The Early Years - up to 1930

The Broken Hill Proprietary Company Limited was formed in 1885 to mine silver chlorides from the world's richest silver mine at Broken Hill. As the silver dwindled, iron ore was used as a flux to extract the last ounces of more precious metals.

Iron ore continued to be used as a flux until the 1900s when Australia-wide railway development created an unprecedented demand for iron and steel.

By 1910, 580,000 tons of steel was being imported into Australia, including 150,000 tons of steel rails. BHP decided to diversify into steelmaking.

Knowing that the company's South Australian ore was suitable for making high grade steel, BHP sent General Manager, Guilliaume D. Delprat to Europe and the US on a fact finding tour in 1911. While overseas, Delprat enlisted the services of Philadelphia engineering consultant David Baker, a specialist in the installation of iron and steel works, to report to the Board of Directors on the feasibility of steelmaking in Australia.

Baker’s report was accepted and he was engaged to supervise the building of the Newcastle Steelworks, then stayed as the Steelworks' first manager until 1924.

On arrival in Australia in April 1912, Baker decided Newcastle was a better place to build a steelworks because there were no adequate supplies of fresh water or coal near the South Australian iron ore. It took three tons of coal to make one ton of iron so it was cheaper to take the ore to the coal. He chose coal rich Newcastle over the coalfields of Wollongong because of its established harbour facilities, quality coal and the fact that BHP already owned waterfront land - acquired in 1896 as a smelter site.

The Newcastle site was extended, although most of the land was swamp. The first major site works required workers to float a pile frame to the blast furnace location on a punt. The area, which was on mud flats covered at high tide by 3ft of water, had to be raised at least 10 feet.

Sand dredged from the river was used to fill the site.

Baker advocated building a large-scale steelworks capable of producing 150,000 tons of rails a year with additional output of blooms and billets. Initially it would have a 350-ton blast furnace, three 65-ton open hearth steel furnaces, a 35-inch blooming mill, 28-inch heavy rail and structural mill and by-product coke ovens.

When war broke out on August 4 1914, the project was already more than 50% complete.

In January 1915, the steamer Emerald Wings (in 1919 purchased by the company and renamed Iron Baron) arrived with the first shipment of 2800 tons of ore from Iron Knob. On March 8 1915, No 1 blast furnace was blown in. The first steel was tapped from the open hearth furnaces on April 9 in an area that only months before had been under water. The first rail was rolled 15 days later.

When the Governor-General, Sir Ronald Munro Ferguson, officially opened the Steelworks on June 2, 1915, the company had spent £1,500,000 on the undertaking and order books were full for the next 12 months.

By August 27 1915, the works had produced 32,214 tons of pig iron, making 17,139 tons of billets and blooms and 11.574 tons of rails.

Heavy orders necessitated immediate expansion and a second blast furnace was planned. World War I forced the company to roll its own steel plates for the proposed blast furnace shell and stoves, an option that would also allow the works to provide steel plates for the shipbuilding industry.

By 1918, No 2 blast furnace had been blown in and a third furnace planned. By the end of the war, the plant's capacity had doubled, but with peace came the return of overseas competition and the end of the steel boom.

By the end of the year, British steel was selling in Australia for half the price of the local product. At that time the basic wage at British steelworks was 35 shillings a week compared to 78 shillings a week in NSW. Coal cost 21 shillings and 9 pence a ton in Newcastle and just 8 shillings and 6 pence in Britain.

Essington Lewis was appointed BHP's General Manager, following the resignation of Delprat in 1921.

Faced with rising costs, over-capacity and increasing prices for coal, Lewis had no choice but to retrench staff, cutting the workforce from its end-of-year peak of 5,500 men to 840 at June 1922 before eventually suspending operations completely.

During the shutdown, a far-sighted program of reconstruction began. Outmoded plant was scrapped to promote competitive ability - a policy that was to pay off 10 years later during the Depression.

The Semet-Solvay coke ovens were replaced with two batteries of Wilputte ovens and a new by-products plant costing some £1,000,000; steam replaced electricity in some places; No 1 blast furnace was relined; the bloom mill improved; the finishing mills reorganised; and a 28-inch mill added. New equipment allowed the simultaneous rolling of billets and rails. Amenities were improved.

Just as importantly, Lewis launched a program of downstream integration to protect outlets for the steelworks semi-finished products, outlets that were to become major employers in the Newcastle region.

Baker was succeeded as Newcastle Steelworks' Manager by Leslie Bradford, a metallurgist renowned for his pioneering work on patented flotation processes at the Broken Hill mine.

Bradford and Lewis (who was appointed BHP's Managing Director in 1926) were responsible for introducing a range of schemes and work practices that shaped Newcastle Steelworks for all time. Schemes included tours, inspections, apprentice training, safety programs, bonus schemes, suggestion boxes, provident fund and sickness and accident benefits. The latter to eventually grow into NIB Health Funds.

Consolidation and modernisation continued. In 1929, work started on two batteries of regenerative by-product coke ovens, the largest of their type in the British Empire, and an associated by-products plant. No 3 blast furnace was remodelled, boosting capacity by 15%.

Then came the Depression.

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