BlueScope has backed the federal government's policy to place emissions caps on major industries to force them to reduce their carbon footprint.
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Known as the safeguard mechanism, it requires the country's major carbon emitters to make genuine steps to cut their emissions, rather than rely on offsets.
In February BlueScope CEO Mark Vassella said the mechanism could affect the feasibility of the proposed blast furnace reline.
However, more recent talks with the government have allayed the steelmaker's concerns.
"Engagement with the government has been constructive," Mr Vassella said.
"We can now focus on completing the feasibility study for the $1 billion No6 blast furnace reline project and the ongoing decarbonisation of our steelmaking operations at the Port Kembla steelworks.
"Now, subject to the final form of the legislative rules and the government's additional support for industry, BlueScope's previous concerns in respect of potential adverse impacts from the safeguard mechanism have been materially alleviated."
Part of that support included a review of the Australian Carbon Border Adjustment Mechanism which "will be a critical measure in ensuring that Australian domestic manufacturing is not competitively disadvantaged and that greenhouse gas emissions are not transferred offshore", Mr Vassella said.
"The government has recognised the challenges facing hard to abate sectors, in particular the unique and urgent challenge of the No6 Blast Furnace reline and upgrade project," he said.
"They also acknowledge the essential contribution BlueScope makes to Australia's sovereign capability, the national and regional economies of Australia and the importance of the steel products we manufacture for key sectors of the economy including renewable energy, building and construction and defence."
Illawarra's Labor MPs said it was critical that major manufacturers such as BlueScope were able to remain competitive in Australia, in order to deliver on the government's plans for renewables, housing and defence.
Cunningham MP Alison Byrnes said BlueScope had a part to play in the government's 82 per cent renewables target.
"We have 81 months to get 82 per cent renewables into the grid," Ms Byrnes said.
"To achieve this goal Australia needs the most modern and world class steel we can produce. Labor is committed to modernising Australian industry, securing and generating jobs and cleaner energy - this is crucial to our climate and our economy.
"We will work to make sure the Illawarra takes advantage of every opportunity as we work towards 2030."
Whitlam MP Stephen Jones said Australian steel was required across a variety of portfolios.
"We want to see high levels of Australian steel, for example, in the biggest projects that we have got on foot at the moment, including our defence industry projects," he said.
Other major emitters are not as happy with government's proposed changes. CEO of cement maker Boral Vik Bansal said more attention was needed to ensure imported materials did not undercut local manufacturers.
Rail freight operator Pacific National has made more strident criticisms of the government's plan. The company, which is Australia's largest private rail freight company and provides rail freight services to Port Kembla, is caught under the safeguard mechanism as a large emitter, however CEO Paul Scurrah said small trucking operators were not covered and could therefore become more competitive than rail freight.
"The quickest and most efficient way to decarbonise the national supply chain is to support the haulage of more freight by trains - the current Safeguard Mechanism does the opposite by tilting the playing field in favour of more freight being transported by bigger and heavier trucks," he said.
Mr Jones said companies which switched from customers covered by the Safeguard Mechanism to those that weren't would be investigated.
"If, as a result of this, we see the arbitrage of people trying to shift from regulated sectors to unregulated sectors, then of course there'd have to be a response," he said.
"It's not like there are going to be some free zones where the push for decarbonisation won't exist."
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Connor Pearce
Glen Humphries
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
