BHP STEELWORKS

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.

With the Depression, wheat and wool prices plummeted, orders for rails disappeared, building everywhere stopped and No 1 battery of the new coke ovens was left idle.

By 1932, ingot steel production dropped to 195,188 tons – less than half the 1930 output – and only No 3 blast furnace continued production.

Yet, for a number of reasons, not the least of which were the efficiency measures introduced by Baker and Lewis, the Depression didn’t hit Newcastle as hard as overseas plants. The works’ downturn never went below 20%-25% of total tonnages.

Relief also came sooner and, as a result of the 1920s modernisation program. Further modernisation began in 1932 with new mills and new collieries. By 1933, the Steelworks was at about 40% of total tonnage capacity.

Newcastle survived the Great Depression that had forced many overseas steelworks to shut down completely. By 1935, demand picked up rapidly and the Steelworks produced a record 552,710 tons.

At that time the Steelworks comprised the two new Wilputte coke oven batteries, three blast furnaces (record output for the largest was 5915 tons a week) and 10 open hearth furnaces, four of them of 130 ton capacity with the newest just commissioned. There was a bloom mill, seven finishing mills including a 28-inch rail and structural mill, an 18-inch continuous mill, a plate mill and a 16-stand Morgan rod mill rolling a single strand. In addition there were finishing shops, roll turning shops, foundries, fabricating shops and a brick plant.

Leonard Grant took over as Steelworks’ Manager in 1936.

Australian steel was reputedly being sold at the lowest price in the world and prices came down through the ’30s while production increased. Newcastle’s price advantage was due in no small part to Lewis’s striving for increased efficiency in process and operation.

Growth became self-generating. But in all the feverish activity, Lewis had more than the immediate future of the Steelworks on his mind. He was driven by the need to prepare for war and would later become the wartime Director-General of Munitions and Director of Aircraft Production, recognised as one of the driving forces behind Australia’s industrial war effort.

Lewis announced in 1936 that machine tools, precision tools and jigs were being obtained to establish a pilot shell manufacturing plant in Newcastle.

In 1938, the heat treatment shop was extended and began producing 10-pounder high explosive shells at a rate of 500 per week. Three-inch anti-aircraft shells were also produced.

When war broke out in 1939, the three blast furnaces and 13 open hearth furnaces had a capacity of one million tons of steel a year. The mean annual output of pig iron and ferro alloys per blast furnace was 221,000 tons in Australia compared to just 160,000 tons in the US and even lower in the UK and Germany.

The outbreak of war saw the production of shells at Newcastle increase fivefold to 2500 a week, rising again shortly afterwards to 3500 a week and a three-shift, seven-day roster was introduced.

The outbreak of war meant shortages of vital metals and tools at a time when they were sorely needed for the war effort. Newcastle Research allowed tungsten carbide – a hard metal used for machine tools – and magnesium metal, which had been sourced previously from Germany, to be produced at the Steelworks.

George Bishop, later General Manager, is credited with another significant advance in armaments manufacture with the development of substitute bulletproof steel using manganese, silicon and chromium with one of the beach sand elements.

During the war years the Newcastle Steelworks was a hive of activity with new plants being built to produce previously imported materials.

Steel produced in Newcastle went into Owen and Bren guns; aircraft engine cylinders and gauges for the production of engines for Beaufort bombers and Beaufighters.

Ingenuity overcame wartime shortages. Equipment designed and made included machine tools (from copies of old ones), high speed milling machines, file-cutting machines, a copy of a British range-finder, precision optical grinders and more than 3000 tons of jigs, gauges and fixtures for the Department of Munitions.

By 1942 there were nearly 9000 workers at the Newcastle plant, but despite continuing demand for steel, production began to fall.

Manpower shortages and delays in the transport of raw materials, caused by the war’s toll on ship numbers, saw employment drop to 8217 in 1943.

Newcastle’s first sinter plant, a new open hearth furnace and a coal washery were completed by 1944.

The wartime shortage of vessels responsible for the Steelworks difficult position opened a new avenue boat building. More than 50 ocean-going tug boats were constructed at the Steelworks for the US Army and the British Navy.

By 1945, coal was scarce and the need to use low quality ore and limestone from NSW forced costs up and decreased output. Production fell to less than 822,000 tons by May 1945.

After the war, the steel industry worldwide was in an even more parlous state than Newcastle’s, creating a massive demand for new plant. This left little available for Australia and by 1946 production was down to 700,000 tons. An industrial dispute and coal rationing, added to problems.

