Good morning, ladies and gentlemen. My name is John Bevan, I'm the Chairman of your board. On behalf of the board, I welcome you to BlueScope's first ever hybrid Annual General Meeting. As the necessary quorum is present, I declare this annual general meeting of shareholders open.
I would like to welcome to the stage Uncle Richard Davis, who is Chair of the Illawarra Aboriginal Corporation and has also worked in business development, helping aboriginal startups for the Indigenous People's Technology and Education Centre for over 30 years. Richard is a former employee of BlueScope, although it was probably BHP in those days, having worked at the Port Kembla Steelworks on the plant for the 10 years prior to that. He's an important figure in helping to shape our surplus land transformation and master planning work here at Port Kembla, where we are taking a designing and with country and culturally respectful, First Nations approach. Welcome, Richard.
Good morning, everybody. First of all, I'd just like to acknowledge Mark.
John.
And John, and the board of directors of BlueScope Steel. Thank you for wanting me to come and do a welcome to country on behalf of the traditional owners' land that we're meeting on. Thank you very much. Appreciate it. Look, yeah, a welcome to country is very important in this day and age. It showcase that we're growing up as a nation. We're starting to get it. We're starting to understand that aboriginal people will always be first peoples of this nation. Unfortunately, some people don't understand it, don't get that. That's their problem, that's their issue. We know who we are, we know where we come from, and we know that we are the first people of this nation.
It's great to see that an organization such as BlueScope are starting to, you know, support and work with traditional owners of the land and continue to make things better in our community, and we appreciate that. If we can move forward as a nation, respect and understanding each other's cultures. We are different, but we are the same in a lot of ways, too. We're all human beings at the end of the day. You know, unfortunately or fortunately, we're all gonna go to the same place. That's a fact. You know, whether you know, that's a fact. We're all going to the same place.
While we're here, let's respect and understand each other and making sure that we make our society, our community, Australia, the world a better place for everyone. I f we can do that, then, you know, it's about what's in here, you know, what's in your heart, and what yous wanna do in community and making sure that society is a place that we can all strive and move forward as people. Thanks for the board of directors. As I said, a welcome is very important.
I know I get a little bit excited sometimes when I talk. I'm trying to get across the importance of working together and coming together as a nation because for far too long, there's always big divides, and big business is big business and community is community. We're coming together and making society a better place. aboriginal people are part of that. For too long, aboriginal people have always been on the outside. I think we're getting better, and I think if we can continue to move in that direction, as I said, it just makes our society, Australia, a better place. My elders are very important in our community because they are the people showing me who I am as an aboriginal person, to be proud as an aboriginal person of my own country.
Without their perseverance, their fight, their endurance, I don't know where we'd be, because a lot of them people that have gone past, they had a lot harder than what I had. I'm a lucky bloke in a lot of ways. I can do the lot of the things that I can do. You know, we're a democratic society, but back in the day, aboriginal people didn't have that, didn't have that opportunity. I'd just like the people to remember, learn about aboriginal culture. A s I said last night, I say in my speeches, it's not just for me, and it's not just for aboriginal people. It's about all of us understanding we're all one, we're Australian, we work, play sport all together, so why not learn about aboriginal culture? You know?
One thing I'd always like to say is there's not a perfect culture in the world. No way there's a perfect culture in the world. We've all got our flaws. Doesn't matter where you come from, doesn't matter who you are, we've all got flaws in our culture, and aboriginal people are part of that as well. I mean, we're not perfect, but if there's a perfect culture out there, then show me. You know? I think that'd be very, very hard to show me. I'll get on with the welcome, and then hopefully, BHP. Sorry. I'm sorry. I've been hanging around these fellows now for a while, and I still get it w rong. BlueScope. You know, maybe it's when I used to work at the power department at the BHP.
You know, it still resonates with me with that. Yeah. I'll do the welcome, then yous can get on with the important stuff of running BlueScope, making sure that yous continue to do what yous do business-wise, community, investment-wise, and making our society a place that we can all live and work and play together. [Foreign language] 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, Shoalhaven River, Southern Highlands. Within the Dharawal nation, we have 13 aboriginal tribes, clans that have occupied this land for a very long time. As I said, we've been here for a while. We're still here. We're still part of community. aboriginal people, in a lot of ways, we're a reserve culture.
Some people probably don't realize that, we're not a culture that sort of gets out there, portray that we're doing this and doing that. I'm a business advisor in the community, helping aboriginal people looking at starting their own businesses. You don't hear about that. There are aboriginal people in our community that have got business, that started businesses. We are doing things in our community. Unfortunately, you hear the negative side of cultures. Not only our culture, but other cultures, the negative side. If we can talk about the positives a lot, makes our day a bit better. As I said, my elders are very important. Without them, I don't know where we'd be. I'd like to acknowledge my elders.
What I'd like to say, too, is Australia with p eople from other parts of the world come and made Australia. We are a multicultural society. People from other parts of the world have come and made Australia their home. Great. Brought their foods, their cultures, and, you know, all that stuff. A s I keep saying, at the end of the day, we're all together. I mean, human society, doesn't matter where you come from. You got your beliefs, you got your culture, i t doesn't matter where you come from. I think w e forget that a lot. We're human beings. At the end of the day, we're all human beings. If we can remember that, then I think we're heading in the right direction.
Without any further ado, I hope that BlueScope continue to move forward. You know, like, it's an industry that's one of the biggest in Australia, biggest in the world, and I hope that they continue to move forward. As Mark was saying last night about, you know, the way we work, renewable energy and all that kind of stuff, I mean, you know, we need to think about the planet, because if we don't have a planet, we don't have nothing. If BlueScope can work towards doing that kind of stuff as well and with other partners, then makes our society, makes our community, makes our global community a better place. Thank you for inviting me today to the board of directors, and I hope that, you know, we meet up again one day, eh?
Thank you very much. Thank you.
Thank you, Uncle Richard, for that heartfelt welcome to country. Thank you everyone for joining us. We're extremely pleased to see BlueScope shareholders present here today after not being able to meet in person for the last two years. I'd particularly like to welcome BlueScope's graduates, cadets, and current and former employees. Let me also extend a warm welcome to those who have joined online. We are here today in Wollongong, just a few kilometers away from our largest global site, the Port Kembla Steelworks. This is the first time we have held the annual general meeting here. I pay my respects to the traditional owners of all the lands where people are watching from today, to elders past, present, and emerging, and to all First Nations people with us here today.
I will now hand over to Michael Reay, our MC for today, to cover some important procedural and technical housekeeping items.
Thank you, John. Welcome everybody to BlueScope's 2022 Annual General Meeting. My name is Michael Reay, I'm head of corporate affairs for BlueScope in Australia, and it is my pleasure to be your host today. It is great that we're holding the AGM again in person. We've had a couple of years purely online due to COVID, but, and especially hosting it here in Wollongong. You know, it's an iconic part of our DNA where the Port Kembla Steelworks is. It's the first time we've done it outside of a capital city in our 20-year history, so very exciting to be hosting it here in Wollongong today. Thank you. Come on.
This is also our first hybrid AGM, so we haven't done one of these before. We've had online or face-to-face, but not both. It's gonna be a little bit different, so I'd like to welcome the people who are online and also on the telephone. We do support hybrid meetings going forward 'cause it enables our shareholders to access and participate in the AGM, which is what we're all about. Given it is our first hybrid AGM, the format might be slightly different, so bear with us to our previous meetings. I'd like to cover off some procedural housekeeping matters up front.
For those of you who are present in the room today, you'll be given a card when you registered this morning. Yellow cards are for shareholders and proxy holders who may speak and vote. If you've got a blue card, they're for shareholders who may speak but not vote. Red cards are for visitors who are welcome to observe the AGM but not speak or vote. For those online, we will shortly cover how you can vote and ask questions. However, if you have any trouble using the online platform during the meeting, please refer to the virtual meeting online guide, which can be accessed on your screen.
It contains all the information you'll need to know about how to vote, how to ask questions at today's meeting. You can also call the help number shown on your screen for any further assistance. Let's cover off how to vote and how to ask a question. My apologies. Thanks for pointing that out. Good pickup.
For those shareholders and proxy holders physically present at the meeting, your voting paper for the poll is on the back of your admission cards. In order to vote on a relevant motion, a shareholder or proxy holder must mark the appropriate box for, against, or abstain. Proxy holders who have been directed to vote in a specified manner must vote in accordance with those directions. For your vote to be valid, proxy holders who have open votes must place a mark in the box for, against, or abstain.
Once the chairman opens the poll, if you wish to vote early, just complete your voting card and then place your card in one of the ballot boxes which are positioned at the exits of this room. If you have any difficulty in completing your voting paper, please see one of the Link staff members who are at the front, who will be able to assist you. For shareholders joining us online, to register a vote and to get a voting card, please click on the Get a Voting Card box at the top of your screen and enter your proxy number or shareholder number and postcode. Or if you're outside Australia, your country of residence. The notice of meeting contains information on where you can locate these numbers if you do not already have them.
To vote, you will need to click either the for, against, or abstain voting button for each item of business and then click on the Submit Vote. Online shareholders and proxy holders attending may vote through the online portal at any time during the meeting. You may edit your voting card as many times as you like while the voting is open.
