaller scale, that's really, I think, starting to pay off in spades now because we're not making big bets.
More on the carbon side, 'cause I think this sort of goes back to the earlier conversation, where we've got projects where we think they make sense but the economics don't work, that's when we start looking at, well, what level of optionality are we talking? What level of capital spend are we talking about? If we think it's really interesting, that's when we've got to go and start having conversations with government and the like around co-funding arrangements. If it doesn't make sense, then we're not gonna progress with it. We go back and move on to the next option. There's always got to be a commercial overlay.
Thanks, Tania, and thank you all to the panelists, and all the panelists we've had today, the questions we've had from the floor, also through the webinar as well. That concludes the discussion, I guess. Obviously we've talked a lot about sustainability reporting and other materials. They're all available on the website. You'll see the links in the presentation from today. Thank you very much for joining us here and for those on the webinar.