BlueScope Steel Limited (BSL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome back to day 2 of the BlueScope Investor Day. I'm Chris Gibbs, Investor Relations Manager, and I'm here with Don Watters, BlueScope's Head of Investor Relations.

Thanks, Chris, and hello, all.

I'd like to kick off today by acknowledging the traditional custodians of country throughout Australia and their connections to land, sea and community. I'm in the land of the Eastern Kulin Nation and I acknowledge that Bunurong/Boon Wurrung and Wurundjeri Woiwurrung peoples and pay my respects to elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples with us today. We hope you found the briefing and Q&A sessions yesterday useful. We have another jampacked day of briefings from BlueScope senior management. Today's agenda is on the screen now for you to see. Don, what are we going to get through today?

Well, Chris, we're going to follow on from yesterday, but looking at the second element of our transform strategy pillar, being our approach to and progress in leveraging digital technology. We'll then shift gears to the grow pillar with the leaders of our business units set to talk you through their businesses, the markets they serve and the growth opportunities they are pursuing. We'll then finish the day on the deliver pillar, where Tania will take us through our financial framework and how we are looking at ensuring we deliver sustainable returns through the cycle.

Thanks, Don. As you can see, there will be a couple of breaks and ample opportunity for questions at the end of each session. The process for asking questions is the same as yesterday. [Operator Instructions] We'll do our best to answer as many questions as we can, but should we be unable to cover everything, please feel free to send Don or I an email, and we'll follow up. All right. Let's get into it. To get us started, I'll now hand you over to our MD and CEO, Mark Vassella.

Good morning again. Thanks for joining us. I trust you found yesterday's sustainability and climate deep dives informative. We're going to pick up again today on the second important element of the transform pillar of our strategy, the role of digital technology. Andrew Garey, our Chief Strategy and Transformation Officer, will give you an update on the promising work that's happening in this space. The balance of today will focus on our growth initiatives, starting with North Star and its expansion pathway. John Nowlan will brief you on the direction of our Australian businesses, how we're growing our sales through product innovation and finding ways to better serve our customers. Looking to Asia. We're very excited about the prospects of this fast-growing region. We have an amazing asset footprint with plenty of potential for further utilization. Connell Zhang, who joined us in April, will give you an update on the NS BlueScope joint venture; and Huang Xu, the President of our China business, will do likewise for that important region. Gretta Stephens, who you met yesterday, will round out the review of our businesses, with a briefing on the New Zealand and Pacific Islands segment. Gretta and the team have recently been through an exercise of successfully restructuring that business for future profitability. And as you know, the business like Australia, has seen some very strong demand conditions, particularly from residential construction. Finally, the third pillar of our strategy is delivering essentials, such as a safe workplace an adaptable organization and strong returns. Tania will round out the day by revisiting our financial frameworks and our approach to capital management. We think we've got a great story to tell, and I hope you enjoy the day. So over to you, Andrew, to take us through our digital story.

Good morning, everyone. My name is Andrew Garey, and I have the privilege of taking you through some of the work that our digital teams across the business have been progressing. Our strategic framework clearly identifies the need to transform the experience we deliver to our customers, improve our operating efficiency and look for new growth opportunities. And in 2019, we acknowledge the critical role digital capabilities will play in helping us deliver on this strategy. We also made a commitment to invest more money and resources into the adoption of digital technologies. Our digital strategy is well supported by senior leaders, and we've made some really good progress over the last 2 years. Today, you'll hear about our objectives and approach to digital. We'll also showcase some examples of some of the work. I'm going to start with our vision and approach. The slide really speaks for itself. Our vision is about delivering the next wave of customer and productivity improvements and growth initiatives through digital technologies. As I just mentioned, this is very much core to the BlueScope strategy. To achieve this, our approach has 3 elements: targeted use cases in priority areas; strengthening our people and technology capabilities, the foundations; and finally, transferring solutions and learnings across the enterprise. I think it's really important to emphasize the order of these. We specifically started with solving real-life problems to help inform the way we think about the foundations. We could have started with designing the foundations, what types of skills and what platforms we thought we needed, but I think our learning by doing has been invaluable to shaping where we all head. On the next slide, you'll see the elements of our approach laid out in a little more detail. Firstly, the use cases. Very early on, we knew the challenge was going to be one of prioritizing scarce resources. We spent a little bit of time upfront with some diagnostic work to identify where we thought the greatest value would be and what work was already going on within the business. We also looked at where we had better data and where the organizational capability could support the digital effort, and we categorize all of the opportunities against the 4 focus areas on this slide. The net result of that was that we started with manufacturing. Even more specifically, we started with coated and painted operations within Australia and New Zealand. We had good data and good capability in this part of the business, and we thought that the value and global opportunity was there, too. We also had some work already underway in several business units to improve the efficiency of our support functions, which we continue to drive. Supply chain and sales and marketing were followed around 12 months later. We now have use cases going on in most countries within the BlueScope footprint across all 4 focus areas. The next section of this slide is our foundations. Obviously, all 3 elements of this are important: our internal capabilities; solid, scalable platforms; and having the right external partnerships to help us get to our solutions faster. I think it's really important to acknowledge that when it comes to capabilities, it isn't just the data science skills we're looking to build. It's critical to get the right combination of data science, business expertise, traditional IT resources and project management and process change skills. Without this combination, it's very difficult to deliver lasting change. Most of the use cases are as much about business process change as are about data and new technologies. And the final element of our delivery is how we transfer learnings, experience and the actual tools and solutions across the enterprise. Having the right foundations in place is critical to scaling quickly. Delivering use cases and driving a short-term EBIT return is a core part of this approach, but so is building the capabilities and platforms to scale our efforts. Over time, it is the foundation that will allow us to really ramp up our efforts efficiently across the group. Now I'd like to share a little more detail around some of the use cases in each of the focus areas. You can see the 4 focus areas through the middle of this slide. The light blue text includes examples of use cases that are either in progress or in planning. Many of the initial use cases focused on using advanced analytics to review large samples of data and discover insights and make predictions more accurately than we've been able to do previously. We are also using simulation tools and robotic process automation. All of these complement our traditional work in automation and robotics. You can see the major drive in manufacturing around a few areas: asset intelligence or predictive maintenance, where we optimize spend on assets but also make sure that asset reliability and uptime matches market requirements. The second section is capacity and cost optimization, through better scheduling, simulations to optimize throughput and better line control to manage costs and quality. And then finally, energy optimization, which is another form of cost optimization. Within the supply chain, we've done a lot of work on demand planning and inventory optimization, but there is also work going on in a number of businesses to provide customers with full track and trace transparency. Sales and marketing is an area that's a little more difficult to find global scale. We have many geographies and markets with different customer needs and different starting positions. Our local businesses are finding innovative ways to improve customer experience in a way that aligns with their needs. For example, in ASEAN, there is a focus on modernizing their e-commerce and self-service platforms. While in the Australian distribution business, they are looking at better pricing transparency. For our support functions, the big opportunity here is improving employee experience and productivity through process automation. We also have the opportunity to better utilize new business intelligence tools to support our people to make better or data-driven decisions. I'd now like to take you through a few use cases in a bit more detail. We're going to go through 4 examples today. We have a couple of videos showing you our team take you through asset intelligence and paint line scheduling. I'll then take you through a couple of examples covering our supply chain work in Australia and some of our work with robotic process automation and finance. Let's start with the video showing some of the innovative approaches we have to asset maintenance in our Port Kembla metal coating lines.

Asset Intelligence is all about incorporating digital technology like machine learning and artificial intelligence into the way that we manage our global manufacturing assets at BlueScope. The way that it works in practice is that the technologies like artificial intelligence will do a lot of the routine mundane work for our people. So like our monitoring performance of systems, looking at detailed at trends and analysis. And really, it's giving us a summary information so that we can focus our key people resources on those priorities straightaway. One example is we've got some key fans that run cooling towers for some of our key metal production areas like the hot strip mill. At the moment, these fans are located maybe 500 meters or more away from the operating unit, and we don't often get to inspect or understand how they're functioning. In asset intelligence, we'll have smart wireless sensors deployed out. They're constantly monitoring the vibration of those fans. And if it starts to deviate from its normal healthy baseline, it will bring alert directly to maybe to maintainer's mobile phone or to his PC to let them know exactly what's going on, and we're able to go and rectify that issue before it becomes a failure and we lose some production time. So this really will change the effectiveness of maintenance and ensure that our equipment is always operating in its best configuration and condition. So initially, we've trialed or piloted a whole range of digital technologies in our manufacturing assets here in Port Kembla. And from that, we've been able to identify those that will successfully work in our environment. And that's what really is the formula for asset intelligence. The next phase is to take that holistic solution and roll it out across our Port Kembla metal coating lines. And the reason we've chosen these assets is because we've got a number of other metal coating lines across the business. And once we've successfully embedded and rolled out the process here, we'll be able to scale it easily across those other units of business. What I'm really excited about is not just about technology, but it's also about our people. It's about changing the way we work and the way we maintain our assets. So we'll have 2 great benefits will not only improve a day and the life of our maintainers and allow them to really utilize their key skills, but will also improve the performance of our really important manufacturing aspects by letting our key people do what they're really good at, and that's innovate and solve problems.

The asset intelligence work is one of the most significant projects in terms of the scope and benefits of the organization, and we're preparing to transfer the solutions to other regions like the United States and ASEAN. The next video case study we have looks at paint line scheduling. This is another example of how we're transferring our approach across businesses. This project first started in New Zealand and has been taken to our Steelscape business in the United States.

In 2021, we developed and deployed a solution for the [indiscernible] paint line that allows the scheduler to optimize further a paint line schedule. Doing so saving some time that can be used to produce more to paint more material and also saving costs.

