Referral and conduct of the inquiry
On 26 November 2015, the Senate referred the following matters to the
Senate Economics References Committee (the committee), for inquiry and report
by the last sitting day of June 2016 (30 June 2016):
future sustainability of Australia's strategically vital steel industry and its
supply chain; and
other related matters.
The committee held three public hearings, in Wollongong (1 April 2016),
Whyalla (5 April 2016) and Canberra (6 April 2016), and carried out two site
visits, to BlueScope steelworks in the Illawarra region and the Arrium
steelworks in Whyalla. The committee published thirty-eight submissions on its
website from individuals and organisations.
With the dissolution of both houses of 44th Parliament on
9 May 2016 for a general election on 2 July 2016, the inquiry lapsed.
On 11 October 2016, the Senate agreed to the committee's recommendation that
the inquiry be re-adopted with the same terms of reference in the 45th
Parliament, with a final report to be presented by 1 December 2017.
The committee re-opened submissions with a closing date of 17 February 2017.
An additional seven submissions were published on the inquiry's website.
The committee tabled an interim report on 1 December 2016, which focused
on the collapse and imminent sale of Arrium.
Background to the inquiry
When this inquiry arose, the Australian steel industry was facing a
number of significant challenges. Foremost among these challenges were the
possible closures of Australia's two major integrated crude steel producers,
the Arrium steelworks in Whyalla and the BlueScope steelworks in the Illawarra
region. Both Arrium and BlueScope had reported financial losses in the years
prior to the inquiry, leading to the decision to lay off significant numbers of
BlueScope reported that it had returned to profitability in the 2015
The sale of Arrium Steel to GFG Alliance was formalised on 1 September 2017,
with Arrium Steel's name changed to Liberty OneSteel.
Both developments are welcomed by this committee. However, the evidence
received in this inquiry suggests that many of the underlying challenges that
led to the financial problems of Australia's biggest steel producers remain. Without
appropriate policy settings and proper government support, Australia's steel
industry remains vulnerable to future crises.
The committee acknowledged the broader nature of the challenges facing
the steel industry in its interim report on the collapse of Arrium. As such,
the committee recommended that the committee's final report should address in
detail potential policy and legislative reforms, particularly in the areas of
anti-dumping and countervailing measures, government procurement and standards.
This report addresses these issues and makes a range of recommendations
intended to help secure the future of the steel industry in Australia.
Other parliamentary inquiries relevant to the this inquiry
It is worth noting here that a number of other parliamentary inquiries
have been held concurrently into some of the broader issues raised in this
inquiry. These include, for example, the Senate Economics References Committee
inquiry into non‑conforming building products, the Joint Select Committee
on Government Procurement's inquiry into the Commonwealth procurement
framework, and the Senate Economics References Committee inquiry into the
future of Australia's naval shipbuilding industry. Relevant evidence and
conclusions from these inquiries are referred to throughout this report.
Scope and structure of the report
This report focuses on the issues that led to the creation of an
environment in which the future of Australia's steel industry seemed uncertain,
and will likely continue to place the future of this industry in jeopardy.
These issues include: inconsistencies in standards and certification between
domestically produced steel and imports, leading to non-conforming and
potentially unsafe structures; an uneven playing field for Australian business
in government procurement; and difficult international conditions, including a
global oversupply of steel, trade-distorting policies by foreign governments,
and a subsequent surge in imported, dumped and subsidised products into
The report consists of six chapters, including this introductory
Chapter 2 provides an overview of the steel industry in
Australia, including BlueScope Steel and Arrium (now Liberty OneSteel), and the
role of steel manufacturers and distributors. It further outlines recent trends
in Australian steel production. The chapter also examines the contribution of a
domestic steel industry to the Australian economy, and considers what makes
Australian steel competitive.
Given the centrality of the collapse of Arrium to this inquiry, chapter
3 considers the events leading to Arrium being placed into voluntary
administration (a matter considered in greater detail in the interim report)
and provides overview of the subsequent sale of Arrium to GFG Alliance. The
chapter also briefly considers the future of the steelworks, including the
significance of recent announcements by Mr Sanjeev Gupta, Executive Chairman
and Chief Executive Officer of GFG Alliance, regarding plans to greatly
increase the use of renewable energy to power the steelwork's operations.
Chapter 4 summarises the current regulatory framework for steel
standards and certification requirements, and looks at the effects of differing
expectations and requirements of domestic and international producers. The
chapter also examines examples of non-conforming steel products and fraudulent
certification provided in evidence. In considering these matters, the chapter
also outlines relevant recommendations made in the Joint Select Committee on
Government Procurement's June 2017 report on amendments to the Commonwealth
Procurement Rules, and considers the government's response to those
Chapter 5 addresses government procurement policies as they
relate to the steel industry. In doing so, chapter 5 outlines the current
Commonwealth Procurement Rules (as of March 2017) and the Australian Industry
Participation framework, and considers the various views expressed on these
matters by inquiry participants.
Chapter 6 outlines current international conditions and their
effect on the Australian steel industry. These conditions, as chapter 6
explains, are characterised by an international glut in steel, trade distortion
policies by other governments, and a recent rise in dumped and subsidised
imports. The chapter also describes Australia's current trade remedies regime
and recent legislative changes to the anti-dumping framework.
The committee thanks all those who assisted with the inquiry, in
particular the individuals and organisations who made written submissions and
appeared before the committee in public hearings. The committee benefited
greatly from the participation of these individuals and organisations.
The committee especially thanks individuals who wrote to the committee
outlining the personal impact that the decline and possible end of domestic
steel production would have on their lives and livelihoods. The evidence given
by these individuals was crucial to the committee coming to an appreciation of
the need for stronger action to ensure the survival of Australia's steel
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