To overcome the critical national labour shortage, the government established significant immigration schemes in 1947. These were vital to the Steelworks’ immediate future and had a significant long-term impact on the make-up of the workforce and the growth and character of neighbouring residential suburbs.

Australia saw 55,000 new arrivals in 1948; 150,000 in 1949; and a peak of 152,505 in 1950. By 1955 these new settlers were to account for 20% of the payroll.

Coal shortages in 1947 resulted in No 1 battery coke ovens and No 1 blast furnace closing for two months. May that year saw production at its lowest since 1935 – 682,631 ingot tons. Employment dropped to 6588.

A general 10-week national coal strike in 1949 saw No 1 and No 2 coke ovens batteries idle for two months from June and the blast furnaces out of commission for 58 days.

It was 1950 before the coal industry started returning to normal production levels after the 1949 national strike. The Newcastle Steelworks resumed modernisation and expansion with a program that would continue through the booming 1950s as Australia’s steel industry struggled to keep up with the production requirements of a retail boom.

Increasing prosperity led to increased sales of cars and whitegoods particularly, giving rise to a demand for steel that exceeded supply by more than a million tons.

Steel imports soared to more than 500,000 tons in 1950 and Newcastle looked to expansion with a sense of urgency.

In 1950, a major project was launched to reclaim Platts Channel and Spit Island. While work progressed the proportion of the Australian market supplied by local output fell from 91% in 1946 to just 57% in 1951. By 1952, imports had reached 750,000 tons and the Newcastle Steelworks employed 7373 people.

A hectic growth program began. By 1954, a fourth battery of coke ovens was commissioned to replace older units. BHP’s total output was regaining ground with 2,000,000 tons of ingots produced nationally for the first time (50% at Newcastle).

But that was still not enough to keep up with demand in a market that had required 285 pounds (130kg) of steel per head of population in 1946 and was growing at such a rate it would consume 725 pounds per head 10 years later.

In 1955, the rebuilding of No 1 battery started. The following year a new stockyard for the open hearth department was finished and an extra row of soaking pits added. New cranes improved ship loading facilities.

BHP’s Central Research Laboratories opened at Shortland in 1957 with far more fanfare than a low-key development some 12 months later that was to have an equally large impact – the installation of BHP’s first computers at Newcastle and Port Kembla.

Although they were in the main to replace clerical functions, one Newcastle unit was used right from the start for operations research. From this base, Newcastle would eventually move to on-line production control facilities in 1970, growing in the 1980s to become one of the most sophisticated computerised steel plants in the world.

1958 saw a new, high speed, 50,000 ton capacity skelp and strip mill brought into production to improve feedstock for the pipe and tube industry. By 1959, a new coal cleaning plant had been built, the administration building extended, the brass foundry relocated and the ore storage area reconstructed.

1962 brought a development that was to change the Steelworks’ operations forever – the introduction to Australia of the process that was to become known as basic oxygen steelmaking (BOS). The BOS system would eventually replace open hearth steelmaking completely.

Claimed at the time to be the greatest breakthrough in steelmaking techniques this century, it saw one 200 ton Basic Oxygen furnace capable of providing 50% more steel than all 14 of the old open hearth furnaces put together.

The BOS increased steelmaking capacity to 1.6 million tons a year, which in turn demanded new or enlarged production units up and down stream. The company installed a 44-inch bloom mill; one of the world’s fastest, largest capacity, four-strand rod mills, a raw coal blending plant and new coke handling facilities; a new ore unloader; deeper berths; a new sinter plant; a fourth blast furnace; the coupling of two revolutionary techniques (basic oxygen steelmaking and continuous casting to increase billet production) and new rolling mills.

In 1964, six of the most modem and almost completely automated recuperative soaking pits in the world began operation.

To further broaden the Steelworks’ skills base, an Apprentice Training Centre was established and on the technical side, to allow the rapid analysis of metal and investigate new fuels and raw materials, a central control laboratory was built.

1964 saw the introduction in March of BHP News, the Steelworks’ own monthly newspaper. It replaced Safety Angles and was designed to highlight the latest progress and planned development within the company, as well as report on items of personal, social and sporting interest to the 11,350 employees.

The five-year period leading up to the Steelworks’ 50th anniversary in 1965 represented only 10% of the Works’ history yet it was the single largest period of growth to that time in monetary terms with more than £S5million spent in modernisation.

