Glenbrook under cloud

By ELLEN READ

The shadow hanging over the future of Glenbrook steel mill has darkened since Monday's news that its Australian parent company, BHP, is to merge with the British resource giant Billiton and will spin off its steel assets as a separate company.

The moves are seen by some - including the union representing the mill's workers - as setting Glenbrook up for possible sale.

On Monday, BHP said it planned to merge with UK-based Billiton in a $A57 billion ($68 billion) deal that will create the world's second-largest mining group.

BHP also said its steel operations - BHP Steel - would be spun out to shareholders as a separate company by the end of 2002, enhancing the newly merged company's focus on minerals and petroleum.

Last year, BHP Steel spun off its long products business, OneSteel, leaving just the flat products operations, which make up the current BHP Steel.

These are centred on the low-cost steel-making facility in Australia's Port Kembla and include manufacturing plants and in-market processing and distribution centres throughout Australia, Asia and New Zealand - which is where Glenbrook fits into the picture.

Cyril Benjamin, the president of BHP New Zealand Steel, which runs Glenbrook, denied the steel assets were being prepared for sale. He said he had told staff this on Monday and would talk to union members today. He said he planned to tell them that it was business as usual.

"There's really no change," he said.

Andrew Little, the national secretary of the Engineering, Printing and Manufacturing Union, disagreed, saying the spin-out had left Glenbrook workers feeling anxious about their future.

"The great BHP spin-out is no more than a plan to cut adrift what has been a valuable enterprise in New Zealand," he said.

It was unlikely BHP's steel division would survive on its own, making it probable that it would be sold to another, larger, conglomerate which would be unlikely to have any empathy for the local mill and its workforce, Mr Little said.

Mr Benjamin said BHP would not have any control over BHP Steel after the spin-out because the process effectively gave the division to BHP's shareholders, establishing it as a stand-alone entity.

"At that stage, BHP don't own it any more, so it is just subject to normal commercial realities, just subject to any normal takeover bids or mergers or alliances. BHP won't have a hand in that any more, but its shareholders will. They would have to approve," Mr Benjamin said.

He said a decision from BHP on whether to make further investment in Glenbrook - meaning a $20 million modernisation and rebuilding of one of the mill's two melters - was still expected in May.

"There is no change to that ... the people making the decision will be the same and the basis of the decision will be the same," he said.

"Obviously we're hopeful and optimistic it will be approved [the $20 million melter upgrade], but there's no guarantees."

The axe hung over Glenbrook for most of the 1990s because its Australian owner had been unhappy with its financial performance.

Several years ago, the company renewed the mill's number one melter but also delivered an ultimatum to its staff that, unless performance targets were met, the mill would close by 2005.

In September, the plant's owners unveiled a multimillion-dollar lifeline expected to ensure its survival for up to another 10 years. It is the final decision on this which is due in May.

The mill, which was established in 1967 and employs 1400 people, uses a unique method of making steel in which the melters liquefy ironsand and turn it into steel.

BHP will own 58 per cent of the new company, which will have its headquarters in Melbourne. Billiton will control 42 per cent.

The merger is conditional on shareholder and regulatory approval.