How to ask a question. In terms of how we'll manage shareholder questions today, for each item of business, we'll take questions here from the floor first, and then I'll read any online questions on your behalf to the Chairman, followed by any telephone questions. Shareholders present with a card can ask questions. If you wish to ask a question, you should, at the appropriate time, make your way to one of the microphones, which will be at the front of the two middle aisles here, and give your name to the attendant, who will then introduce you to the Chairman. You may then ask your question. Shareholders and proxy holders online can submit written questions anytime from now by clicking the Ask a Question box, which is at the top or the bottom of your screen.
If you have yet to obtain a voting card, you'll be prompted to enter your security holder number or proxy details before you can ask a question. If you do have questions, I encourage you to submit them as soon as possible, as there might be a little slight delay in them being received on our end. In addition, on your screen, you'll see the virtual meetings guide. This also contains all the information you'll need to know on how to vote or how to ask a question. If you do have any problems, there's the help number shown on the screen. Shareholders and proxy holders who are on the telephone, press star one on your keyboard to ask a question. If at any time you no longer wish to ask that question or make a comment, just simply press star two.
We will answer questions in accordance with the item of business as they relate. If you are asking a question today as a representative of a particular shareholder, organization, or group, please include or say that at the start of your question. We also request that you only ask one question at a time, but please feel free to ask multiple questions throughout the meeting. To avoid duplication, if we receive a number of questions online that are essentially the same, we'll do our best to aggregate these and broadly cover the issues raised by the questions. Of course, we do ask that all questions are asked in a respectful manner. Any online questions that include offensive language or defamatory remarks, will not be read out or responded to.
In the unlikely event that we experience technical issues online during the meeting, we may need to take a short break. If we are able, we will communicate this to our online shareholders either verbally or by putting a message up on your screen. If there is a significant technical issue, at the discretion of the Chairman, we will adjourn the meeting to another time or date. If this occurs, please keep an eye on your email inbox and our AGM website for updates and further details. We'll also lodge details on our ASX platform. Now, with all those procedural housekeeping matters out of the way, I'll hand back to your Chairman, John.
Thanks, Michael. Before we start the formal business of the meeting, let me introduce you to my fellow directors. I'm very pleased to be joined on the stage by my fellow. Beginning on my immediate right is Ewen Crouch, who is the Chair of the Risk and Sustainability Committee. Then Rebecca Dee-Bradbury, who's the Chair of Remuneration and Organisation Committee, Kathleen Conlon, and one of our new directors, Peter Alexander. On my immediate left is Mark Vassella, our Managing Director and CEO, Jennifer Lambert, who's the Chair of the Audit Committee, K'Lynne Johnson, who's the chair of the Health, Safety, and Environment Committee, ZZ Zhang, one of our new directors, as well as Jane McAloon, who's also a new director. In the front row, we have Tania Archibald, our Chief Financial Officer, Debra Counsell, our Chief Legal Officer, Penny Grau, our Company Secretary.
We also have a number of other members of the executive leadership team in the audience. I would especially like to welcome our new directors to our first annual general meeting. Finally, Mr. Matt Honey and Mr. Richard Bembridge from our auditors, Ernst & Young, are also present here today, and they'll be available to answer any questions that shareholders may have for the auditors at the appropriate time. This is Matt's first BlueScope annual general meeting as lead audit partner, so welcome, Matt. You all would have the opportunity to read the notice of meeting and accompanying explanatory notes that was released in October. I propose to take them as read. Thank you.
There are a number of items of business on today's agenda, all of which are shown on the screen now. Voting on items two to six will be carried out by way of a poll. Mr. Daniel Reid of Link Market Services is the returning officer for today's poll. As mentioned earlier, only persons holding a yellow admission card are entitled to vote at this meeting. That's actually blue, as we've just mixed up. Thank you.
They're both colored wrong.
Well, that's probably right. It's blue. Thank you. Thank you. I now formally open the poll on items two to six. Voting will close five minutes after the end of the meeting. The results of the poll will be available later today on the ASX and our website. I will invite questions in regard of each item of business as we address those individual items. I will address the meeting, followed by the managing director and CEO, Mark Vassella. In these addresses, we will give a summary of account of BlueScope's performance in the last year. Rebecca Dee-Bradbury, the Chair of the Remuneration and Organisation Committee, will provide her address when we get to the item of business dealing with the remuneration report. I will move on to the formal business of the meeting. Now for my address.
Our record-breaking 2022 results are the testament to a robust corporate strategy that's been in place to grow, transform, and deliver. To recap, we recorded an underlying EBIT of AUD 3.8 billion. We invested AUD 1.4 billion in growth, and we returned AUD 1 billion to shareholders. This result reflects many years of work to transform, innovate, and leverage capability across a diverse portfolio of businesses now in 17 countries. Fittingly, this performance was achieved as we recognize BlueScope's 20th anniversary as a listed company. In New Zealand, our Pacific Steel business turns 60 this year, and in Australia, our Western Port plant in Victoria and the basic oxygen steelmaking plant here at Port Kembla both celebrated their 50th anniversary. Delivering on our purpose and strategy also means we are delivering strong returns to you, our shareholders.
Thank you for investing in us, and especially like to thank the outstanding performance of the 15,000 BlueScope employees globally. I'm pleased to report that 2023 has also commenced well for BlueScope, and we are today reconfirming our guidance provided in August for first half underlying EBIT of between AUD 800 million-AUD 900 million. To our company's focus on safety, health, and an inclusive workplace. Our 15,000 people are our strength, and we are committed to safe and inclusive workplaces, which is one of our five sustainability outcomes. In 2022, we saw a stable result in our lagging indicators against a challenging operating environment. It was a year with sustained pandemic impacts, a highly competitive labor market, strong product demand, and challenges related to growing our workforce.
Importantly, though, over the last year, we continued to evolve our overall approach to safety culture as we seek to take our performance to the next level. We observed strong performance on our lead indicators of involvement in team-based risk improvement projects and in our health, s afety, and environment risk management program. This program has been in place since 2020 and was awarded the World Steel Association's 2021 Safety and Health Excellence Recognition Award for leadership and culture. Well done to the team. Mark will provide more detail on health, safety and diversity and inclusion. However, I will add that we have gender balance at the board and ELT in line with our 40:40 Vision, and women now make up 24% of our workforce, up 2% on the previous year. Thank you.
Now turning to sustainable growth and transformation. Our goal is to continue to grow our portfolio of sustainable steelmaking businesses and our world-leading coating, painting, and steel products businesses. As I speak from our home base in Australia's Illawarra region, many of you who have visited the Port Kembla will appreciate that it is a major manufacturing precinct of strategic importance to the region and Australia's sovereignty, steelmaking capability. The Port Kembla Steelworks has been part of the local community's rich history for almost 100 years, and I believe it will be deeply ingrained for another 100 years as we invest in modern manufacturing initiatives such as robotics, automation, and other digital technologies to deliver the next wave of growth and productivity improvements.
We've continued to make large strides to reposition Port Kembla for a low-carbon world. Achieving net zero steelmaking, carbon steelmaking is an enormous challenge for the steel supply chain, given the technical issues involved. Unlike many industrial processes, where the end product can be produced using a different fuel or method, carbon is entrenched in primary iron and steel making as a crucial chemical reductant. As we stand here today, there is no technically and commercially viable solution to produce virgin iron and steel without carbon in the timeframe required. Excitingly, though, BlueScope is actively involved in pursuing solutions by collaborating across the steel value chain to explore low-emissions iron and steel making. Of greatest relevance, right here in the Illawarra, we're advancing our study of a pilot hydrogen-based direct reduced iron melter and a hydrogen electrolyzer.
In the near term, there is a pressing need to ensure BlueScope can produce locally-made steel as our operating Blast Furnace No. 5 Reaches the end of its campaign life around the middle of the decade. To this end, a team of over 100 engineers and specialists are working on a feasibility study for the reline and upgrade of the presently mothballed Blast Furnace No. 6 . The reline and upgrade will include a range of improved environmental controls, along with technology options that will enable greenhouse gas reductions over the medium to longer term. Importantly, the reline provides a bridge to our adoption of breakthrough lower-emission steelmaking once technically and commercially available.
The feasibility review is progressing well. We will provide further update in February next year in conjunction with the release of our results for the first half of 2023. As we consider the longer-term future of Port Kembla, we are working on a new master plan for 200 hectares of land which is surplus to our steelmaking needs. In June, we announced the appointment of world-leading architects and urban designers, the Bjarke Ingels Group, or BIG, to develop a master plan. Our vision is to explore options to unlock a wide range of exciting new uses to develop significant long-term economic and social value for the whole of the Illawarra. Meanwhile, earlier this year, we were able to literally fly the flag when Port Kembla Steelworks achieved ResponsibleSteel's site certification. It's the first steelmaker in Asia-Pacific and the fourth site to be certified globally.
ResponsibleSteel is the global steel industry's multi-stakeholder sustainability standard and certification program, designed to ensure customers, stakeholders, and consumers can be confident that the steel they use has been sourced and produced responsibly. We continue to pursue growth and seek better ways to serve our Australian customers through initiatives such as the assessment of an additional metal coating line, likely to be located in the Western Sydney Service Center, and a new heavy gauge pipe and tube mill here in the Illawarra. I'd now like to turn our attention to our largest growth region, which is the United States, where it has been a year of major achievement and progress for BlueScope. At North Star, our mini mill in Ohio, construction is complete, and we are now in the 18-month ramp-up phase, with the first coil having been produced in June 2022.