On December 2, 1965, the last Newcastle open hearth furnace (No 14) ceased production. 1966, the year Australia introduced decimal currency, was also the year of a devastating drought which, along with a rapidly retreating world market, sent steel prices plummeting. Newcastle’s answer was an export drive to South East Asia.

During the year, Central Research Laboratories installed a $100,000 EAI 60 computer, the only one of its type in Australia.

In 1968, coke ovens battery 5A, which had 36 ovens and a capacity of 6300 tons of blast furnace coke a week, was commissioned together with the four-strand, curved mould, continuous billet caster and the $28million No 2 merchant mill.

The caster was an Australian steel industry first that converted liquid steels directly into billets, bypassing conventional ingot moulds, soaking pits and bloom mill operations. The merchant mill, described as ‘the mill to end all mills’, was the largest and most modern in the world.

By 1970, the Steelworks was benefiting from the preceding decade’s investment in new plant and equipment. There was a new level of manufacturing efficiency.

Improvements were continuing too. On October 21 1970, the steel foundry’s 53 year-old acid open hearth furnace was tapped for the last time. It was the last of 17 that once operated in Newcastle, and the last of its type in Australasia.

The furnace was replaced by two, almost fumeless, 25 ton coreless induction furnaces, the largest in the Southern Hemisphere. Used to make high alloy iron, their main benefit was the ability to make ‘double-pour” rolls that had previously been imported.

In 1971, the company announced expansion plans worth $l4million to increase merchant bar output from 320,000 tonnes a year to 600,000 tonnes. The program’s main features included duplicating some rolling and finishing facilities, increasing the bloom mill’s standard ingot size from 6.4 tonnes to 8.5 tonnes, and extending the direct metal foundry to handle larger ingot moulds.

But by the end of the year it was obvious an increasingly tight economic climate was not going to ease and operations were reduced because of insufficient orders. Nevertheless numerous improvements continued to be made.

First indications of the tempestuous period about to be faced by the Steelworks were seen in November 1974 when BHP’s steel section showed a profit of just $550,000 for the half year compared to $9,582,000 for the corresponding period the previous year. To put it into perspective, the six monthly profit amounted to less than one-third of the then weekly wage bill for the Newcastle Steelworks alone.

 The company warned that not only had the market for steel, both inside and outside Australia, fallen, but it showed little sign of recovery while costs were rising dramatically.

In Newcastle, economy measures started immediately. Nothing was overlooked, even to publication of the BHP News going from monthly to quarterly.

The $54.5 million No 2 bloom mill, cold commissioned in 1975. remained idle until 1979 due to the lack of orders. 1976 saw the last bar rolled in the 18-inch mill and the 60 tonne BOS furnace commissioned.

1977 saw the installation of a “no twist” finishing train at the rod mill and the announcement of a new $2.25 million computer system for the computer centre.

In 1978, a corporate restructure established Divisions as largely autonomous profit centres. The Steel Divisions had full responsibility for product marketing.

Recognising that the industrial downturn could only be weathered with the total commitment of all involved, General Manager Rod Harden broke new industrial relations ground by organising an economic briefing for union representatives.

He confirmed that the Steelworks was very much dependent on export business to maintain its current level of operation, which was just 80% of capacity. And he warned of the emergence of SE Asia as competitors.

Orders and prices at the end of the decade gave room for optimism, but at the time no one realised that the steel industry generally was at the start of a long downhill ride, part of a worldwide recession triggered by skyrocketing oil prices.

The general managership of Maitland-born John Risby, from 1980 to 1986, saw a marked increase in corporate involvement in the Newcastle community although 1982-83 was one of the most difficult periods in the Steelworks’ history, when the possibility of closure loomed largest. The world market was volatile. For the six months to November 30, 1981, the Division had operated at a loss of $59million – $50 an employee a week. Australia was finally feeling the brunt of a worldwide decline in steel production. For the first time employees realised that many jobs were at stake. The company was determined to modernise in order to improve competitiveness and while Newcastle capital investments totalled $57.2million in 1982, the scrapping of uneconomic capacity saw inevitable closures. Productivity increases necessary for survival demanded that Newcastle reduce its workforce to 6000 by May 1983 while maintaining production at l.5 million tonnes a year. Voluntary Early Retirement packages were offered.

BHP Steel’s situation reflected international trends, but was more worrying because Australian domestic demand had plummeted even lower than international demand.