So this project really helped us move away from Excel spreadsheets and the day-in/day-out manual work, optimizing that schedule.

This is the first project that our digital team has scaled to a new location and to new facilities because this project takes a lot of the learnings we got when doing the paint line optimization project in New Zealand. Of course, we learned a lot from the project, and in this case, show down.

One of the things that has really helped us solve was be able to free up our scheduler, some of his capability and repurpose it to assist other production lines instead of being so bogged down, putting together a schedule for the [ rentals plan ].

The tool provides also additional benefits. For example, it provides more insight and visibility over the cost and the value of specific orders, specific times in schedule and allows the scheduler to evaluate and potentially take some trade-offs. For example, an earlier order might cost more in inventory, but it might save some costs in logistics because maybe there might be some logistic costs associated with delivery later in the week or labor regulations might make some orders for some additional plan changes or idle time, more competing to have earlier in the week than later in the week. And that's something that the tool can naturally include in its logic for the benefit of the schedule itself.

So this project has been very positive overall, not just in terms of what it's been able to deliver, but also to the engagement that we saw and the people involved project and being exposed to different people across the business. So that was a great positive trends.

Given that we are currently developing a very similar solution for the other Steelscape paint line, the one in Kalama of scaling this solution to from other sides of the business, in particular, now we are looking at Asian paint lines.

Those are our 2 video case studies, and I'm going to take you through 2 more case studies over the following slides. Let's start with improving our supply chain. We ran a pilot earlier this year, looking to improve our supply chain performance in one of our Australian businesses. [ Paul ] had a strong focus on using digital tools to improve decision-making. [ Paul ] had a few parts to it. Firstly, improving our demand forecasting through the development of machine learning models. Machine learning models use a wide range of signals and data sets than we traditionally have used, and we're getting much better results than our traditional methods. Second, inventory optimization using simulation tools to better optimize our service levels, operational costs and inventory holding costs. And finally, improved visualization to better inform decision-making. The big learning from this pilot is how much work is required in supporting business process change. The new tools need to be integrated into the way we do business to ensure sustainable, long-term solution. These changes and a new suite of digital tools is expected to enable improvements to customer experience and to operational performance. It will take some time to integrate fully. The final case study I'll take you through is targeted improving our support function efficiency. A small project team introduced robotic process automation, known as RPA, to automate some of our finance processes. The goal was to create capacity for finance professionals to improve the business rather than just run the business. We piloted our RPA with balance sheet reconciliations as this was an extremely time-consuming process involving many people. We have expanded the use of RPA to more automation initiatives within finance, saving our teams a significant amount of time tied up with the repetitive work. Again, though, it is not just the direct benefits of efficiency and labor saving. We found many other benefits such as better accuracy, faster turnaround and increased cross-functional collaboration. This also significantly upskilled the organization using RPA, our people skills, common methods and approaches and our platform development. We see the opportunity to adopt this approach not just in other support functions, but also within manufacturing and sales and marketing. That brings us to the end of our digital solutions showcase, and I hope it has given you a bit of a taste for some of the work going on across BlueScope. I now want to finish with a couple of slides on our foundations, particularly focused on data and platforms and then finish with our people and capabilities. We are focused on increasing speed. That is how we can deliver solutions and value faster while always ensuring we protect our organization, both reducing complexity and managing security. We have had a couple of fundamental learnings around data and platforms so far through the use case development. Firstly, if you have immature digital technology platforms, you'll be slower moving from pilot to embedded use cases. Secondly, if you have inconsistent technology platforms, it will be more difficult to leverage solutions across different businesses. We have a dedicated team to look at how we can achieve this through building data and platform capabilities. This includes creating common standards and principles for how we manage our data, where common technology platforms make sense, what investments need to be made to modernize parts of our existing technology landscape and then which partners are the right partners to work with to accelerate our efforts. And we can already see large opportunities in areas such as machine learning and automation. Clearly, digital transformation is not just about technology, and that is why we've left the most important elements of the last slide, our people. Digital transformation requires having the right people and culture to deliver lasting change. I mentioned earlier the broad mix of people and skills that are required to make lasting change. As far as investing in new roles and capabilities, we have increased our digital resources across the group, which has certainly strengthened our ability to execute on our digital strategy. Dedicated digital hubs are formed in Australia, New Zealand and in the ASEAN JV. These hubs contain a mixture of skills, business and domain knowledge, technology knowledge and new skills like data science. This has led to a substantial shift in the development of the pipeline and implementation of projects in the last 12 months. A number of formal networks have been created to improve alignment and transfer skills, knowledge and experience across the group. We have also built out a strong central team to support our businesses on their journey. The central team will continue to grow in the short term. We've committed to further roles currently, but it is likely that the larger growth will occur closer to the opportunities within our business units. We also recognize that there are many amazing experienced people in the business already who have foundational skills and a passion to solve business problems with digital techniques. So we've invested in upscaling them through formal training, mentoring and on-the-job opportunities. An example of this is our automation community of practice that have completed RPA training. And they meet regularly to share knowledge, showcase their new robots and potential projects that could be applied elsewhere. Another example of this is [ Tom ] as pictured on this slide. [ Tom ] joined our Global Center of Excellence [indiscernible] from one of our businesses, And with his attitude for learning and problem solving and a bit of training from the team, he's doing a brilliant job in a new role. Access to talent is always difficult in the space, but this is certainly one of the great opportunities for an engineering-minded company. Well, that's it for me today. I hope you've enjoyed hearing a little bit more about our digital efforts and look forward to any questions you might have later this morning. [Presentation]

Greetings from Delta, Ohio. I'm Pat Finan, and that was a pretty good introduction to the North Star business, a business we are very proud of. North Star is a single business located within 90 minutes of Detroit, deep in a rich pool of prime and obsolete steel scrap and with an easy reach to a large flat rolled steel customer base. The business was first established by BHP and Cargill back in the mid-1990s. And with our highly-engaged employees, we have continuously reached new highs, generating over $600 million of underlying EBIT in the 6 months ending June '21. North Star's competitive advantage lies in a combination of: one, product quality with a slab caster in a hot strip mill that allows for superior quality characteristics, strip flatness, surface and thickness control; two, service and delivery, where employees strive to readily meet the customers' expectations, closely watch their performance from both direct customer feedback and from results of the Jacobson's steel industry survey; and finally, safety, demonstrating industry leadership through open communications and learnings, employee involvement and focus on critical controls' effectiveness. A key part of the North Star success is the simplicity of the business and the strategic location. The sole product is hot rolled coil of different widths, thicknesses and steel grades. We are the only steel mill with hot-rolled coil as the sole product offering, and our high quality and service is well known in the market. The location is strategic with the majority of sales within 200 miles of the plant, ample supply of scrap and a fantastic labor force with access to low-cost electrical power. 80% of our volume is sold directly to service centers, which then perform value-adding services before dispatching onto automotive plants, fabricators and other end-use customers. Our markets are roughly 50% automotive, 35% construction with the balance going to agriculture and manufacturing. Typical products made from North Star steel include those shown on the slide: structural auto parts and clutch plates, construction products such as purlins and storage racks, guardrails, propane gas tanks and agricultural uses, including farm implements and grain silos. An improved COVID situation, low interest rates and a significant infrastructure program are supporting improved optimism and a robust economic momentum at present, albeit pressure exists from supply side challenges in the form of labor availability and relevant to the auto industry, semiconductor chip supply. On this topic, it is clear that the auto stoppages are increasing. But to date, this hasn't dented demand for North Star product, and we're maintaining full dispatch rates as I speak today. The transformation that the U.S. flat products steel industry has seen over the past 2 decades and more recently in the last 2 years is remarkable, as this slide depicts. A combination of recent mergers, including US Steel and Big River and AK and ArcelorMittal U.S.A. under Cliffs and a heightened focus on emissions controls seems to have led to a very rational use of capacity. I'm sure you've listened to conference calls across the industry demonstrating and echoing at this point. In the region in which North Star operates, blast furnace closures are expected to be more than offset the return of temporarily idled mills and new capacity projects coming online. So we expect a balanced supply and demand in the regional market going into 2023, when we expect to be well along our start-up curve. Importantly, North Star continues to be highly cost competitive with margins remaining significantly stronger than the average of the U.S. flat product peers. Together with the team's strong focus on customer service, this allows the mill to continue to operate profitably at full utilization throughout the cycle. Historically, the sustaining capital has been in the order of about $30 million per year, leading to strong cash flows. One of the questions we get asked occasionally is the security of raw material supply. As you may know, North Star runs on a diet of roughly 75% scrap, split between prime industrial scrap and obsolete and 25% pig iron. The mix will vary depending on relative pricing. The scrap is largely all sourced locally within 200 miles with a decent part of the prime scrap coming from the auto production cutoffs. Pig iron mainly comes from sustainable supply in Brazil and the CIS region. We continuously look at ways to diversify our metallic supply to provide future flexibility and security, particularly as we grow. A benefit of the new furnace is that it allows us to use scrap that was previously not suitable in the existing twin shell shaft furnaces. Different feeding capabilities and more melt capacity will enable us to use a broader range of metallic feeds. We are also looking to increase our capabilities to assess quality of obsolete scrap and other diversification strategies such as using HBI as a scrap substitute. Likewise, for pig iron, we continue to seek to diversify our supplier base in Brazil and the CIS, while using some plate iron from New Zealand steel on a trial basis. The expansion is entering the home stretch. I know Mark mentioned to you on August 16, we successfully completed our first heat in the new EAF. Since then, we have produced numerous heats, and we fully commissioned the EAF, and we become familiar with the new furnace. We are very pleased with the early results. We remain on track to commence commissioning the slab caster and tunnel furnace and produce our first coil in the early calendar year 2022. As Mark mentioned, on August 16, our present expectation is that the total cost will be between 5% and 10% above the $700 million initial estimate. This reflects some inflationary pressure and an acceleration of our work program with the goal of commencing production as soon as possible. I take this moment to complement the team working on the project. They've done an amazing job to keep this project on track despite the challenges of pausing the work briefly last year, maintaining the performance of the existing operations and managing through the unprecedented challenges presented by the pandemic. I'm particularly pleased with the engagement and teamwork of our employees and all of our contractors to execute the project in a safe manner. We continue to expect selling all the new volume to our existing customer base, having a small share of their wallet that we typically hold with each. The customer feedback from the expansion has been excellent, and they are as excited as we are to get this up and going as soon as possible. Once ramped up, the new EAF and slab caster will provide slab-making capacity of around 3.5 million tonnes per annum, leading to a bottleneck at the hot strip mill with the current practical capacity of 3 million tonnes. The debottlenecking project will target tapping the 500,000 tonnes of latent melt capacity and is expected to be achieved through several measures, including ladle isle upgrades, slab caster optimization and cooling upgrades, hot strip mill optimization, mill loading and down coiler upgrades. A very high-level concept estimate of cost is USD 100 million. However, this will be better defined as we proceed through prefeasibility work and fully operationalize and optimize the bit of gear we're about to start up. Assessment is to begin as we progress through the ramp-up period of the current expansion. Indicatively, implementation is to occur over the time during fiscal year '24 and fiscal year '25.