This expansion adds 850,000 tons of capacity, lifting capacity by 40%. Last December, we established BlueScope Recycling and Materials following the acquisition of a ferrous scrap steel recycling business of MetalX in Waterloo, Indiana, and in Delta, Ohio, for approximately $220 million. In August, a third scrap processing site was acquired in Mansfield, Ohio. BlueScope's recycling gives us crucial presence and expertise in scrap processing and will enable North Star to improve the quality and economics of scrap consumption. This expansion in recycling scrap steel is one demonstration of our commitment to climate action, which is one of our five sustainability outcomes. We are also very pleased to have established a national U.S. coil painting platform in BlueScope Coated Products following the acquisition of Coil Coatings for $500 million.
This is the second-largest coil coating business in the country, with around 900,000 metric tons of annual painting capacity. It's an exciting acquisition as the business has a history of robust financial performance with a sales mix focused on domestic end-use segments that are attractive to BlueScope. We see significant potential for BlueScope Coated Products in the medium to longer term growth through product development and branded products consistent with our customer service and value proposition elsewhere. Altogether, BlueScope's total investment in the United States is now over $5 billion, with nearly 4,000 employees. To round out the discussion on the importance of sustainability to BlueScope, in recent years, we have sought to pursue industry-leading practices and strategies. Now we are seeing the results of those efforts and have been recognized by World Steel, who named BlueScope a 2022 Sustainability Champion.
We have a pragmatic approach to sustainability, informed by key stakeholders and a strong governance structure. We continue to focus on our five sustainability outcomes, including ensuring safe, healthy, and inclusive workplaces, responsible products and supply chains, sustainable growth, and transformation, of course, climate action. These outcomes provide a clear direction for investment and deliverables for our customers, people, shareholders, and the communities we live in. Mark will talk more about these shortly.
Now turning to our shareholders. A core part of BlueScope's financial framework is balancing the competition between capital for growth initiatives and returns to shareholders. I'm pleased to advise that the company returned just under AUD 1 billion to shareholders in 2022, another record in BlueScope's 20-year history, and this included a dividend payments of nearly AUD 350 million. In August, the board approved an increase of the share buyback program to allow up to a further AUD 500 million to be bought over the next 12 months. Further, given the consumption of tax losses in the Australian tax group, we expect to be able to announce franked dividends during 2023, subject to the timing of tax payments and accrual of franking credits.
I'll now turn my focus to the board. At an event last night, we had the pleasure of meeting and talking to local community members here in Wollongong. Events like this are always great for board members and the community to share mutual aspirations, challenges in the local community. Thank you for those who came along.
The board composition, with the addition of K'Lynne Johnson and Peter Alexander based in the United States, ZZ Zhang based in China, and Jane McAloon based in Australia, reflects the appropriate level of regional and sector board representation to match the company's business profile and growth aspirations. As we welcome new board members, as flagged last year, over the next few years, several directors will be retiring, and consequently, board renewal is of key focus. It is our intention that during this transition period, directors may remain on the board for approximately 10 years. Therefore, the board has exercised its discretion and requested Ewen Crouch to stand for re-election. Gratefully, Ewen has consented to stand for re-election today.
BlueScope is a very different kind of steel company that is uniquely positioned to grow and deliver across our major regions as we enter the age of steel. As I close out my address, I'm optimistic about the future. With the dedication of our 15,000-strong BlueScope team, our financial strength, and high-quality asset portfolio, we are well-positioned to lay foundations for future growth and returns for decades to come. Thank you to our shareholders, customers, suppliers, and our global BlueScope team. Ladies and gentlemen, I'd now like to ask BlueScope Steel's Managing Director and CEO, Mark Vassella, to address the meeting. Mark?
Thanks, John. I join with our Chairman in welcoming all shareholders here in person and online for our meeting today. It's a pleasure to be here for BlueScope's first ever annual general meeting in Wollongong. Thank you for the acknowledgement earlier. It's a bit embarrassing to say that, I must say. As the Chairman has noted, BlueScope's financial performance in financial year 2022 was extraordinary across all regions and markets. I wanna congratulate all of the BlueScope people for their incredible efforts. Being here in the Illawarra takes me back to my time working in BlueScope's Australia and New Zealand business between 2011 and 2018, and there are many here in the room, I'm sure, who will recall that was a very challenging period in BlueScope's history. I could not be more proud of how far we've come since then.
Much of the success we see in recent years is the result of the difficult decisions we had to make through that time, and the combined contribution of our people, our customers, our suppliers, our stakeholders, and our community. We are truly a modern global business driving sustainability in steel. Through many economic and operating challenges over the years, BlueScope has navigated its way and emerged a more resilient company. In the pandemic, we did that again in FY 2022, announcing historic financial results. Shortly, I'll give an update on performances in each of our businesses during the current half, our strategy and sustainability developments. As always, we put safety first, so I'll start with our safety performance.
BlueScope businesses operate 24/7 and did not close during the pandemic. This meant the potential for more risk as we dealt with staff shortages, supply chain disruption, and high levels of demand. The FY 2022 injury profile continued to be lower severity injuries, sprains, lacerations, for example. With 2.5% of our injuries having had the potential to be fatal incidents, and one which sadly resulted in a permanent incapacity. We've reviewed our safety indicators to strike the right balance between lag indicators to measure performance and lead indicators for risk management.
The indicators are now more closely aligned to our strategic direction and industry standards. At 7.1, the lagging injury metric, TRIFR, remains slightly above the long-term range of 5-7, although pleasingly, it is a slight improvement on the previous year. We continue to evolve our approach to safety by building capacity and driving a greater focus on employee engagement and learning.
Across our entire business, we're implementing innovative and practical risk controls, and empowering people who make and handle our products to identify opportunities and be part of the ongoing safety journey. Before I provide an update on the Australian Steel Products business more broadly, I wanted to add to the chair's remarks about Port Kembla's Blast Furnace No. 6 reline and upgrade project. The project team has undertaken extensive stakeholder engagement and community consultation, including over 100 forums conducted with more than 1,000 local citizens and stakeholders directly. During the public exhibition period of the Environmental Impact Statement, around 450 submissions were received, with 95% of those supporting the project. Subsequently, this has led to official planning approval by the New South Wales Planning Minister under the Critical State Significant Infrastructure pathway.
The No. 6 Blast Furnace reline and upgrade project represents a total investment of around AUD 1 billion. It's estimated 250 new jobs will be created during construction of the project, and we'll seek to give priority to engaging local contractors and suppliers. Today, BlueScope reaffirmed its guidance provided on the 15th of August that the first half of FY 2023's underlying EBIT will be in the range of AUD 800 million-AUD 900 million. At a high level, the outlook this half for the group's U.S. businesses has improved moderately since August, driven by better than expected margins in our downstream businesses, combined with foreign currency translation impacts of the weaker Australian dollar compared to the U.S. dollar.
Domestic dispatches in Australia and New Zealand have been lower than anticipated due to high channel inventories, particularly in the distribution segment, combined with customer hesitancy driven by falling regional prices. Underlying domestic demand remains solid, supported by an ongoing pipeline of construction activity, albeit impacted by labor constraints and weather-related events. Looking at the performance across our portfolio of businesses during the current half. Australian Steel Products is expected to deliver a lower result when compared to the second half of FY 2022. Underlying domestic demand remains solid across key end-use segments, supported by a healthy construction backlog. However, as I just mentioned, dispatch volume is expected to be lower than the second half of FY 2022, particularly due to distribution customers seeking to lower inventories in a falling price environment and following the arrival of delayed imports.
Building segment dispatches have also been impacted by severe weather events and some labor constraints in the building and construction supply chain. North Star is expected to deliver a result around a 1/3 of the second half of FY 2022, with the improvement to prior expectations driven by the depreciation of the Australian dollar relative to the U.S. dollar. This has a benefit in the translation of earnings. The business continues to operate at full capacity. The ramp up of the expansion project is progressing according to plan, noting that it's not yet at the stage where it's likely to make a meaningful contribution in the half. The Buildings and Coated Products North America segment is expected to deliver a result around twice that of the second half of FY 2022.
The contribution from the Engineered Building Solutions business, which is benefiting from expanded margins on lower steel fleet costs, is expected to be better than expectations at the time the August guidance was provided. A negligible contribution is expected from the Properties group due to project timing, and pleasingly, the integration of the BlueScope Coated Products business is progressing well. Expectations for Building Products Asia and North America have moderately improved since guidance was provided in August. We continue to expect a slightly weaker result than the second half of FY 2022. Margins in the North American business are better than expected, albeit lower compared to the cyclical highs that we've seen. The business is expected to contribute around half of the segment's earnings in the first half of 2023.
In addition to the typical favorable seasonality of the December half, the China business is seeing stronger dispatch volumes and is also expected to contribute around half of the segment's earnings in the first half of 2023. The Asian businesses are experiencing a difficult trading condition, reflecting weaker regional demand in a falling price environment, and accordingly, are expected to deliver a moderate loss in the first half. Meanwhile, the Indian business is performing well and is expected to make a slightly lower contribution than the half. Expectations for the New Zealand and Pacific Islands segment have softened since the August outlook was provided. Domestic dispatches are expected to be robust but lower than previously anticipated due to similar effects that we're seeing in the Australian business.
Our strategy sets out how we will deliver on our purpose, which is to create and inspire smart solutions in steel to strengthen our communities for the future. Our focus is to deliver strong returns for our shareholders and sustainable outcomes for all of our stakeholders. Our transformation goal is to deliver a step change in customer experience and business performance. Investments in robotics, automation, and digital technologies need to be core of our customer experience and manufacturing excellence programs. Transformation also speaks to our approach to climate change and sustainability as we continue to embed sustainability at the heart of what we do. On growth, I've recently been fortunate enough to spend time in our U.S. businesses, visiting our existing sites, but also our new sites, and meeting many of our passionate employees. It's been a treat.
