Capacity for more BlueScope steel in rail, energy projects

Speaking after Premier Minns toured the BlueScope steelworks, the first visit by a NSW Premier since Barry O'Farrell inspected the site, BlueScope managing director Mark Vassella said Port Kembla had the capacity to contribute more to major projects.

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"Steel is such a fundamental component of not only the renewable energy industry but also rail, automotive and infrastructure," he said. "Any of that activity that's in the state means that's more sales and more opportunity for us and BlueScope."

The Labor government committed to mandate 50 per cent local content in future train contracts and has committed to beginning the procurement process for the replacement of the Tangara train fleet in this term of government.

NSW Labor will also increase tender weighting to 30 per cent for local content - which would cover major renewable energy projects such as steel heavy wind farms and transmission towers.

"We want to make sure that when we look at the future growth of the NSW economy, the Illawarra doesn't miss out," Mr Minns said today.

The ASX-listed steelmaker's future in the Illawarra was recently thrown into doubt after the federal government's safeguard mechanism presented a material uncertainty for the $1 billion blast furnace reline project, which is yet to receive final board approval.

However, after discussions with the federal government, the release of a package of grants and tweaks to the mechanism to take into account the challenges faced by the steel industry, BlueScope came back on board with the government's signature plan to reduce emissions from major polluters in the economy.

Mr Vassella said that similar discussions would need to take place with the NSW government as it steps up its ambitions to decarbonise the NSW economy.

"Our industry and our members are near and dear to the Labor Party's heart. So from our perspective, we expect to see continuing support from the Labor Party," Mr Vassella said. "There's a great opportunity for us to decarbonise the industry."

Any plan to decarbonise the steel industry would require enormous amounts of electricity to take the place of current steelmaking methods which rely on coking coal.

The NSW Labor government has committed to establishing a state-owned energy body to develop renewable energy projects. Whether to provide renewable electricity directly to the steelworks or to run electrolysers to produce 'green' hydrogen off wind and solar power, the electricity supply would need to double, Mr Vassella has said, without increasing prices in the trade-exposed industry.

"The government public policy for a renewable energy system is a key component of decarbonising the steel industry. This is going to require a broad-based approach and broad-based support from all parts of the community."

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