Thanks very much, Pat. We'll jump to some Q&A now. And to do so, we have a panel assembled. Mark Vassella is on the line, Pat Finan is on the line, Andrew Garey. And here with me in Melbourne, obviously, Tania Archibald. [Operator Instructions] We might start by going to the phones, please.

The first question is from Peter Wilson from Crédit Suisse.

Peter, are you there? You might want to come off mute maybe. Hello, Peter. We might move to the next question if we can, please.

The next question is from Simon Thackray from Jefferies.

Okay. Can you hear us, Simon? We might just move to a couple of webcast questions, which I can see in front of me here now. We've got a question on digital, and it relates to the benefits of the program. Can we quantify the potential cost savings that can be generated and over what time frame? So Tania, who's here with me now, I might throw that to you.

Yes, I'll start and then I might throw to Andrew to elaborate. So I think -- and thank you, Don, for that question. I think many of you would be aware that we've had a very strong focus for quite some time now on maintaining our cost and productivity base, and it's particularly important as we go into an inflationary environment. A lot of the investments that we're making are OpEx. They're scattered across the business units and in head office. And you might remember back in August when we released our guidance for the half, we did actually call out that there are some investments being made in the head office, in particular, a lot of which are actually people. We are very focused on what is going to deliver value and, of course, what is scalable, and a large part of that again is focused on driving cost or maintaining cost and productivity. We do believe that there's upside from there, but it's also going to evolve over time. So we're not going to put specific dollars on it at this point in time, but certainly, there's upside. Andrew, you might like to elaborate any of my comments there.

No, I think you've got it spot on, Tania. Look, we haven't -- given they're so intertwine, business improvement versus digital and the crossover between them, we haven't sort of separated those out and gone public with that. But suffice to say, the opportunity is quite large. And we can say over the next 3 to 5 years as making really inroads. You mentioned costs as part of the question, but I think the other side is margin benefits and market share benefits as we improve our customer service as well. So we see both sides of that equation playing out over time.

Thanks, Andrew. Look, sticking on the topic of digital and in particular asset intelligence, we have a question from Lee Power from UBS. He's asking if we can give an estimate of the latent capacity, we think there can be unlocked through the pipeline scheduling and asset optimization.

Well, look, we're pretty early on in some of these. So we have got some early benefits on asset intelligence, particularly and the paint line scheduler, as we had before. Look, we've got some improvements that can be utilized in a number of different ways. You can either utilize the line to produce more capacity or you can be more flexible to improve [indiscernible]. So it depends on which way you take it. It's certainly given the business extra flexibility. It certainly yielded material dollars in the vicinity of sort of $1 million of paint line so far. But depending on where we take that, which lines we roll it out to will depend on the -- and magnitude of the value, and same with asset intelligence. It's early on, we've got some really good wins in Port Kembla so far in a couple of assets. We're still early days in rolling that across the network. So I probably don't want to put any numbers on that.

Yes, no problem. Thanks so much, Andrew. We might shift gears to talk about North Star and the U.S. hot-rolled coil market now. Obviously, big news in the last few business days like last week. And this week is the announcement by U.S. Steel and Nucor of the intention to add around 3 million tonnes of capacity each. One of the -- a number of questions coming through here. Clearly, there's a question around, is there an indication that the U.S. industry is shifting in terms of its level of discipline? And what does it mean for BlueScope or North Star in terms of having capacity coming on around -- potentially around the same time, particularly the debottlenecking project? So Mark Vassella, maybe if you're happy to take that in the first instance, please.

Yes, sure. Sure. Thanks, Don, and I'll hand to Pat as well. But clearly, yes, a couple of announcements in the last couple of days. It is still very early days. We don't even know the locations of the mills. And I think the way that I'm thinking about it at this stage, just a couple of weeks ago when we talked -- we were asked the question about whether there was any indication of additional capacity coming on, there wasn't at that stage. So things have changed in a relatively short period of time. But I think what you're going to see is this continued shift away from older blast furnace assets to electric arc furnace. It's the trend that has been a consistent thread through the U.S. industry for some time now. I can't imagine as an old blast furnace comes to be realigned that someone wouldn't think in North America given the availability of scrap HBI that they would consider thinking about investing in EAFs. I know that Nucor's commentary this morning around their HBI capacity, their ability to redirect that internally, the very high grades, ultra high-strength steels we talked about yesterday and the direction of those target markets. So yes, it's very fluid, and all of the steel companies have a much stronger position today than they did 12 months ago. And certainly, some of those that were struggling have had the opportunity with several coal prices where they are to fix their balance sheets and look at the opportunities to grow. But again, I think the commentary on where the U.S. market is in terms of short steel, we haven't yet seen any influx of imports. The continued growth of the U.S. economy, particularly if you think about the infrastructure spends and renewable energy spends. I'm watching this with great interest, but I don't think there's any reason for us to be panicked or too concerned at this stage. We're very excited about North Star coming online and some of the new projects will take some years to have an impact in the market. So Pat, do you want to add anything to that from your perspective?

Sure, Mark. You're spot on. Just a couple of things to add is this is certainly a continuation of conversion from BOF to EAF technology. And frankly, the U.S. always has been right. We've got good access to low power -- low-cost electrical power. We've got high-grade iron ore pellets, and we've got a pool of scrap. And I think you'll continue to see conversions from BOF to EAF, particularly as furnaces come up for relines. The other item in there around the question which was around discipline, I don't see this as a flood of new steel coming on that's going to far exceed the demand. And in fact, the ability to ramp down and turn off an EAF relative to a BOF during the down cycles is quite important to steelmakers around here, and I think they'll continue to invest in that, and that ability to turn down capacity quickly and affordably is important for the industry. So not at all concerned. There's plenty of scrap available, plenty of iron units available, and all this capacity will take time to come online.

Very good. Thanks, Pat. While we're still on the topic of capacity and production, Owen Birrell at RBC has asked a question just diving a little deeper into the 500 kilo tonne estimate on the debottlenecking project. Just asking, is that a risk-weighted target? Or could it go either way? What -- are there more benefits that we could extract Maybe, Pat, if you want to elaborate on that current target.

Sure. So it's a good question. The simple math around that all is we've always had an oversized hot strip mill that's about 3 million tonnes. We were making roughly 2.2 million tonnes. We added the third furnace, it's conventional furnace. The capacity of that furnace is broadly 1.5 million tonnes. That leaves 500,000 tonnes of latent melting capacity. The cast that we're putting in has plenty of capacity for that. So that bottleneck, which has typically been upstream around the caster and the melt shop, will clearly move to the hot strip mill. And there's -- as I mentioned, there's probably 3 areas of work that we need to get done. One is to make sure we've got the logistics set up to get the ladle of molten steel from the melt shop to the caster. The second one is to have a look at the strip temperature in the casting and the handling of the casting. And then finally, on the hot strip mill, it's looking at the mill loadings and whether or not we got to do some work on the accident. So the team will sort that all out in a short period of time as we sort of commission and learn how to operationalize the equipment we have now, but the early results from what we've seen in the commissioning of the furnace is we're very, very optimistic about the performance of that new furnace we've got. We're pretty confident we're going to make a lot of steel out of that.

That's great. It's good to hear, Pat. Thank you. A follow-on question from Dan Kang. He's asking about longer-term or medium-term demand. And just pointing out, is there a potential upside risk in our sort of 2024 for data and beyond relating to the infrastructure bill. Pat, would you be able to comment on that, please?

Sure. So the infrastructure bill and if you looked at some of the forecast, and I don't recall the actual ratios of steel per billion of investment, but it's significant for the U.S. And while much of that investment will span across a number of steel products, long products as well as flat products, it's definitely going to have a positive impact on the demand for steel products. And hence, why you see, I think, some of the growth that you've got and some of the investments that are being made in the industry. I don't know, Mark, if you had anything to add to that at all.

No, I think Pat sort of said and you estimated 4 million to 5 million tonnes a year potentially of volume that was being added through the infrastructure spend and the renewable energy spend. I'm here in New York, we had an event today around the Australian American Association, and the Department of Energy talked to the group. Joe Hockey was here [indiscernible] was here. It's quite a gathering today. And the amount of money that's being spent by the Department of Energy, particularly in this renewable energy space, electrical vehicles, infrastructure for electrical vehicles, is pretty impressive. So yes, what we're seeing and hearing and as the infrastructure bill starts to take effect, I think there's no doubt there will be a positive impact on demand. And I think you're right, Pat, part of the reason for some of the announcements we've seen recently.