We'll continue to build out the North American value chain and our customer offers with a focus on integrating our recycling assets and our newly acquired Coated Products business. We have an incredible footprint across Asia with tremendous potential, and we're striving to deliver on the promise of that earlier investment with an equal focus on growth and sustainable returns. We recognize that there is considerable scope for improvement in this business. In Australia and New Zealand, our intermaterial growth investments and broader strategies will continue to be driven by our comprehensive sales and marketing programs, backed up by product and service innovation and differentiation. As always, being a capital-intensive and cyclical organization, we remain acutely focused on the need to deliver strong returns and robust cash flows, and above all, keeping our people safe.
At our Sustainability Investor Day, which we held here in Port Kembla just last month, investors and analysts had the opportunity to meet our key leaders driving our sustainability journey. If you haven't already done so, I would encourage you to watch a recording of the briefing on bluescope.com. In line with our 2050 net zero target, greenhouse gas emissions have reduced year-on-year for five years, making a total reduction of 3.6% since 2018. Our non-steel making emissions in FY 2022 increased slightly due to lower dispatch volumes across the midstream operations, which was caused by supply chain constraints and disruptions. Despite this, since 2018, there's been a 3.7% decrease in non-steel making greenhouse gas emissions.
While we continue to work on breakthrough technologies that are not ready for commercial deployment, investing in the Blast Furnace No. 6 reline helps secure the future of Australian steelmaking once our Blast Furnace No. 5 completes its current operating campaign around 2026. On a matter of public policy, BlueScope has submitted a comprehensive response to the Australian Government's proposals to reform the Safeguard Mechanism, which covers about 200 Australian-based industrial facilities, including our Port Kembla facility and our Western Port site. The government's consultation paper proposes to implement declining baselines for Scope 1 greenhouse gas emissions at facilities covered under the Safeguard Mechanism. These declining baselines are designed to incentivize facilities to reduce their emissions through either generating credits or, if unable to reduce emissions, surrendering credits.
Our response is aligned to the decarbonization pathway for steel and seeks to ensure that the reforms do not impose material costs on BlueScope's covered facilities or impair our international trade competitiveness. Innovation, partnerships, collaborations with governments and technology vendors and industry bodies are all critical elements in the environmental and economic success of the reline. I will also note that we've received several questions prior to the annual general meeting regarding BlueScope's approach to, and progress on addressing greenhouse gases. As I've just covered, BlueScope has a comprehensive approach to climate change that is a core part of the group's strategy. Our climate action report, sustainability reports, regular financial reporting, and sustainability investor briefings all contain significant detail on our strategy and our approach. These documents are all available on our website.
With regard to diversity, we continued our focus to better reflect the communities in which we operate through the year, with female representation continuing to grow across all segments of the workforce. Gender diversity can be seen on the stage here at board level, and extends to our executive ranks, where 40% of the executive lead team are female. While gender is an area where BlueScope has had significant opportunity to improve, we recognize that diversity is broader than just gender. Accordingly, strategies designed to support our businesses, mirroring the diverse communities in which we operate, are being rolled out, including broadening our focus to areas such as disability and ethnicity. In the U.S., for example, a focus on ethnicity has seen ethnically diverse candidates comprise 42% of all new hires into the buildings business.
In Australia, we launched our First Nations framework. On the topic of responsible products and supply chains, we continued to ramp up our supplier assessment process and continued to play a key role in the development of the ResponsibleSteel standard, which aims to set a performance and transparency benchmark for the responsible sourcing and production of steel. Also this year, the sustainability team has continued to represent BlueScope as a business association member of Be Slavery Free, and we've become a signatory to the UN Global Compact, recognizing our commitment to human rights and good labor practices.
In closing, FY 2022, our 20th year as a listed company, surpassed what was a very strong FY 2021. The record financial results speak for themselves. Beyond those, we were able to make significant progress in establishing our growth platform in the U.S., more broadly, investing for future growth. We look forward to the future with optimism and the dedication of our 15,000-strong BlueScope team, our robust balance sheet and financial disciplines, we're completely focused on delivering long-term sustainable earnings and growth. Thank you.
Thank you, Mark. I will now turn to the formal business of the meeting. Before opening up the discussion on today's items of business, I want to quickly go over a few procedural matters. As shareholders are aware, no formal vote is required on item number one. As I mentioned earlier, the poll on the remaining items two to six is now open. The proxy position on each relevant item will be displayed after the discussion of that item. To facilitate discussion and voting, I formally put to the meeting each item of business in the terms set out in the notice. There will be plenty of time after the discussion of the items of business to complete and submit your vote. As mentioned earlier, I will invite questions about each item of business when we address the individual item.
We have received several questions and comments from shareholders in the lead-up to the AGM, and we thank you for your input, which has been considered. Many of these questions have been addressed in my remarks as well as Mark's. We received several question on shareholder returns. I mentioned earlier our expectation to return to franked dividends this year. In terms of the mix of shareholder returns last year, we significantly increased the dividend to a level where which we feel comfortable throughout most economic and sector cycles. The buyback, which is likely liked by most shareholders with whom we speak, is seen as a flexible means to return funds to shareholders and serves to enhance earnings per share. In fact, since the buyback began in 2017, they have enhanced earnings per share by over 22%.
Concerning New Zealand imputation credits, our New Zealand business has almost exhausted its tax losses and will commence paying corporate income tax again in the next few years. This will result in New Zealand imputation credits beginning to the general levels material enough to allow BlueScope to commence attaching New Zealand imputation credits to its future dividends. This will be benefit to BlueScope's investors in New Zealand.
Prior to the meeting, we received a query about the recognition given to Australian employees who achieved significant milestones in their employment with BlueScope. I can confirm it is BlueScope's practice to recognize five-year milestones with, as a minimum, a certificate and some team recognition and celebration. More broadly, we are reviewing our approach to employee recognition, and this includes appropriate recognition at major service milestones. Further, on employee matters, we received a number of questions regarding organization culture.
We, at the board, closely monitor this through a range of initiatives such as employee surveys, quarterly business reviews, and absenteeism, and our turnover metrics. The sense we have is that we are a healthy organizational culture, supported by a strong focus on our bond, our purpose, and very clear business conduct expectations. We also received a question on BlueScope's approach to cyber risks. This is clearly an area of significant relevance at present. BlueScope has a comprehensive program of work ongoing to strengthen the group's cyber defenses. It's a very present risk, and we take it seriously. Our work in this area ramped up significantly after we were the target of a cyberattack in May 2020.
Lastly, we received a question inquiring about the impacts of COVID-19 on the group. It clearly put our people and operations under considerable pressure due to the operational disruptions that most companies faced throughout this challenging period. This challenge was compounded by relatively strong demand conditions in many of our regions, off the back of significant government stimulus programs. Unfortunately, due to these factors, our delivery performance was impacted in many of our businesses, and the entire team is working hard to restore our service levels back to where both we and our customers expect them to be. Again, I'd like to thank the entire BlueScope team for their exceptional efforts in this area. Now, as indicated in the notice of the meeting, I intend to vote valid, undirected proxies given to the Chairman in favor of items two to six.
Let's now turn our attention to item number one, which is to receive and consider the annual report, financial statements, and the reports of the directors and the auditor for the financial year ended the 30th of June 2022. Shareholders and proxy holders are entitled to ask our auditor questions relevant to the conduct of the audit. I am advised that there are no questions the auditor received prior to the meeting. I'll now take any questions shareholders may have. I invite shareholders present who have a question to move to the microphone in one of the aisles. Please provide your name to the attendant, and then when called upon, please ask your question about the 2022 results or any general questions you have about the company. Before we go to the floor, Michael, I understand we received a question from the ASA.
Yes, we did. One from the Australian Shareholders' Association. The estimated cost of the upcoming Blast Furnace No. 6 reline project at Port Kembla is around AUD 1 billion. What combination of cash, debt or capital raising does the company anticipate to fund the project?
Well, our plan is that that'll be completely funded through operating cash flow, so should be able to finance that without going into any debt.
Okay, thank you.
Mr. Chairman, I would like to introduce to you Ms. Rowan Weir.
Good morning.
Good morning. I'm joining Zoom here. I'm probably asking the obvious, but what do you do with the recycled scrap steel in North America? Does it have a use ?
Yes. We take the recycled steel, and we melt it in an electric arc furnace a nd produce new steel from there. It's actually the recycling the whole circle.
Okay. Yes. I thought so.
Yes.
O n the other hand.
Yeah. Thank you for your question. Have we got any more questions from the floor? Yes, please.
Mr. Chairman, I'd like to introduce Francis.
Morning, Francis.
Good morning to the board. Thanks all for your time. I want to say in particular, thanks for the emphasis I'm hearing from the board and the executive team on the sustainability goals of the company and the progress towards reduced carbon emissions. You mentioned the submission to the Australian Safeguard Mechanism, and in that submission, you state that you currently expect the breakthrough to very low emissions iron and steel making to happen in the 2040s. ThyssenKrupp has plans to produce 2.5 million tons of very low emissions steel by 2026. ArcelorMittal plans to produce 1.6 million tons of low carbon iron and steel by 2025, and Salzgitter plans to produce 1.9 million tons of low carbon iron and steel by 2026.
