Mill production target doubt

Press, 2 November 1989, Page 42

Mill production target doubt

PA Auckland The $1.2 billion expansion of the Glenbrook Mill of NZ Steel looks set to fall short of production targets by as much as 250,000 tonnes a year. Helenus Corporation, the new owner, said it might have to spend $6O million to rectify the problems. One of the cornerstones of the “Think Big” era, the two-stage expansion was the subject of massive cost and time overruns when owned by taxpayers. The Government had to write off $1.58

before selling it to Equiticorp for $327M in late 1987. Now the BHP-led consortium which purchased the mill from Equiticorp’s statutory managers is to spend S2OM immediately to rectify problems, and may have to spend a further S4OM. The company’s new managing director, former BHP executive, Mr Lance Coburn, said that the money has to be spent on matters critical to the expanded mill performing to design specifications that were delayed and reduced during the

expansion project. Mr Coburn said Helenus discovered the problems during the due diligence process as part of its investigations undertaken in preparing its bid for the mill. Unless the issues are addressed, Mr Coburn said the mill was set to produce about 450,000 tonnes of steel a year, instead of the 650,000 to 700,000 envisaged when the expansion project was approved. Mr Coburn said the exact cost of the remedial work should be known in a month or so.

The production shortfall is being caused by problems in the area of steel slabs and billet production — the raw material needed by the hot rolling mill to make finished products. Plant procedures and work practices are also being looked at in order to help overcome the difficulties, the need to improve productivity being the subject of discussion with the Glenbrook workforce. Mr Coburn says those discussions began on Tuesday.