Thanks, Mark. [Operator Instructions] There's a question on the webcast here in relation to raw material supply for North Star. And Pat, I might ask you this one. Any update on how the HBI trials are progressing? And further, would we consider acquisitions to secure scrap supply at all?

Sure. So to the first part of that question, we have run a number of trials of HBI locally. Of course, we've run trials from other sources as well. And we've run trials on plate iron from New Zealand. So we view HBI as a good substitute for prime scrap. We have not seen carbon levels yet that would get us to a view that it would be a substitute for pig iron. But nonetheless, it's a very positive thing for us, particularly regionally in the area with HBI now up and running. And on the prime scrap side, we continue to look at all sorts of alternatives around prime scrap. A couple that were mentioned or at least one that was mentioned in the presentation was the -- which is important, which is the beneficiation of obsolete scrap. So basically, it's taken the copper out and giving us what we would consider a good substitute for prime scrap. So that's really important to us. We think we're in a pretty good position, and we've run a number of trials in that regard with suppliers there. And I would say, look, all cards are on the table as we continue to -- we're fortunate that we've got a good number of suppliers for scrap in the region. We're in a very, very good market for scrap. Scrap and the delivery of scrap is highly dependent upon the cost of freight. So we have that as an advantage for us. We'll continue to have that. But I think we'd look at all options as we think about securing raw material as we sort of -- on our path to North Star 4.0.

Excellent. Thanks very much, Pat. I might ask the operator if we can have some questions from the phone line, please.

The next question is from Peter Wilson from Crédit Suisse.

I might just follow up with some questions on the North Star -- or the regional market balance. So Slide 21. So Mark, I take your comments that Nucor hasn't selected the exact location of their expansion, but they did there put a circle on the map, which appears to be a bull's eye on Ohio. So it would seem that, that expansion is coming into that region. So my question is how important is the regional supply and demand versus U.S. supply and demand picture? So if Nucor came into the region an extra 3 million tonnes, an extra 10% of supply, how important should we consider that regional supply/demand balance?

Mark, do you want to take that?

Yes. Thanks, Don, and thanks, Peter. I'm pleased we've got the technical [indiscernible] sorted out. So look, it is a regional game, and this has been our argument all along. And as Pat just alluded to from a freight perspective, having a low-cost supply of raw material in terms of freight and to customers again is a significant advantage for us. I haven't had a chance to have a look at all of the detail of the new core packs, I'm not aware of the particular slide you're talking about. But again, from what I saw of the headlines and the commentary, it's very much focused on the advanced high-strength steels, the skins, the direct supply to the auto guys. Of course, that's not the space that we currently operate in. But look, potentially, obviously, Peter, if they would have put it in our backyard, then it would have an impact in terms of access to raw materials. But as we've said, having HBI add to that market, that's been a positive for us. We didn't expect that when we went into the North Star expansion. So that was news to us after the North Star expansion as well. So where they locate that? I mean that's obviously their choice, and we'll watch that with great interest. But we still have good supplies of scrap, some of the initiatives that Pat talked about, the beneficiation processes. We're going through around obsolete scrap as we get to a position where we can improve obsolete scrap, take the copper out, effectively produce another grade, not quite prime, but one that's cost effective for us and provides better quality than obsolete scrap. That opens up a much larger pool of scrap than we would typically source from in terms of looking for prime grades. So there's a range of options that we're looking at. But clearly, if they stick it very close to us, it would have some impact in the region for sure. That's always been our view that hot-rolled coil is a regional market in North America.

Okay. And the exploration of the alternative raw material supply, should we see that as, essentially, future-proofing your supply? Or will there be cost advantages that may come from this?

Look, I think there's a couple of those things. That's certainly future proofing. I mean, as I said, a much larger pool of obsolete scrap. So anything we can do to beneficiate that and get better value and use out of it is obviously an advantage for us. Now there's some costs obviously involved in the beneficiation process. It's not the same as just taking prime scrap, but you're also not playing a prime scrap extra. So there are -- there's a cost benefit analysis here that we need to trade off, and it's early days on that, but we have been working with some of our suppliers about just what that process might look to about future-proofing supply and giving us a product that's better from a value -- that gives us the right equation from a value and use perspective. So it'll be a bit of both, Peter. Pat, anything I missed there? Or do you want to add?

Yes. Just a couple of points on that as well is it's really about, I think, stabilizing supply and securing supply. Having said that, today, when the differential between prime and obsolete is so great, it's upwards over $100 a tonne. Clearly, the use of obsolete works in our favor. But that's not historically been there. It's been more like $20 to $30 a tonne. The second item there is the new furnace we've put in is a conventional furnace. So it can run different types of scrap than what we can in our shell furnace, which is the shaft furnace. So what we want to do is as we look at different types of scrap, we want to make sure it's the very best scrap we've got in reducing the copper content out of that. So it's a little bit of both for us. And just a short comment on the Nucor announcement. While we don't know where it's going to go, I did see reported. And again, these announcements, there seems to be a race to make this advanced, high-strength automotive grade steel. Much of that is exposed, which we don't participate in. And if you looked at the numbers just recently that was in the Nucor announcement, as I seem to recall, that product mix was something like 1.1 million tonnes of galvanized and 700,000 tonnes of hot rolled and the balance being cold rolled. It's important to note, and I mentioned it in that presentation, is all we do is produce hot rolled coil. That is our base business. That's what we're good at. Whereas for the rest of these mills, it's sort of the product that's left over that they don't convert to other value-add. So we think we're the best at it. It's a good strong market for us. And as these other mills open up, we'll see just how much hot rolled they've got into that hot-rolled market.

The next question is from Peter Steyn from Macquarie.

Sorry, it was -- further questions around the raw material supply actually in the range of them have been answered. But I was particularly keen just linking at yesterday's conversation around carbon intensity. If Pat could just give us a bit of a sense of where carbon intensity could go, if you've got more obsolete into your mix or more HBI into your mix? What are the sort of optimal outcomes for emissions there?

Yes, Peter. So for us, broadly speaking in its public data there that an EAF producer broadly producing the mix that we do with roughly 75% scrap and 25% some sort of virgin iron unit, whether it's pig iron or DRI, you're in that sort of 0.6 tonne per tonne produced. It's about a 1/4 of what a traditional steelmaking integrated works would be producing through glass furnace. And I truly think that these investments that you have seen most recently announced is part of their decarbonization plan as they'll continue to convert BOF and EAF because there's such a large reduction in carbon emissions intensity. The -- as further to that is for all of the EAF producers, including ourselves, a big generator of the emissions is in your Scope 2 electricity. So I don't believe that there's a path for us to think about our mix so much with further carbon reductions, whether it's obsolete or prime scrap. That wouldn't really be the play there. It'd be about reducing Scope 2 and then looking at other Scope 1 emissions that we've got at the site. I hope that answered your question.

Pat, yes, that does make sense. And you would be in the 0.6 tonnes you're fully accounting for the emissions of the raw feed particularly in pig iron.

Well, that's a Scope 1 and 2 measure, Peter, whereas the feed is Scope 3. So it's important distinction there.

Yes, yes. Okay. And then I was sort of curious a little bit of a follow-on question on the Nucor gold comment you made, Pat. So would your view be on the basis of the fact that are presented relatively early stage at this point by Nucor that it wouldn't represent particular disruption to your market if they were more integrated and more value added in their focus?

Pat, do you want to take that?

Yes. So look, certainly, there's an impact regionally. If the facility is built in our region in Ohio, it has implications of scrap flows. It's got implications of some of that hot roll getting into the customer base and the markets that we sell into. But it's not as large as the headline number that you might see of 3 million tonnes because much of that is targeted for different markets than what we operate in.

Thanks very much, Peter. I appreciate the questions. Pat, perhaps extending on -- there were some questions obviously around emissions profile for North Star. Owen Birrell also has a follow-on question here. Highlighting North Star's green credentials are a positive highlight. I mean obviously, the expansion lower BlueScope's emissions intensity overall. Are there any green technologies being adopted by other U.S. EAFs? I know we've got sort of low NOx burners that we're installing as part of the expansion project. I don't know if there's any other elaboration you can make around technologies that you're aware of being fitted at the EAFs. I think you've made a clear explanation that Scope 2 is a very big part of the bulk of an EAF emissions footprint. But maybe at the edges, are there other technologies that you're aware of?

Yes. So I think I can provide a quick answer to that and probably turn it over to Andrew, who certainly cross this space as well that he may have some other insight. But the development of hydrogen-based iron units, whether it's HBI or pig, I'm not aware of large -- well, even pilot programs that exist in the U.S. as you read about and hear about in Europe. I think it's more advanced in Europe. Now I know that at Cliffs, there's -- they have talked about the use of hydrogen there for HBI. They're not doing that now. But I think as that technology emerges, you'll see some more of that. But I think in terms of the technology development, it's more broadly in Europe. Andrew, I don't know if you would have some comments on that.

So just really quickly in terms of the question, look, it's really about efficiency we can get some small gains in the mill. In terms of technology, as Pat said, it's not going to be big there. The main game is Scope 2, which Pat already alluded to. And then Scope 1, which he's now talking about, which is getting lower carbon DRI, HBI feedstock for the mill. So yes, little incremental pieces there, but they're not really the main game.

Thank you. That's great. I go to your question from the webcast now, one from Paul McTaggart of Citi, who -- and Pat if you take this question, what's the limiting factor on HPI feed into the EAF? What's the rough percentage fee that's possible? And I know that will depend on the carbon content as you've pointed out, Pat. What's the beneficiation? And also, what's the beneficiation process for obsolete scrap?