My question is, what is the earliest timeline that the board has considered for producing green steel, and does it still maintain that 2040s is a reasonable projection of breakthrough green steel?
Let's just start. All the companies that you mentioned, they have a slightly different configuration of operating plant. Some of them are more capable of producing low-carbon steel now than we are in here in Australia. We of course, produce an electric arc furnace in the U.S., and there we have very low emissions as a result. There's not enough scrap in Australia to be able to change our technology away from blast furnace at this point, so we're working with others to try and generate new technology that will enable us to transfer to a lower carbon sort of scenario. That technology is not ready yet, and these other companies still have a way to go as well.
Mr. Chairman, I'd like to introduce to you a representative for the Shareholders' Association, Anna Lloyd.
Good morning.
Good morning. My name's Anna Lloyd, and I'm representing the Australian Shareholders' Association. After consideration by the monitors and the members with the chairman, we will be voting in favor of each resolution. However, there will be questions asked by Mike Muntisov over online. I'd like to thank BlueScope for holding the AGM in Wollongong. Because of the importance of BlueScope and their steelworks in Wollongong, another AGM meeting in Wollongong would be very welcome. Thank you.
Thank you for that recognition.
Mr. Chairman, I have Kylie to introduce, please.
A little loud. Thank you. Thank you so much. I really appreciate that both of you spoke on climate action and your commitment to sustainability. I'm curious, though, the International Energy Agency is asking that steelmaking achieve emissions of 1.03 tons per ton of steel of carbon emissions by 2030, but you're only aiming for 1.449 tons by that time, which is significantly higher than what we need to achieve net zero. How can shareholders who are committed to climate action and net zero feel confident that their investment is supporting the achievement of global emissions reduction goals?
Okay. Well, I think you would have heard in Mark's speech that we've actually been holding significant briefings through our sustainability report and our climate action statement. From a board perspective, we feel we are going as fast as we can, given the technology limitations that are there now. We're working with many other steel companies around the world to try and go as fast as we can. At the moment, that technology for some of our sites does not exist, so we need to work with them to get there. It's not a matter of intent-
Mm-hmm.
It's a matter of the technology at this point.
I would argue that your intent is published, and it's published at much higher rates than what the International Energy Agency is asking for.
Well, that all I would do is refer you back to what our reports say. I think we've detailed very clearly what our ambition is there.
Sure. May I ask a follow-up question?
Yes.
With the shift of capital towards low emissions and net zero, is that a concern for shareholders or for the board to see organizations like the Glasgow Financial Alliance for Net Zero, shifting $150 trillion away from high emitters?
Well, the reality is steel is a material that is absolutely critical to actually creating renewable energy going forward. Steel, you can't put a solar panel up without a steel frame for it. You can't put a windmill up without. Steel is critical. This industry will continue to exist, and we will continue to allocate capital so that we have a history that goes for the next 100 years like we've had it be there. The intent of the Board is to move as quickly as possible, given the technology constraints. We will monitor that and continue to work with others to get there.
Okay. Thank you.
Mr. Chairman, I'd like to introduce to you Mr. Peter Yule.
Good morning, Peter.
Good morning, Board. Okay, I guess a question. The steel and energy market is changing rapidly as technologies firm up and capital shifts to lower carbon options. Has the Board considered scenarios where the Blast Furnace No. 6 reline will move from being a no regrets decision to becoming unfinancial? What market conditions, including, say, a carbon price or a green steel cost and demand for green steel, will change your decision to reline No. 6?
As I said in my speech, the final feasibility study will be coming through in February. We'll talk about more details about how feasible it is at that point. Our view is that by relining No. 6, it gives us the opportunity to try out some of the new technology that we've just been talking about now. By learning through that process, we'll be in a better position to transfer to when the new technology comes through. It's a no-regrets decision for us because without being able to make steel, we can't service our customers. The organization gets into financial stress if you're not making steel. Our operations in Australia are actually relative to many other blast furnaces, much more efficient way of making steel than some of the other blast furnaces around the world.
By realigning it in the middle of this decade, we will learn about the new technologies that are coming through by applying them through hydrogen, through various other melters and so forth, that we've talked about, will enable us to understand where we need to get to while maintaining the financial strength of the company. Without making steel, we don't have a BlueScope.
Good answer. I have another question, if I may?
Yes.
This one's about water. Five million people in Greater Sydney rely on Sydney water catchment for drinking water. WaterNSW has objected to recent proposal to expand South32's Dendrobium mine due to the impacts on this catchment water quality and quantity and ecological integrity. BlueScope Steel has contracted to buy a blend of coal from South32 mine and the Appin mines. Given the concern of both government agencies and the public about impact of coal mining on Schedule 1 areas of the water catchment, will BlueScope commit to not buying coal mined in those areas of the catchment?
Well, my understanding is that the South32 don't have the ability to expand that mine, but they are contracted with us till 2032 to supply coal locally to us. As they're not expanding, it doesn't have any further impact on the catchment areas. I think it's somewhat of a moot point at this point. It's up to South32 to pursue whether they can actually get approval or not for that. For us, we have a contract with them, and we'll continue to draw from them. By drawing on it locally, the coal locally, we're actually reducing the amount of coal that has to be transported. Actually, it's the lowest emissions outcome on the CO2 side that we can actually work with.
That's something to watch, and I think we'll see how that'll evolve over the coming years. Your comment about water is a real one. Yes.
Yeah. If they were to get approval to expand, which seems unlikely given recent news, would you still use their coal given the ill effects on other people?
I think that's speculation at this point. That mine has the capacity without expansion to service us through to 2032.
Okay, thank you.
Are there any more questions from the floor? Michael, have we got any questions?
We do have a number of questions coming through online. With the first one from Peter Gregory, given the effect that variability of currency is having on results, can you consider reporting in constant currency in parallel with Aussie dollar?
Well, I've got the CFO sitting in front of me here, and I occasionally say to her, why don't we report in US dollars? U.S. dollars are most of our input costs, and we have a significant business in the U.S. I think that is an open question, and we'll continue to think about that as we go forward. For the moment, we're comfortable most of our shareholders are based in Australia, and most want to see Australian dollars as the reporting currency.
Thank you. one from, Stephen Mayne. The audited annual accounts claim we have net assets of AUD 10.5 billion, but the market capitalization is only AUD 7.5 billion. Could the new audit signing partner please explain how rigorous the audit process was in terms of interrogating the book value of our various assets, particularly the claimed AUD 2.45 billion of intangible assets and the AUD 5.26 billion in property, plant, and equipment? If the market thinks our reported assets are overvalued by AUD 2.5 billion, why haven't the auditor and the directors taken more write-downs?
Matt, would you like to answer that?
Thank Mr. Mayne for the question and the interest in our audit. As you can see from our audit report, impairment testing is a key audit matter. It is probably the matter that we spend the most time in the audit, and we consider with the most amount of detail, and hence it's reported as the first key audit matter. We have interrogated very carefully the cash flow forecasts of the company, as well as consideration of the market capitalization and the trading multiples of similar companies. We do that each and every year. We're comfortable, as we outlined in our audit report on the basis of our procedures, which included the assistance of our valuation experts internally at EY, of the carrying value of the assets as they're reported in the financial report.
What I would say is that impairment testing takes a long-term view of the carrying value of assets and also includes looking through the cycle, and therefore, there may be short-term fluctuations in the market capitalization of the company that are not reflective of the underlying value of the assets. That's for consideration at each reporting period. I hope that answers the question. Thank you.
Thank you.
Thank you.
There is another follow-up question from Stephen Mayne. Did any of the five main proxy advisors, ACSI, Ownership Matters, Glass Lewis, ISS, and ASA, recommend a vote against any of today's resolutions, including in the remuneration report? What was the issue identified, and had there been any material protest votes? Will you disclose the proxy votes before the debate on each resolution? Why not disclose the proxies to the ASX with the formal addresses like others now do?
Well, I think there are about six or seven questions there.
Yes.
Let's see if I can remember most of them. The issue of showing the proxy results ahead of time, we believe stifles the conversation in the room by actually giving everyone else's intention who are not in the room. It's important that I think everyone in the room has the opportunity to ask questions before seeing what the proxies are. That's been our policy to date. The proxy advisors' reports are. They are contracted to the shareholder to give their view. That's a confidential thing between those proxy advisors and their customers. I suggest that Stephen Mayne takes that up with the proxy advisors rather than asking us to divulge what is confidential information. Please keep going. What was the other question?
One final question on this topic from Stephen again. Working with the Australian Workers' Union, BlueScope achieved some major productivity gains at its Port Kembla facility with a renegotiated enterprise agreement in 2015. Seven years later, how many different enterprise agreements do we have across the Australian business? Are we concerned about the proposed changes to the federal industrial relations legislation currently before Parliament?
Exact number of agreements I don't have in my mind as to what that is, but probably just as many as we had back in 2015. I would say our working relationship with our staff, either through the union or not through the unions, is a very collaborative one, and we've had a very good working relationship through that period, and that's one of the reasons why we've been very successful over the last few years.
Just to follow up from Peter Gregory's earlier question, he's just clarifying, he wasn't asking about reporting currency to change from Aussie to U.S., rather to report each region on the basis of the local currency as well as Aussie dollar. It gives shareholders a better understanding. Just to clarify.
Internally, we don't look at the business like that. We actually set a fixed rate for the year. We make our decisions against a budget rate. To actually predict what the actual currency conversion rate is in any one reporting period just creates greater confusion, frankly.