Saviour came in the form of the Steel Industry Plan of 1984 -1988. The tripartite agreement between Government, the steel unions and BHP, provided a five-year assistance package of bounty payments up to $71.6million a year, a quota imports and an import watch system.

Confidence and stability were restored to the steel industry, but in return for a measure of protection, the company was obliged to upgrade and reduce costs. In Newcastle, the plan heralded an unequalled period of investment that would see $450 million spent on capital works over five years. It would also see the start of a new era in industrial relations with the entire workforce pulling together to reach one common goal – survival.

In 1985, the $90million bloom caster and reheat furnace installation was approved. The four-strand continuous bloom caster would be the largest in the world.

General Manager Bill Farrands signalled the move towards high grade, value added, specialist steels for the export market. The last half of the decade saw the commissioning of significant projects and upgrades.

In June 1988, a trial shipment of 3000 tonnes of Special Bar Quality steel exported to the US was well received and an order placed for more. The turnaround had come. BHP Steel reached a record $92.6million profit in September 1988 to which the Rod and Bar Division, particularly Newcastle, was a major contributor.

The signing by every major union in the Steelworks of the historic Newcastle Steelworks’ Development Agreement signalled the start of a new consultative era in planning and industrial relations.

The prospects for good returns on shareholder funds, industrial relations harmony and an ability to grow and meet domestic and overseas demand had never been brighter.

The Steelworks marked its 75th birthday in June 1990 and more than 8000 people attended the celebrations. But towards the end of the year the turning economic tide of rising oil prices, inflation and interest rates was being felt and the Australian steel market was down 20% on its peak 1989 levels.

In 1992, the cost reduction scheme known as the Business Improvement Plan (BIP) was introduced. In the same year the new Supply and Personnel system (SAP) began.

In September, in Future Directions, BHP announced it would continue integrated steelmaking operations at Newcastle Steelworks. Significant expenditure was proposed on plant improvement and the introduction of new technology.

The Sydney Mini Mill (later known simply as the Sydney Steel Mill) was commissioned in September.

Bob Kirkby was appointed Group General Manager on February 1, 1993. One of Kirkby’s first initiatives was a focus on safety. World-class safety experts DuPont assisted Rod and Bar to implement safety changes. The Steelworks launched the environment improvement program ‘Towards 2000’ in 1994.  In December, coal-fired power generation ceased with the Steelworks buying 90% of its electricity from Pacific Power.

Sydney Steel Mill’s $100 miIlion rolling mill rolled its first bar on October 10 1994.

As Newcastle Steelworks celebrated its 80th birthday in June 1995, concern mounted about its future.

BHP industrial land to the west of the Steelworks was set aside for a future industrial park, later called Steel River.

The coke ovens created a world first in its $2.8million repair of the 5A battery – it was the deepest hot regenerator repair undertaken on an Otto battery and used a specially built water-cooled cage.

In 1996, Rod and Bar Products merged with Long Products (Whyalla) to form the Long Products Division, headquartered in Newcastle. In August, BHP announced a far-reaching review of Steel Group, including Long Products, because of disappointing profit results.

On April 29 1997, BHP announced the future of the Steelworks. Main points were that iron and steel making would be phased out by the end of 1999, with the loss of 2,500 jobs. The existing rod and bar mills were to be retained along with an expanded wire mill. Feed for Newcastle would be supplied from Whyalla.

A major human resources program, ‘Pathways’, incorporating career planning, retraining, retirement and financial advice, counselling and a host of supports, was launched to assist employees to prepare for job loss. Departmental Transition Steering Teams comprising representatives of employees, unions, management and staff provided input into closure organisation.

1998 was marked by preparations for closure. The Federal Government approved ‘Manufacturing in Bond’ for the Steel River site, planning started for the ‘Ribbons of Steel’ arts festival to commemorate closure, and Steelworks’ tours restarted.

$18million was spent on improving the Bar Mill to a world-class operation and $44million was spent on upgrading the Wire Mill. On August 31, the Newcastle mainframe was turned off marking the end of an era in computers.

On 30 September 1999, iron and steel making ceased and the plant closed. All structures except a few heritage-listed buildings have since been demolished. The site is currently being remediated awaiting reuse, possibly as a container terminal.

The Rod Mill, Bar Mill, and what started as Stewarts & Lloyds, Rylands and the Wire Rope Works were all amalgamated to become Onesteel, which continues operating today as the descendants of the once-massive Newcastle Steelworks.

Complied from notes by Sue Maiden, and from RodBar – final edition.