Yes. So to the first question and just to give you a sense, it's a complicated question because it really sort of depends on the value and use and where we're at. So for instance, the way that we have operated, where we've been constrained by the melt shop, we are very focused on putting feed in that furnace that melts as quickly as possible because it's the constraint. Now that tends to limit us a bit on HBI. HBI takes a bit more power to melt than #1 busheling prime scrap. So we restrict the amount of HBI that we put into the existing furnace. With the new furnace, that phenomena still occurs. It takes more power to melt HBI than it does prime scrap. And there's a sort of value and use that we think about that. That's how we think about our optimal mix in terms of cost. Having said that, we'll have more melt capacity. We'll not be the bottleneck for a few years to come until we can sort out the hot strip mill. So we could run and will run actually more HBI. And in fact, on the new furnace, we've put in a continuous feed system for HBI that helps us with the melting of that HBI in there. I don't know that I could give you a practical limit of how much we would run less than 5% on the old furnace. I think we'll be in the 15% on the new furnace in terms of HBI feed. I couldn't tell you what the practical limit is, though. It would really depend on the value and use for us.

Thanks, Pat. I've got one final question from the webcast for you here coming from Dan Kang of CSLA. Can you give us an update on the impact of North Star and the broader U.S. steel market from the auto production impacts arising from the semiconductor shortages at the moment? Pat Finan, would you be happy to answer that?

Yes. Don, can you just -- I believe the question was around the chip shortage.

You're spot on. That's right.

And the impact it's having on the business. So that's a question we ask our customer base and our processors nearly every day. Surprisingly, there's been little impact. Well, really not much impact at all for us in our customer base in those auto plants that we serve. Now having said that, we also see the photographs of vehicles sitting around and car [ ops ] waiting for their chips in certain aspects of the supply chain waiting for chips to arrive. But I think the supply chain itself and with the capacity that was taken out of the steel industry, albeit temporary during last year during the COVID and the auto shutdown put a tremendous strain on the supply chain for steel. And so we in our customers, what we hear more is, can you give us more? And that continues today. And I spoke with a customer just last week who was up with 1 of the big 3 automakers. And what they were telling that supplier who is our customer that they will be busy through the entire calendar year '22. Absolutely flat out once they get these chips in. So it's had very little impact to date, Don.

Thanks, Pat. We will just go back to the phone quickly. I know Simon Thackray might have got cut off earlier. We didn't get through to you. So maybe if we can take Simon's question on the phone, please.

Thanks. Pat, a quick question for you. Just mentioned furnace 2 for North Star can probably take up to 15% HBI feed, the old furnace at 5%, which is encouraging. But Cleveland-Cliffs, I mean, Cliffs are saying that they're now pointing all their Toledo feed internally. I'm just trying to understand, where does the additional HBI feed, Where is it going to come from, if Cliffs are in terms of truth and disclosure saying that they're going to divert all their HBI feed internally?

Pat, take that question?

Yes, yes. So I think if was the probably key word there. We are running some product today. We're running trials today. We communicate with Cliffs quite regularly. I understand what's being said publicly around that. But at the end of the day, we're very close to Cliffs and Toledo from a logistical standpoint. I continue to believe there'll be some external sales coming out of Cliffs. It's -- I don't -- I'm not an integrated steel maker, but the economics of putting pig iron into a blast furnace, I don't fully get, but I don't know the full picture there. So we'll -- we think we'll get some material from Cliffs. We also get some DRI from [ Voice Alpine ]. It's a long way away in Houston. But wherever we end up with Cliffs, the real point I'm making there is -- and if they consume it all, they consume it all internally, although that's hard for me to understand. But the idea with the new furnace is that we -- it's not only HBI, but it's all sorts of raw material that we can add into this new furnace that we can't add into shaft furnaces because of the conventional nature of this furnace. So if there's HBI available, we can consume numbers like 15%.

Yes, got it. No, that makes sense. And presumably, as you pointed out, the work that Nucor, I presume, Steel Dynamics are doing in there, scrap raw material removing copper and other impurities is making the obsolete scrap side and the supply side look more attractive. Is that correct?

Yes, yes. That's absolutely correct. And there's a very large pool of obsolete in this country. I think there was 50 million tonnes I saw in the previous day 1 presentation. And so to the extent that we can remove that copper in there, it becomes much more attractive to us.

Yes. Okay. And then just one final one, if I can. The auto industry, yes, we've got the chip shortage. The sort of channel commentary, however, is that the auto suppliers are sitting on plenty of sheet inventory waiting for the chip shortage to be resolved. Is it a fair assessment to say that if shortages is resolved that they're actually sitting on sufficient inventory to start working through their sort of backlog of orders and that it's not going to be incremental demand in the near term for the sheet industry?

Yes. So there is some -- not only is there assembled vehicles with our chips that's sitting out there. The -- overall, the service center inventories, while they seem to have bottomed out, and I think there was a little bit of growth in the service center industry just of late, they're still at historically low levels. And I do believe once the automotive gets the chip shortage sorted out, that we will see an uptick in demand for the steel products to support the fleet cars and the cars to get to the inventory levels at the dealerships. So I think there will be a blip in demand as we sort that out. I do believe we'll see that.

Thanks very much, Simon. Thanks for joining us today, and thank you to our panel members, Pat and Andrew Garey and obviously, Mark and Tania. We're going to take a brief break in a moment, coming up after the break. We've got an exciting session with -- on the Australian business, and we'll introduce Sue Stark, who's joined BlueScope recently to head up the Buildings North America business. So we'll come back just after 10:50 Melbourne time. We'll catch you then. [Break]

Welcome back, everyone. I hope you had a chance to stretch your legs and to [ de-square ] your eyes. I'll shortly hand you over to John Nowlan, who will take you through the Australian Steel Products business, along with some of his lead team, Gerald Cornelius and Kylie MacKenzie. Following ASP will be a presentation on Buildings North America from Sue Stark, who joined us in August. Sue will be joined by Matt Roth, the President of the BlueScope Properties Group, who'll take you through that business as well. We'll then take some time to answer any questions you may have. All right. Let's get into it. Here's John to take you through the ASP business.

Good morning. I'm John Nowlan. I've been with BlueScope and before that, BHP for some 45 years. Now amongst other things that was part of the team that established North Star from the mid-1990s to the early 2000s and also part of the significant restructuring to the Australian operations in 2011 and 2015, '16. I took over from Mark as Chief Executive of ASP in 2018. For those who are less familiar with BlueScope's Australian footprint, we have over 80 points of presence with our largest sites being Port Kembla Steelworks, the Springhill coating and painting operations and our coating and painting operations at Western Port in Victoria. Operating a single blast furnace at Port Kembla, ASP produces over 3 million tonnes per annum of flat steel products from hot-rolled coil to our flagship painted product, COLORBOND. It's an advantageous location close to high-quality coking coal and port facilities, broadly in the middle of the Australian Eastern Seaboard population end market. ASP has a range of iconic brands, largely for building applications and extensive channels to market. As an end-use construction applications account for 3/4 of the volume of ASP that we sell each year with dwelling construction applications at about 1/3. Being a producer of flat steel products, larger low-rise construction particularly drives demand for our steel. For example, detached residential construction, alterations and additions and industrial and commercial nonresidential development. All of these subsegments are seeing strong demand at the moment, leading to a very robust sales volumes in FY 2021. Gerald Cornelius will talk to that some more in a moment. And while our products tend to be increasingly preferred, the further you travel from major metropolitans due to the ease of transport and weather resilience, we have been pleased to continue to grow our sales in the major cities like Melbourne and Sydney through focused marketing and business development activity. This is our ASP strategy wheel that includes the focus areas across our business, such as improving safety, improving our customer experience, growing domestic market sales, improving the efficiency of our supply chains, carbon reduction initiatives and prudent cost management. The wheel with supporting detail are important elements in leading and motivating the ASP team. At ASP, we measure success through a range of measures, including constantly improving measures of customer satisfaction while promoting a customer-centric culture, where insight and understanding drives product and service innovation to meet and exceed the needs of our customers; maintaining steelmaking at above cash breakeven at bottom of the cycle conditions; delivering above target ROIC through a 3-year cycle, which we achieve through disciplined capital investment and strong financial focus in all we do, including optimizing of our supply chain, the adoption of new technologies to reduce waste and improve efficiency, the pursuit of profitable growth opportunities particularly domestically, the pursuit of 0 net cost escalation across our business; being an employer of choice by providing an engaging employee experience where we embrace diversity, promote belonging and offer opportunities for people to grow and develop both personally and professionally; delivering our greenhouse gas intensity reduction plan by optimizing current operations and adopting new technologies so that we can manufacture and sell our products in an increasingly sustainable way; making a positive contribution to our community, adhering to our bond and fulfilling the obligations of our code of conduct, our agreement. Moreover, we seek to have a positive impact through our local community investment framework and active engagement with governments and the wider stakeholder groups. These focus areas on the strategy wheel are supported by a number of needle-mover projects, including our strategy to grow our metal coated and painted volumes, which you will hear more about in a moment; new product offerings to improve our customers' experience; our strive to thrive cost-saving program, which we have highlighted before. This includes digital and automation initiatives, some of which I will discuss shortly. We are constantly reviewing our footprint and looking at opportunities to optimize and better support our customers and reduce costs in our supply chain. The opportunity to consolidate our Victorian core processing facilities into the Western Port site and exit our Sunshine and Braeside sites are an example. And we have capability and diversity programs and safety leadership programs, which are all about investing in our people and improving business outcomes. I'm now going to introduce Gerald Cornelius, who leads our Australian Steel Markets sales and marketing function. Together with Kylie MacKenzie, he will dive into more detail on how we are improving our product offering for our customers and growing sales volumes.