That's all the online questions for that particular item. Are there any questions on the telephone?
We have no questions at this time.
Thank you.
Okay. Thanks, Michael. That concludes the discussion on that item. There is no vote on item one. We'll now move to item number two. This item involves a non-binding resolution to adopt the company's remuneration report. Ladies and gentlemen, I'd now like to ask Rebecca Dee-Bradbury, who's the chair of our Remuneration and Organisation Committee, to speak to you about some of the key issues, addressed by the committee during the past year.
Thank you, Chairman, good morning, shareholders. Since the introduction of BlueScope's remuneration framework in 2018, our approach to remuneration has been based on five key principles. Firstly, we need to attract and retain the right talent in the markets we operate in. Secondly, we encourage our executives to behave like shareholders through equity ownership. Thirdly, our remuneration framework enables delivery of our strategy. Fourthly, the remuneration outcomes feel fair over the cycle for all of our stakeholders. Finally, our remuneration framework is simple and easily explained both internally and externally.
In short, BlueScope's remuneration framework maintains a deliberate and continued focus on the financial fundamentals and provides more value to executives at less cost to shareholders. We received several questions prior to the AGM that relate to the level of executive remuneration payouts and whether they are appropriate. Our framework is characterized by fixed remuneration set slightly above the median of our competitors and is offset by lower variable reward set below the median of the same peer group.
Variable reward payouts require the achievement of challenging annual targets in the short-term incentive or STI, and the delivery of sustainable long-term returns in the long-term incentive, LTI, or alignment rights. I'd like to emphasize that while the threshold level hurdles under the alignment rights mean that the plan is expected to vest more often than other more common LTI designs in the market, the quantum of the reward is set much lower than the peer group median. This design was intended to deliver an outcome to executives that is aligned with shareholders, regardless of where we are in the cycle.
A significant part of the remuneration package is at risk and is only available to executives if they meet performance hurdles. Outcomes for executives under the variable incentive programs reflect the performance of the company, are aligned to shareholder returns delivered during the year, and that are also aligned to the payouts made to our employees below the ELT who participate in the various business unit profit share plans. I'd note that BlueScope's at-risk executive pay is in fact at the lower end of the peer group companies. Environmental, Social and Governance or ESG metrics, are increasingly used as a measure of BlueScope's long-term sustainable success. We have listened to the feedback we received from you in 2021, and have accordingly increased the weighting of our measures in the STI scorecard related to safety and other ESG objectives.
In FY 2022, the total weighting allocated to safety was increased from 5% to 10%. A further 15% was allocated to ESG measures, specifically relating to addressing climate change and enhancing diversity across the group. Your directors have carefully selected safety and ESG measures, which are both quantifiable and measurable. The safety measures include both leading and lagging indicators to drive our HSE evolution through a human-centered approach. The ESG measures include a reduction in BlueScope's year-on-year emission, business specific climate change objectives, and progress to BlueScope's diversity and inclusion objectives. The Alignment Rights are specifically designed for the cyclic nature of our operating environment and have a threshold ROIC hurdle of 10% and a net debt-to-EBITDA ratio of less than 1.3x , averaged over the three-year period.
Delivering the ROIC hurdle would achieve a weighted average cost of capital over three years at or above the median compared to major steel companies globally and our peer remuneration group. We are pleased that the Alignment Rights, along with the rest of the remuneration framework, continue to operate as intended, even with the market volatility we've experienced in recent years. Let me now move to the topic of company performance and executive reward. While supported by macroeconomic tailwinds, this year's result reflects the commitment and hard work of all of our people. BlueScope has performed strongly against a wide range of business objectives in FY 2022.
As highlighted by the Chairman, the company has delivered strong financial performance in FY 2022, a record full-year result of AUD 3.8 billion underlying EBIT and a 41.6% ROIC, both of which are the highest in our 20-year listed history. As mentioned by the Chairman and the Managing Director and CEO, in FY 2022, we saw a stable result in our lag indicators against a challenging operating environment during the year. The lagging injury metric, TRIFR, marginally exceeded the target range of 5 to 7. As a result, the threshold for safety under STI was not achieved. We aim to strike the right balance between lag indicators to measure performance and lead indicators for risk management.
Over 243 team-based HSE risk control improvement projects were completed across the business. The health, safety, and environment risk management workshops were attended by 1,372 leaders, including the board, the leadership team, and many of our supply chain and industry partners. We continue to embed sustainability at the heart of what we do. With strong performance in FY 2022, steel making emissions intensity is tracking close to target with a 3.6% reduction since 2018. Midstream emissions intensity has decreased by 3.7% overall since 2018. However, it increased in 2022 on lower dispatch volumes due to supply chain constraints and disruptions. Management responded well to external conditions and demonstrated strong leadership to deliver significant value.
As is our usual practice at the end of the year, the board took a holistic view of the individual, business, and group performance to ensure the actual STI awards were reflective of the business performance for the year. To reflect the below threshold TRIFR result, the board used its discretion to reduce the maximum STI payouts from 150% to 145% of target for both the Managing Director and CEO and the CFO. The actual STI awarded to Managing Director and CEO was 82% of the maximum, while the awards for other executive KMP were between 73%-97% of the maximum opportunity. Since FY 2019, we have been introducing profit share plans across all of our business units. In FY 2022, over 60% of our employees participated in a profit share plan.
The plan rewards employees based on the achievement of ROIC targets and HSE objectives. It is designed to materially reduce the cost of paying incentives when business performance makes it unaffordable to do so, and provides significant upside in the event of strong financial performance. FY 2020 Alignment Rights vested in full in September this year. For the three-year performance period, we achieved an average ROIC of 27%, excluding the capital spend related to the North Star expansion. Exceeding the threshold of 10%, and an average net debt to EBITDA ratio of 0.15x over the period, again, exceeding the threshold of less than 1x . The Managing Director and CEO received a 5% increase to his fixed remuneration in 2022, the first since his appointment in 2018.
Certain executive KMP also received a 5% increase to their fixed remuneration after a robust remuneration benchmarking exercise in local markets. The board reviews fixed remuneration for the MD and CEO and other KMP each year. Typically, we have not passed on increases every year. However, effective September 1, the board approved an increase of 3% for the Managing Director and CEO in recognition of the significant inflationary pressures in our operating markets. Non-executive directors get paid a base fee and an additional fee for membership of or chairing a committee. In FY 2022, the base fees for the chairman and other non-executive directors were increased by 3%, the first increase in base fees in several years. In fact, non-executive director base fees have increased by less than 7% over 10 years, including the legislated increase to the superannuation guarantee over this time.
I would now like to refer you to items four and five in the notice of meeting, which deal with the approval for a grant of share rights to the Managing Director and CEO for his short-term incentive and Alignment Rights. Item four relates to the share rights under 2023 STI plan. Executives can elect to take the STI in shares or cash, or a combination of both. Mark Vassella has again elected to take all of his FY 2023 STI in shares. The shares or a proportion of the shares will vest at the end of the financial year based on performance against objectives set by the board. These include threshold, target, and stretch objectives for financial ESG and safety performance, as well as delivery of strategic initiatives. The specific measures of performance and performance against them will be disclosed in next year's remuneration report.
The notice of meeting outlines the terms and conditions of this award, and together with my fellow non-executive directors, I recommend that you approve this item. Item five in the notice of meeting relates to the approval of Alignment Rights for Mark Vassella for FY 2023. Consistent with the plan that has been in operation since 2018, the FY 2023 Alignment Rights have a threshold return on capital measure, a maximum debt hurdle, and an individual behavior gateway of adherence to our company values. The return on capital measure is set at a level which achieves our weighted average cost of capital, top quartile performance compared to major steel companies globally and median performance compared to the ASX 100. If each of the performance conditions are met, all of the Alignment Rights will vest.
Conversely, if they are not achieved, none of the rights will vest. There is no retesting provision under this plan, and as always, the Board retains the overarching discretion to protect against any unintended outcomes. To reiterate, the intent of the alignment right structure is to align management's experience with that of the shareholder. With hurdle rates set at thresholds that result in an increased likelihood of vesting but at a lower quantum than our peer group. The notice of meeting outlines the terms and conditions of this award, and I recommend that you approve this item. This year, we have continued to build a workforce that reflects the diversity of the communities in which we operate. Female representation has continued to grow from 22% in FY 2021 to 24% in FY 2022. The Board achieved 50% representation. The ELT achieved 40% representation.
Beyond gender strategies are emerging across the businesses to suit local community needs, such as a focus on ethnicity in the U.S., while Australia, we launched our First Nations framework. For the year ahead, we continue to focus on our ability to attract and retain talent globally, which is more challenging than ever with increasing inflation and tight talent markets in most geographies.
Lastly, I would really like to thank all of our team members globally. I am so impressed by our team's commitment and the pride they take in their businesses, and the strong performance of the group in the last year reflects their efforts and dedication. Together with my fellow non-executive directors, I would like to thank you for your support and recommend that shareholders vote in favor of the remuneration report. Thank you.
Thank you, Rebecca. Each director recommends that shareholders vote in favor of this resolution. I will now take any questions we have on this from the floor. Are there any questions? Okay. Michael, have we received any questions online?
There are no online questions on this item, Mr. Chairman. Are there any telephone questions on the line?
We have no questions at this time.
Thank you.
Thank you, Michael. That concludes discussion of this item.