Thanks, John. It's great to be here. Well, our Australian Steel Products business has grown a lot over the last 8 years. Back in 2013, we sold 1.8 million tonnes into the Australian domestic market. Fast forward 8 years, and that figure has grown to 2.5 million tonnes, an increase of nearly 40%. This is despite [ loss of any of these applications ] through the closure of domestic automotive production and auto manufacturing facilities. On the slide here, you can see that the growth in sales has been achieved across a broad range of categories but predominantly our [ new coated and painted categories ]. We've enacted a [ clear material broad strategy over recent years ], which has driven the [indiscernible]. Our customers, particularly across the broader nonresidential building and construction sectors, continue to preference many of our broader coated products. ZINCALUME steel and GALVASPAN, generally used across building applications. Whilst you've seen increased GALVABOND use across many applications, including nonresidential partition walls, air conditioning ducts and panels, just to name a few. COLORBOND steel is our flagship painted product. Planned ongoing investment in our COLORBOND steel product and brand continues to deliver inter-material share growth. We're now in the final year of delivering on our 5-year growth strategy, and we're already exceeding business case, focused on marketing and business development activity has combined to deliver increased awareness, consideration and conversion of COLORBOND steel in key geographies. Investment in the brand remains a key priority. In 2017, we introduced COLORBOND steel in a matt finish to enhance the color and design leadership of COLORBOND steel. The positioning has provided an aspirational and inspirational finish has driven growth and further consideration for COLORBOND steel. COLORBOND has also been by our LYSAGHT business, which is managed separately to our [indiscernible] business to develop an intermediate range of commercial and residential facade. These facade products provide an attractive alternative to current [ planning options ] with the aesthetic and durable properties of COLORBOND steel covered with [indiscernible]. Our sponsorship of the block is into its fifth year, demonstrating the versatility of our products and elevated COLORBOND steel's leadership role in series design trends. In January of this year, we launched a new COLORBOND steel television commercial, shown its beautiful strength through the parallels between COLORBOND steel, the Australian landscape and way of life. Australia is positioned as [ our muse ]. We're inspired by it and made for it. For those of you who will be able to see it and take the opportunity to play it for you now. [Presentation]

[ I couldn't describe my face ] every time I see those images in that commercial. You'll see the continued evolution of these themes in our [ collateral ] market over the coming year. We don't take our success for granted and develop the COLORBOND steel strategic road map to guide future activity in the areas of sustainability, COLORBOND design leadership, alternate construction methods and [ brand ]. This will enable us to continue our growth story well into the future. We've spoken to you for some time about the potential of light-gauge steel frame in Australia, featuring our TRUECORE steel brand. We now feel that we're making some serious headway. We compound growth over the last 8 years of 13% per annum, and within that particularly pronounced growth through the past year. This growth has been on the back of robust residential demand and the execution that we sold inter-material growth strategy. We have a video here that we'd like to show you that highlights some of the core activity we have underway supporting this growth, after which Kylie MacKenzie, our Marketing and Market Development Manager, will tell you a bit more about the execution of our strategy. [Presentation]

Thank you, Gerald. I'm Kylie MacKenzie, and I'm responsible for both strategic marketing and market development in the Australian business. Further to what Gerald has just shared, well, and the video that you've just seen, I thought I'd give a little bit more flavor to some of the activities that we're doing and we have done to grow light-gauge steel framing to a mainstream building product and TRUECORE steel to a mainstream brand. One of the critical activities we do is investment in [ consumer ] and branding. I'm sure you've seen our out-of-home, you've seen our social media content and some of our TV advertising, much of which features Tom Williams, our TRUECORE steel brand ambassador. This is really important to us because it grows awareness of TRUECORE steel and ultimately, consideration for when consumers are building a home. We've also recognized the need to work with industry to ensure that in education, light-gauge steel framing is featured. So we've worked with relevant industry bodies such that in vocational education, professional development and education for follow-on trades, we've got light-gauge steel featured. We also work with builders over their first newbuilds. So we'll have someone on site that helps them with that transition, answers whatever questions they may have. In the last year alone, we've seen dozens of Australian builders transition to offering a home made from TRUECORE steel framing. We've also heard from some of our key builders during that time that working with light-gauge steel is fast and efficient. It's lightweight for their teams and it allows good design versatility. You heard some of that directly from them on the video a moment ago. These builders don't only use TRUECORE steel framing for detached homes and in residential applications, but it's very much growing in nonresidential applications, too, in buildings such as child care centers, hospitals, schools, aged care and fast food. To support this ongoing demand growth, you've may have heard that the Australian business is actually considering additional metal coating capacity. We've actually just progressed a concept study on an additional metal coating line. Another exciting area of growth in the Australian business is TRU-SPEC steel. Many of you, I'm sure, are familiar with our new tension-leveled coil plate offering. This is another really good example of how we've been able to grow domestic steel sales through really modest brownfield investment. So in 2014, BlueScope invested in a coil plate processing line in Port Kembla to enable the production of TRU-SPEC steel. This is a coil plate product that provides really excellent product quality, flatness, consistency, and it's really [ through ] to the growing laser-cutting segment. Growth has been really strong, roughly at an average of 13% per annum, which you can see on the slide, meaning that a second line has actually been commissioned. It was commissioned during the height of COVID last year in October, and it's really pleasing to see that it's already really well utilized. This increased capacity provides not only the opportunity to grow TRU-SPEC steel sales, of course, but it really helps us look to reduce complexity and costs in the supply chain, ultimately improving the service offer for our customers. We've been really pleased to share with you these growth stories in the Australian business. And with that, I'll hand you back to John Nowlan.

Thanks, Kylie. To round out the discussion of product development and growth, I'd like to show you a short snippet that gives you insights on our research and testing capabilities based at Port Kembla. [Presentation]

Moving to focus on the role of technology going forward. We see robotics and automation opportunities as key to unlocking the next wave of productivity improvements and cost savings with numerous opportunities for robotics given the scale and complexity of our operation. In the past, we've shown our slab yard crane and BOS limekiln automation projects, which are now well advanced. Further examples are our investment in automation at the new Western Port service center site, where we are consolidating Victorian coil processing facilities. The new automated slitting line removes manual handling, improving safety and driving productivity. Secondly, automation is improving the efficiency and reducing risks in changing steel ladle flow control refractories. Refractory changes are completed using 2 ABB robots. Scanning system has been used -- components of the ladle. The robots remove the need for manual handling, providing better safety outcomes, quality improvements and productivity benefits. In other areas, we are building the foundations for advanced automation and process control through machine learning and artificial intelligence. Machine learning offers opportunity to further improve already advanced manufacturing processes, and we are gaining benefit from 2 programs already. Slab-making temperature model using machine learning. We have piloted a machine learning model to achieve more accurate ladle temperature going to steel treatment, minimizing large reheats and coolant scrap additions. More accurate charge calculations for the BOS are allowing optimal scrap charge without adding costly heat raisers. The optimal scrap charging drives higher throughput and, in turn, reduces our carbon intensity footprint. Product flow simulation and metal coating line machine learning. We've developed a simulation model to increase the throughput by optimizing production flow decisions at the Springhill plant. This enables the identification of where bottlenecks may emerge and assists in the design of optimal, capital-efficient interventions. Benefits include increased throughput through the plant and reduced capital costs. Optimization program has been implemented on MCL1 and MCL2 at Springhill, and the application at Western Port is in progress. Automated surface inspection systems are being enhanced and developed to significantly reduce surface defects and improve process control. As a reminder, we put a lot of work into improving the cost competitiveness of ASP from 2015 to 2017, and we've striven to achieve 0 or minimal escalation since then. The effect of the 2015 to 2017 work was to reduce the estimated cash breakeven point of the hot steelmaking operations as ASP to around what we call bottom of the cycle levels, e.g., spreads of USD 200 a tonne or just below. While spreads are vastly higher today and there has been escalation in some areas such as energy and freight, we continue to believe the breakeven estimate still holds. Our overarching focus is to retain the benefit of the major cost reductions through a highly disciplined approach and containment of cost escalation over the medium term. To wrap up, and particularly in the context of the ongoing cost competitiveness of the steelmaking part of the business, we continue to see a significant value in the integration of the steelmaking assets with the downstream manufacturing and channels to market. There are clear synergies between our steelmaking and coating operations through optimization of working capital, communication, customer service and overheads. The end-to-end asset portfolio serves to moderate earnings volatility. Steelmaking is able to better -- to capture better margins at times of high hot-rolled coil prices and likewise for the coating operations when hot-rolled coil prices are lower as given the more stable nature of COLORBOND earnings. We see clear value in being a participant in the steel channel to market, delivering pull-through demand for both steelmaking and coating and painting and greater customer intimacy and knowledge of regional and local requirements.