There are voting restrictions which apply to this item, which are detailed in the notice of meeting. Before moving on with the meeting, the details of the proxies validly lodged with the company in relation to this item are shown on the screen.
We'll now focus the discussion on the next item of the agenda. Ewen Crouch stands for re-election today, and K'Lynne Johnson, ZZ Zhang, Jane McAloon, and Peter Armstrong, who have each been appointed to the board since the last AGM, are required by the constitution to offer themselves for election. Each of items 3A to 3E will be voted on separately. I will ask each director to address the meeting. Following that, I will ask for questions on any of these items. Item 3A relates to the proposed re-election of Ewen Crouch as a director of the company.
Ewen was appointed to the board in March 2013, and was last re-elected in November 2019. Ewen was due to retire from the board in accordance with our non-executive director tenure policy, as he has served the maximum three terms of three years. To allow board transition to take place in an orderly manner and to facilitate the transfer of corporate knowledge to each of the new director appointees, the board, at its discretion, has formed a view that it would be benefit to the company for him to stand for re-election. Ewen has consented to stand for re-election, but intends to retire before serving his full term, should he be re-elected. I'd like to confirm that the board considers Ewen an independent and u nanimously recommend to shareholders for Ewen's re-election. He's been an excellent director over that period of time.
I'd now like to ask Ewen to briefly address you.
Thank you, John, and good morning, everyone. I, too, would like to acknowledge the traditional owners of the country on which we meet today and pay my respects to elders past, present, and emerging. It is a real privilege to serve on the board of BlueScope Steel. I present myself to shareholders today to seek your support for what will be my final term as a director. I joined the board of BlueScope in 2013 and have been delighted to see the success that the company enjoys now. My professional career in the law and my board career in service-based industries complements well with the skills and experiences of my colleagues around the board table and also assists the smooth transition as the four excellent new board members appointed this year settle into BlueScope governance.
The knowledge I have gained at BlueScope and from other board roles allows me a fair bit of insight into a number of risks that BlueScope is dealing with, and I very much enjoy my role as Chair of the Board's Risk and Sustainability Committee. To mention but two of the matters on our agenda which have been highlighted in the addresses today: overseeing the reasonable basis to support BlueScope's decarbonization targets and program, as well as sustainability reporting and monitoring the resilience of BlueScope's technology platforms and achievement of its digital transformation objectives are all matters in which our stakeholders have a very keen interest. It is a great honor to be a member of this board, and I thank shareholders for your support over the years.
Thank you, Ewen. Item 3B relates to the proposed election of K'Lynne Johnson. K'Lynne joined BlueScope's board in January 2022, and details of her background are set out in the notice of meeting. I'd like to ask K'Lynne to briefly address you.
Hello. Thanks, John. I was delighted to be able to join BlueScope's board in January. I bring about a 30-year background in chemicals and oil industry across a mixture of businesses, which has included mature commodity, specialty, and technology-driven venture companies. Most recently, I was the executive chair and CEO of Elevance Renewable Sciences, a global specialty chemicals company, which developed and commercialized an innovative new technology platform which enabled sustainable chemistry solutions for the automotive consumer goods, oil, and engineered material markets. During my tenure, we built a large-scale manufacturing asset in Indonesia and successfully negotiated multiple manufacturing and marketing joint ventures across Asia, Europe, and U.S.
Prior to Elevance, I had the pleasure of working for many years as an executive for Amoco and BP in both functional and operational roles w ith my last role at BP, leading a $4 billion global chemicals operating company.
My background has built expertise in successfully transforming capital-intensive businesses through operational excellence, technology innovation, sustainability, and customer-driven marketing. I currently serve as an independent director for two U.S.-listed public companies, FMC Corporation and Trinseo Corporation, where I'm also the chair of the board. In addition, I serve on the board of two private companies, J.M. Huber and Sylvatex, a small early-stage technology venture company. As BlueScope's Chair of the Health, Safety, and Environment Committee, I bring learnings from multiple top-performing manufacturing companies. I also bring a shared deep commitment for the criticality of our businesses to operate and drive to be the best in the industry and continuously improve our safety and environmental performance.
I'm committed to the time and effort to support BlueScope's continued growth and excellence and respectfully ask for your support.
Thank you, K'Lynne. Item 3 C relates to the proposed election of ZZ Zhang. Details of his background are set out in the notice of meeting. I'd now like to ask ZZ to come up and speak.
Good morning, everybody, I'm very happy to be here in person to join this meeting. My name is ZZ Zhang. I was born and grown up in China. The last 35 years, I've been working with a multinational company, including the last 20 years as the president of Siemens Automotive, Nokia Telecommunication, Sandvik, and ABB. I was elected last year, so the last 11 months, I've really enjoyed working with the company, with the board, and very happy with the culture and performance of the board. I'm currently living in China, and I hope my background, knowledge of the industry, robotic, digital factory automation, and my experience on the ground in China and experience in Asia countries will help the company further growth in that region, so we're becoming a truly multinational company covering Asia, American, and Pacific.
Thank you very much. I'm looking forward an exciting journey in the years to come. Thank you.
Thank you, ZZ. Item 3 D relates to the proposed election of Jane McAloon. Jane joined BlueScope Board in September this year. Details of her background are set out in the notice of meeting. I'd now like to ask Jane to briefly address you.
Thank you, Chairman. Thank you for the opportunity to present to shareholders today what I believe I can bring to the board of your company. BlueScope has a proud history starting right here, with steel and manufactured products playing a crucial role in some of the pivotal moments in modern Australian history. BlueScope is a global company that solves complex problems and creates products and solutions through people, innovation, and technology. Given the crucial ongoing role of steel, BlueScope finds itself again playing its role in addressing the global priority to decarbonize modern life. I have spent my working years in that same intersection between, on the one hand, profitably transforming natural resources, energy, and infrastructure into products that underpin a productive economy and, on the other, the imperative to do that in an increasingly transparent, sustainable, and decarbonized way.
It is something I'm passionate about and believe I have a blend of skills and experience that complement those of my colleagues on the board. I spent 25 years in executive management across BHP, AGL, and the New South Wales Government in energy, water, regional development, environmental management, and rail. For the last several years, I've been a non-executive director and chair of both public and government organizations, including supporting the Australian Defence Force. As I said at the time of my appointment, BlueScope is at an exciting point in its strategic journey as major initiatives come to fruition both in Australia and globally. While the answers are never straightforward nor easy, subject to being elected, I very much look forward to joining the board and contributing to the company's future success. Thank you.
Thank you, Jane. I've moved item 3E, in which we propose election of Peter Alexander. Peter, would you like to come up and say a few words?
Thank you, Chair. I appreciate the opportunity to give some of my background at this, my first annual general meeting as a BlueScope independent director. I joined the board in September after serving a term on the board at Boral Limited. I retired in 2018 as Chief Executive Officer of the second-largest public building materials distributor in the U.S., which is now by far the largest U.S. building materials distributor in the U.S. That was my fifth role as president and CEO of a major enterprise. I have a proven record of managing large global technology, retail, distribution, and service firms with private and public, and many with significant global presence in North America, Europe, Australia, and the developing economies of the world.
I've successfully completed 51 acquisitions across the globe. I understand the importance that should be placed on the selection and the logic of acquisitions as much as the crisp and metric-based integration of such acquisitions. I'm intimately familiar with all aspects and components of the North American construction market, which is even more important for BlueScope, given its presence and its contribution margins from the U.S. My global background with U.S. firms like GE brings what I believe a unique perspective to this board. I spent considerable time over the past month visiting BlueScope facilities, meeting with many levels of managers and line workers, and listening to the field to ascertain that the message management is delivering is being absorbed and being actioned consistently. I can comfortably report that there's a strong alignment in that communications of the strategy and its execution.
BlueScope's employees demonstrate a passion to grow, to work safely, and to be the best. After these visits, I believe that the very best days are ahead for this enterprise and for its shareholders. My record reflects a commitment to value-creating growth, ethical behavior, culture, and global performance. I'm excited to join the board. I'll commit the time and the effort necessary to do a good job for you as the shareholders, and I re-respectfully ask your support. Thank you.
That's great. Thank you, Peter. I would like to reinforce the important contribution that each of these directors make to your board. I think you've heard that today in their summary. I'd like to confirm that the rest of the board unanimously recommends the election of these directors. I now invite any questions from the floor on the re-election of any of these directors. Okay, Michael, have we got any questions online?
We do. We've got one, from the Australian Shareholders' Association. Advocates for a meaningful skills matrix to be published in the annual report so that shareholders can access director candidate skills against needs. Mr. Crouch's skills appear to be in legal, risk, and governance. However, the company's skill matrix in the governance statement rates eight out of eight current directors having the same skill set. Why is it necessary for Mr. Crouch to seek re-election, noting also that his tenure exceeds the company's own director tenure policy? Will you commit to publish a more informative skills matrix in the annual report next year?
Firstly, the comment about the skills matrix itself. We note the comment, we had a good conversation with the Australian Shareholders' Association on this, we'll take it on notice and have a look at whether we can improve our information. As I said earlier, Ewen Crouch has been an excellent director for us, you've heard all about a lot of the work we're doing around risks in the business and our sustainability agenda, much of that goes through the committee for which he is the chair, and we've made dramatic improvements through that time he's been as the chair of that committee.