Hello, everyone. I'm Sue Stark, and I joined BlueScope as President of Buildings North America at the beginning of August of this year, having most recently been a Group President with ITW. I'm pleased to share with you what makes Buildings North America positioned to succeed in our market space. BlueScope Buildings North America designs and manufactures engineered metal building solutions [indiscernible] nonresidential North American construction market. Engineered metal buildings offer unique advantages to builders and customers such as speed of availability and wide floor plate spans. Our 2 flagship brands are Butler and VARCO PRUDEN with more than 120 years in the industry. We are an engineering and technology company with competitive advantages in product innovation, sophisticated proprietary technologies and strong in-house engineering capabilities. We leverage that in-house engineering capability to design efficient structures to meet the needs of our most demanding customers. We also provide support to our builder network through project management through the construction phase. Part of our unique offering is that we can provide, supplemented by design, conventional building opportunities as well as our in-house construction capability to capture work that does not fit our existing builders' capabilities. Here are several examples of projects that we supply across end uses such as manufacturing, warehouse and distribution, commercial and more. Our buildings serve well-known brands such as Costco, FedEx, Harley-Davidson, Amazon and the U.S. government, to name a few. We have a national operation through 7 manufacturing facilities [ in the country ] to serve builders. Our national network of long-standing builders goes to market through our premium brands Butler and VARCO PRUDEN. Our builders use proprietary design software to win work and add value to the construction process. Our software handles complex structural designs to meet our customers' needs and requirements that others cannot. For example, we create large, open-span designs to allow the square footage to be maximized as well as overhead space flexibility for the building owner. Additionally, the Butler MR-24 roof system is the gold standard in the industry and is known as the most reliable and highest quality. BlueScope Buildings is exposed to end-use segments that are well positioned to benefit from trends. The chart on the right shows the makeup of our 2020 end-use segments. You can see we are strong in manufacturing, which is defined by equipment storage, warehousing and production. We are also well positioned to capitalize on growth in e-commerce with data centers, warehousing and distribution and last-mile logistics. BlueScope's vast experience in manufacturing construction makes it the ideal choice for businesses considering onshoring production with an increased demand for production facilities related to warehousing and equipment storage. BlueScope continues to drive efficiencies and organic growth through manufacturing excellence. Modernizing and upgrading manufacturing equipment allows us to take advantage of digital technologies, thereby increasing automating the complete design through production process. This helps with efficiency gains and reduces labor bottlenecks. We have automated welding equipment, added new paint capabilities and installed the trim cell machine. We integrate industry-leading modeling and detailing software with our proprietary end-to-end design system, which improves our builders' competitive position and provides capabilities to feed further automation and robotics on the manufacturing shop floor. We are focused on organic growth initiatives such as the unique hybrid solution we have developed for the large warehouse and distribution market. It uses our exclusive products with conventional, structural systems to better address customer needs. We also enable buyout services to builders for adjacent product needs to streamline the construction process. And we have a continued focus on core customers with high-quality structural needs. Shifting gears, I'd like to introduce Matt Roth, who leads our Buildings Properties Group.

Thank you, Sue. I've been with the Properties Group since it began in 2014, and I'm excited to share this update with you today. BlueScope Properties Group develops, leases and sells Class A industrial warehouse and distribution centers throughout the U.S. We are a ground-up developer, which means we acquire and entitle the land and then oversee the construction of the development. BPG utilizes BBNA's capabilities and strong builder network to develop these industrial properties. This provides additional value to the builder network by providing access to projects they may not otherwise have the opportunity to participate in. The Properties Group will do a mix of build-to-suit and build-to-demand projects. Build-to-suit projects are those where we lock in tenants before we commence construction. For build-to-demand project, we market the building to potential tenants during the development process and then lease the space to one or more end users. Now once the project is complete, BPG sells the development to an institutional investor. This entire development and sales process typically takes between 18 and 24 months. The industrial asset class is a large, attractive segment in the real estate space. High demand and limited supply have contributed to high net absorption and low vacancy rates throughout the U.S. With the shift from just-in-time to just-in-case warehousing, the sustained growth in e-commerce and increased focus on shoring up supply chains in the U.S., the current market conditions are expected to persist throughout the coming years. All these factors have contributed to a strong institutional demand for these buildings. End users need the space and institutional investors want to continue to own industrial real estate. This is driving up lease rates and compressing exit caps. BlueScope Properties has a clearly defined risk appetite and tolerance measures. We continually focus on short holding periods, ensure portfolio diversification in terms of geography and single asset exposure as well as actively managing our mix of build-to-suit and build-to-demand projects through the cycle. The project-specific risks, such as construction costs, are closely managed by our dedicated team and builder network general contractors. We also employ a thorough diligence process and must exceed project-specific investment hurdle rate requirements. We have completed 10 projects in the past 5 years. The last 2 projects we completed in fiscal year '21 were a 27,000 square meter storage facility in Apopka, Florida, for Coca-Cola and a 10,000 square meter distribution facility in Sanford, Florida. The Coca-Cola project is located at the Mid-Florida Logistics Park we developed and is also home to Goya Foods, Amazon and Universal Studios. It is an incredible industrial park to see in person, and we are extremely proud of this work. Our growth plan will see us continuing to focus on the fast-growing industrial asset class. BlueScope increased our capital investment by $200 million with a maximum capital commitment of $300 million at any one time. We will target projects that are in the $10 million to $30 million range with 8 to 10 projects in progress at any given point in time. However, there is flexibility for larger projects as opportunities arise. BPG targets an annual return on capital above 15% and has exceeded this return on all 10 projects to date. We will continue to grow our pipeline over the next 2 to 3 years so we can provide a more consistent earnings contribution to BlueScope and its shareholders.

Thank you, Matt. The Properties Group's story is exciting to see, and I'm looking forward to helping it progress over the next few years. In closing, as you can see from this video, BBNA is focused on what matters most: taking care of our core customers by providing them with solutions they can't get anywhere else. We offer more than a building. We look for ways to provide value to our customers and to the building owners during every step of the construction process. We are confident that when our job is done, our builders will be proud of their accomplishments and the building owner will know their structure is made of high-quality materials that will last for decades to come. By leveraging our technology capabilities, manufacturing excellence and industry-leading construction innovation, we know BBNA is your best partner if you want the job done right. We've been doing it since 1901, and we're just getting started. Thank you for your time today.

Thanks very much, Sue and Matt. We're going to take a pause now and take some of your questions. Again, we've got a panel assembled, which is great. We have Sue, Alec Highnam, John Nowlan and, of course, Mark Vassella and Tania Archibald. [Operator Instructions] I'll look to the webcast, first of all. And John Nowlan, a question for you regarding the current market demand conditions. A couple of people here, Paul McTaggart and Dan Kang, highlighting that, obviously, the domestic sales of 2.5 million tonnes in FY '21 being a solid outcome and just seeking to understand whether you see that as a new normal. Or to what degree has there been a pull forward of residential construction demand, John?

Yes. Thanks, Don. I don't think there's any doubt that this is a sort of a cyclical industry, and what we're seeing today is a very positive cycle for us. As far as the pull-forward goes, I would say that there's certainly an element of that, but I think that there's other aspects going on in the market that are probably trends in our direction. And examples of that is the more detached housing being built, the work that we've been doing on steel framing, some of the -- our sales into the commercial industrial segments. There's trends there that are in our favor as well. So that's probably the best answer I could give at the moment.

Thanks, John. A question now here for you again, John. Can you talk about the size of the prize from the digital and automation opportunities? Or do they go more to just offsetting cost escalation?

Yes. So the -- we're working really hard in that space. And I mean we've got a long history of building -- of automating our processes and the process control aspects that sort of give us the efficiency of what we do. What we've got going on in this space is that that's really happening on steroids now because the technology -- there's better technology available, some of the automation technology that's lower cost to install the robotics, the lower costs. There's new techniques in the sort of the machine learning space and data analytics that's really helping us to understand our process and understand the opportunities better. I would say, at this point in time, it's -- they're a very important part of our toolkit for improving our operations and offsetting the cost escalations that we have to offset and that we're working to offset every year. And what we're trying to do is get ourselves so that they actually go above and beyond that and actually contribute to the business as well. But at this point in time, I would say it's primarily the part of our toolkit to offset our escalations and keep on improving our efficiencies.

Thanks, John. I appreciate that. [Operator Instructions] What we might do now, though, is move to the telephone line and take some questions. Operator, if you could queue those, please.

The first question is from Simon Thackray from Jefferies.

I've got a few questions. I'm going to start with one based in -- coming from pure ignorance. Just on TRU-SPEC, John, the coiled plate, I appreciate its application. But -- was the coil plate replacing a traditional product? Or has its growth been a function of a change in downstream laser-cutting technology or something else? I'm just trying to understand how -- where the product demand has come from for TRU-SPEC.

Yes. So Simon, the -- originally, we used to supply coil plate, and it was basically -- we supplied the coil and it was produced by OneSteel, and it was basically produced by rollout leveling with the technology that existed up until, I think, 2014 when we introduced a new stretch leveling coil plate line. So at that point in time, I think our market size was about 50,000 tonnes. And unfortunately, we were losing market share. I think there was -- when I say market size, that was our sales, and we were losing market share. So we think that the -- probably the market at that point was well over 100,000 tonnes. When we put the new coil plate line in, it's a tension leveling process, and that produces a product that sits very flat and is now something that the laser cut is [ favor ]. And so we've regained significant market share in that market. And I think that there's -- we also believe that there's a growing market there because these laser cutters, people are buying them, small operators are buying them, but they rely very much on having a plate that sits level and doesn't move when it's being cut. And that's the product that we're producing. And so people can set them up, they're well automated, and our product works really well. And so I guess we're seeing both the growth, but also we're improving our market share in that space as well.

That's interesting. And then just talking about branded product, I mean you've got my agreement on the cyclical factors around steel. But interesting to note, how much -- if you can, have you guys estimated what sort of share of the -- of house, if you like, value-added products from roofing, gathering, fencing, facades and frames that BlueScope now represents in the build of a home if such a metric exists?

Yes. So I mean I don't think we've analyzed it quite the way that you just articulated. But from a roofing point of view, we think steel roofing sits at roughly 50% of the market share. The opportunity for us, of course, is in the metropolitan areas, particularly Melbourne and also Sydney. I mean we've got better shares in that in the regional areas because of the history of our product and its utilization and its utility in the revision areas. In the house framing market, we think we're sort of in the low teens as a percent of share, and there's a -- so there's a big opportunity there in that space. In the fencing market, I think that's probably one of the areas where, historically, there's been more imports of painted steel in the fencing area. And certainly, one of the things that's happened -- I mean it's a lower premium product, obviously. But one of the things that's happened in this market is that there's -- we were selling a lot more fencing material as well. But historically, I mean that's one of the sort of areas where imports compete very strongly.