When a board changes, you've seen the directors that we have today who have been standing for election, they come from a diverse set of experiences, they have all the skills to drive your company forward and make an even better company that it's been in the past. It reflects now the geographic distribution of where our business is. Having the skills and having good experience is one thing, but you need to actually learn about what's different about BlueScope, what's different about the organization, and get to know everybody who's important in the organization, who drives. That takes time. We're in 17 different countries. You need time to learn. That time to learn, one of the ways you do that is by looking and listening to the directors as they get to the end of their tenure.
We have asked Ewen to stay on to help in that transition. Ewen won't stay the full length of his three years, but he will certainly stay long enough to help the directors that have just joined us understand. That would be my answer to that question.
Thank you, Mr. Chairman. We've got a couple more online. One from Stephen Mayne. There's no doubting the success of BlueScope during Ewen Crouch's decade on the board. Could Ewen please comment on the three achievements he's most proud of during his lengthy service and any regrets he might have?
I'm not gonna ask Ewen to comment further. He's already commented on the things that he's enjoyed doing there. I would just say he's been an outstanding director through that period.
Another follow-up question from Stephen Mayne. After 10 years on the board, Ewen Crouch was due to retire. Does Ewen intend to serve the full year, three-year term? Have the chair and Ewen ever noticed that virtually all of the ASX 100 directors who seek to serve beyond soft tenure limits tend to be men? Why is it that Australian female directors rarely ever successfully ask for or accept board-endorsed tenure extensions?
Well, that second question I really don't think has any basis in fact. if you can demonstrate to that to me . I'd be, like, interested to see that. I've explained as to why we want Ewen to stay on longer. We would have renewed the board probably earlier had COVID-19 not come along. When you're selecting directors who you're gonna work with over a 10-year period, you want to get to know them. It's very difficult to recruit people online. I know we do it all the time these days, getting to know people face-to-face is really important before you make those commitments, and that's what we've actually done. We've delayed some of our recruitment until we could actually meet up with the candidates.
Another one for you, Mr. Chairman, from Stephen Mayne. John Bevan has been chairman of BlueScope since 2015, coinciding with a period of good performance. This board doesn't have a deputy chair, so it is not clear who leads the annual performance review of the Chair. Could K'Lynne comment on how the Chair's performance review was conducted this year? Does the Chair believe there are multiple potential successors as chair currently serving on the board?
Well, the way in which we do my review is actually the most next most senior director actually sits down with all of the board, takes a view of whether they want me to continue to be the chair or not, and gives me that feedback. Ewen Crouch did that in the last 12 months, so not K'Lynne in a sense. K'Lynne's only just joined us. All I can say is that the process of having an effective board requires transition. My time as the chair of the board will come up when I complete mine, and it's up to the board to decide whether they want me to stay on longer or not.
Another one from Stephen Mayne. Could Jane McAloon and the chair comment on the recruitment process that led to her appointment to the BlueScope board? Was a headhunter involved? Did the full board interview Jane? Did they interview any other candidates? Did Jane know of any of the other existing directors before engaging with the recruitment process?
Yes, we did use a recruiter. Yes, every director interviewed Jane. What was the third question, which I was also yes in my mind?
Did she know any of the existing directors before engaging?
She may well have known some of the directors 'cause she served with some of them on other boards, but that's not unusual or disqualifies anyone from being a director.
Thank you. The last question. A number of Australian carbon emitters such as Santos, Incitec Pivot, Woodside, and Rio Tinto have offered shareholders a non-binding vote on their climate action plan. Why hasn't BlueScope done the same as yet? Could new director Peter Alexander comment on whether he would support making this move at the 2023 AGM? There's one for everyone here.
I won't ask Peter to answer that. I think we do a really good job of communicating with all of the stakeholders involved on this very important topic for the world and certainly for Australia and for the steel industry. Mark talked about a day in Port Kembla where we brought all of our shareholders down, including some bankers and various other individuals, to actually understand what we're trying to do. It's through that type of engagement that I believe shareholders can get fully informed as to what the company is doing. At this point, there are very few companies that do have a vote on the climate action that's being taken by companies. If that becomes more common, then we may engage on that. For now, we believe we are communicating adequately about what our plans are.
Fantastic. There's no further questions online. Can we just check with the moderator if there's any telephone questions?
There are no questions at this time.
Thank you.
Okay. Thanks, Michael. That concludes that part of the discussion. Details of the proxies validly lodged in relation to these items are displayed on the screen. Based on the proxies received, I'd like to congratulate Ewen on his re-election, K'Lynne, ZZ, Jane, and Peter on their election.
We can now turn our attention to items four and five. These items relate to the grant of share rights under the company's short-term incentive plan and Alignment Rights under the company's long-term incentive plan, respectfully for the company's Managing Director and CEO. The notice of meeting sets out the details of those proposed awards to Mark. Rebecca, in her earlier comments, spoke about the company's approach to remuneration issue, including the company's short-term incentive plans for the Managing Director and other key management personnel. The directors, other than Mr. Vassella, unanimously recommend that shareholders vote in favor of these resolutions. I now invite questions from the floor if there are any. Michael, have we received any online?
Just one online from Stephen Mayne. Could the CEO summarize his past LTI grants as to whether they are vested or lapsed? Also, has he ever sold any ordinary shares in the company or bought any on-market without relying on the incentive scheme to build his equity position in the company? Please don't say look it up in the annual report and through ASX announcements. It's complicated over many years and the CEO could factually summarize this situation in 30 seconds.
Well, let me do the 30-second version. Mark has chosen to take all of his STI in shares and all of his LTI in shares through the period of time he's been the chief executive. That's consistent with our desire for the executive to hold a lot of shares and have the same experience of seeing the share price go up and down that all of the shareholders have. He has sold some shares, that is purely to pay for tax that falls due when they vest. He's generally would sell half of what he receives to pay for tax. Beyond that, I know Mark had some shares prior to taking on the role, he's sold very little of his shares in that period of time, if any, so.
Thank you. There's no further online questions. Can we just check with the operator if there's any telephone questions?
There are no questions at this time.
Thank you.
Thanks, Michael. Well, that concludes the discussion on these items. There are voting restrictions that apply to these items, which are detailed in the notice of meeting. Details of the proxies validly lodged in relation to each item are displayed on the screen. This brings us to the final item to be discussed today. This item relates to an increase in the maximum aggregate annual non-executive fee pool, as described in the notice of meeting, that may be paid by the company for the services of non-executive directors. The last increase occurred in 2008. Given the interest of the non-executive directors, the board makes no recommendation on this item. I now invite any questions from the floor. Michael?
There is one from the ASA. Last year, the board sought shareholder approval to increase the maximum number of directors to 12, and shareholders were told that, and we quote, the board is of the view that there is no need to increase the maximum non-executive director's fee pool. Twelve months later, the board is requesting an increase in the director fee pool. How does this reflect on the board?
The ASA points out is exactly right. We did not think we would need to increase the fee pool 12 months ago. We asked to go up to 12 directors so we could go through this transition period. There will be three directors retiring over the next couple of years, but we're gonna reach a peak of 12 directors and then go back down to nine. In that period where we go to 12 directors, which will be for a relatively short period of time, we may exceed the fee pool limitation, and that's why we've asked for it today. It really relates to the fact that we were delayed as part of the COVID piece to getting the recruitment done. In essence, we will have a period of concentration of a larger board for a short period of time.
Thank you. Just one last question from Stephen Mayne. BlueScope has around 75,000 retail shareholders, but less than 5,000 will have voted today. When disclosing the outcome of voting on all resolutions today, including the proposed increase in the director fee cap, could you please advise the ASX how many shareholders have voted for and against on each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions, and was a disclosure initiative adopted by the likes of Metcash, Dexus, and Tabcorp.
Well, frankly, the number of shareholders who vote is relevant in a scheme of arrangement because you do have to get a proportion of those in a takeover type situation. The only relevant item for voting in these, on these resolutions at the AGM is, in fact, the number of shares. We'll continue to display the number of shares, but not the number of individual shareholders.
That's all the online questions. Can we just have a final call from the Moderator? Is there any telephone questions?
We have no questions at this time.
Thank you.
Just a moment. I can't read anything without my glasses. Okay. First of all, are there any final questions from either online or on the telephone, Michael? Just given that this is our first hybrid, we just wanna make sure that we've picked up everything that was there.
Yeah. There's no online questions coming through, Mr. Chairman. I will just do a final call from the operator. Any telephone questions?
We have no questions at this time.
Thank you.
All right. For the last item we just talked about, there are voting restrictions which apply to that item. Details of the proxies for that last item are shown on the screen at this point. Okay, that concludes the formal business of the meeting. However, given we've just asked that last final question, could we just move the thing on a little bit, please? Shareholders and proxy holders present holding a blue admission card, thank you, Viva, are entitled to vote, and your voting paper and the poll will be on the back of those blue cards. If you have difficulty completing your voting paper, seek out a Link staff member who will assist you. If you haven't already done so, I now ask you to complete your voting paper on here and also for those online.
For those physically present, please place your completed voting paper in the poll collection boxes, which position near the exit of the room. The poll will remain open for a further five minutes to enable shareholders to submit their votes. For online shareholders, there is a countdown clock which will appear on your screen, letting you know how long you have until the meeting closes. Except for the closure of the poll, there are no other matters to be transacted at this meeting. Thank you for your attendance, and I invite you to join us for some light refreshments after the meeting. The results of the poll on items two to six will be available later today and can be obtained by visiting the ASX or our website.
Thank you again for your attendance, and I'd like to thank you all of our employees here especially, and I'll wish all of you good health through the next year or so. Look forward to seeing you next year, hopefully here again. Thank you.