And John, with the framing technologies, I mean there's now a lot of chatter around replacing concrete slab with new flooring technologies. Does TRUECORE have a role to play in that movement away from slab or potential movement away from slab?

So what I would say is that we're not actually working on the flooring in houses with our technology. What we are working on is getting our steel into low-rise buildings, industrial commercial buildings with some of our flooring systems by BlueScope, sort of some of the downstream businesses like Fielders and Lysaght, for example, getting their flooring systems into those low-rise commercial industrial buildings.

All right. Then I have just a quick one for Sue, if I can, just on the Properties Group. The commitment of the capital up to $300 million, is that -- just to be clear, and apologies if I get the terminology wrong here. Is that the opportunities that you have in front of you right now? Or is there any element of sort of speculative investment, for lack of a better word, in that number?

Sue, I think you might be on mute.

Sorry. Thank you very much. I don't know if I would say speculative. I think we do see that as the pool that we want to be taking these kind of concerted efforts to get into this market and that kind of Class A building range in that $10 million to $30 million price range. So to say speculative, I don't know that I would, again, kind of use that word, but it certainly is the pool of opportunity that we want to kind of expand into.

Maybe just worth reminding, Simon, there's 2 models that sit within BPG, of course, the build-to-demand and then there's the build-to-suit. And then with the build-to-demand is where we still have the lease-up risk. So it's really more about the 2 different models. And of course, the plan is to ramp up that investment over a number of years. So it's going to be 2024 before we get to a full run rate or expect to get to a full run rate there. So there's a couple of years. So just to elaborate on Sue's point, there's a couple of years to run whilst we work through building up the pipeline with both the combination of the build-to-demand and build-to-suit models.

The next question is from Peter Wilson from Crédit Suisse.

Just want to follow on, on Buildings North America for Sue. I'm just curious about how the agreements work with the network of builders, i.e., what the profit share agreement is.

I'm not sure I understand the question.

Maybe I'll step in there, Peter. The builders are responsible -- sorry, is it a question for BPG? Or is it a question for BBNA. As in is it a question around the...

BBNA.

BBNA. Yes, okay. Sorry. So it's a question around the -- how the builder network -- the relationship broadly, the relationship with the builder network. So it might be a question for Sue or for Alec, who's obviously been there for a while longer.

So understand...

And what share [indiscernible] versus BBNA?

I don't know if we give speculations here.

No, we don't share specific dollars. But just maybe the broad nature of the relationship between ourselves and the VARCO PRUDEN and the Butler builders.

So every -- it depends, and I know that's not probably a great answer, but obviously, it depends on the size of the project, the size of the builder, that whole piece, the whole package really kind of coming into play when it comes to pricing out different projects that the builders bring to us. So I don't know that I would say that there's a hard and fast rule as much as it is depending on the complexity of the project and the builders' kind of position in the marketplace. Alec, I don't know if you want to add anything to that.

The only thing I'd add to that is we work with the builders as a partner on projects. But we are effectively selling to the builders who are then selling into the marketplace. I mean that's how the relationship works. We are -- we sell directly to the builders, and they then sell on to the end owners or their end customers. And we partner with them on projects. But it is a direct sale and then a direct sale perspective.

Okay. Good. That's helpful. And in terms of the trends you're seeing, is there any reason why margins in that business would be sustainably either higher or lower?

The margins [indiscernible] are affected by margin erosion, where we're being -- with steel price increases. So as steel price rises, then that takes -- that erodes some of the margin from the Buildings business. And so we've seen significant steel price rises over the past 12 months in particular.

Tania, do you want to cap that off at all?

Yes. I was just going to say we've obviously had a bit of margin compression there. As Alec pointed to, we've had the very rapid steel prices. I mean we do actually accommodate within our standard model for increases in steel prices, but what we've seen is quite unprecedented in the U.S. So hence, the level of margin compression that we've had. We've also been making some -- quite a number of investments in engineering capacity. I know, Alec, you've been working on that for a number of years, and Sue, you've picked up on the baton, and that's really about improving the throughput of the business. So it's all part of the toolkit of thinking -- of working through how we improve the performance overall of Buildings North America. There's the robotics and automation and digital program more broadly. There's increasing the engineering capacity, and then there's working our way through these very rapid price increases from steel and dealing with the margin compression issue, which should be a temporary issue.

Thanks, Tania. Does that cover it for you, Peter?

It does. Yes.

The next question is from Peter Steyn from Macquarie.

I just wanted to put to John, just around the cost competitiveness of ASP. You mentioned, John, that you don't believe that there's any sort of structural change to how you would think about the managing of the business to the bottom of the cycle spread outcomes. But just curious whether you would be thinking about it differently in the medium- to longer-term sense given there's obviously a significant structural adjustment that's occurred in the Pan APAC steel market. And then thinking about some of the energy transition aspects of the business over the medium to longer term and obviously some of the investments that you may make but also cost implications of some of those, how are you thinking about the sort of puts and takes around cost competitiveness in the medium to longer term?

Thanks, Peter. John, do you want to take that?

Peter, I think that's part of the big challenge of the transition over the next 20 years is it's -- I suppose I'd characterize it's going to be a pretty tightly scripted dance. On one hand, we have to stay competitive within the framework and within -- in the industry and within the policy settings, I suppose, that we operate in, and at the same time, sort of find the space for the investment and the transition. And I guess the way we're thinking about it in the short and medium term is to keep ourselves competitive, make sure that we've got the cash flows -- the positive cash flows that we need to have so that we can fund the investment that we're going to need both to sustain the current business but also to be able to transition the business in the future. I mean we don't operate in isolation. And today, I mean our competition is the Asian steelmakers. I mean it's the Chinese blast furnaces, it's the Koreans, it's the Japanese. That's our competition, and that's the context of the market that we operate in. And we strive to make sure that we're keeping ourselves competitive in that market. I guess the transition to the future is one of the big challenges that, I guess, was talked about yesterday. It is both about our investment and our competitiveness. It's also -- as we talked about, it's also about raw materials and raw material suppliers. It's about energy, the infrastructure around us to renewable energy, the hydrogen supply potentially, if that's the technology that we're all going to go to.

I just had one slightly more nitty gritty question around TRUECORE. John, to what extent do you believe that you've benefited specifically from lumber shortages? And how sustainable do you think the transition is that you've made as a consequence of those shortages? And then probably an attached question is builders that have transitioned to you, if they're thinking about carbon footprint, can you sort of really argue that TRUECORE is ultimately a better solution from a carbon footprint point of view? I'm just sort of particularly keen on that, the sustainability angle of TRUECORE versus the wood alternative.

Sure. I think just going to the first part of your question, I mean we've been particularly focused working on TRUECORE and growing our share in the house framing market, probably for quite a while, but we've had a particular focus on it for the last 4 years or so. And we had made steady progress in growing that -- the volumes that we're putting into house framing -- into the house framing market. So we certainly -- in FY '21 and some of what's gone on with timber prices in Australia but also with just the house price -- or the house market, the increase in sales in housing has helped us. But in that, though, we were -- the trend was going in the right direction. And I guess sometimes we get a little bit fortunate with some of the factors that actually give us leverage on the work that we've been doing. But I'm confident that what we've been doing is sustainable. And the reason that I say that is that it also gives the builders benefits. Like -- just like we're very focused on automation and trying to be repeatable with what we do. And we've seen that benefit -- as I said before, with TRU-SPEC, with coil plate, the house frame -- the steel house framing market helps people with -- in the same space, with automation, with the building of the house frames, being more certain about the results that they get, getting it consistent and -- a consistent product. So I think it's a -- we've made good progress, and I think we'll continue to make good progress for a number of reasons. And the timber prices have certainly helped. There's no doubt about it. But that's not the whole story, I don't think. And on the sustainability front, I suppose -- I mean that's part of -- the carbon footprint is part of the challenge for steel in total. I suppose we work very hard on the total sustainability picture [indiscernible]. And I mean one of the things about our product is it's -- for example, it's an [ AAM ] product, so it's got magnesium, which means it has got lower coating mass. And the way we sort of -- we put that product together [indiscernible], et cetera, I mean we've got -- I think we've got a good sustainability story we've got to tell with respect to that particular product. As with everything steel, there's certainly a challenge on that carbon side of it for us.

Might be worth just adding, John, of course, that steel is infinitely recyclable. So of course, from a total life cycle perspective, there's certainly a pretty strong story there.

It's for sure. Thanks, Tania.

Thanks, John and Tania. Peter, does that round it out for you?

Yes. That's all from me.

Thanks very much. Appreciate the questions. I might look through a couple of webcast questions now. And John, while you're on the screen, I've got a question from Paul Young at Goldman here. He's asking about the potential MCL7. How long the concept study will take? And then what's the sort of an indicative construction time line? And I know on Page 36, I think it was about full year result. You broadly had an indicator probably spanning around the FY '23 to FY '25 time frame. But John, maybe you can answer that question for us, please.

Yes, Paul. So as we've indicated, we've commenced a study on that subject to the outcome of that pre-feasibility study that we're working on right now. I mean I would expect if the line is approved that it would take about 30 months from now up and running. That's the sort of time frame. Normally, the construction of those lines or what -- they've taken us a bit over 2 years to actually construct them and get them operating in our footprint.

Thanks, John. And Paul has a second question here, again, related to coated and painted. What are the volume trends you're seeing on the import side on -- for coated and painted steel more recently?

Yes. So as with sort of [indiscernible] steel, certainly, there's been a disruption in the supply chain. That doesn't mean to say that there's quite a bit of steel still being imported into the country. I think the reliability sometimes of the imports has been a bit problematic. And so we've seen people switch from us -- switch to us as far as people that might have traditionally been importing steel and looking to buy steel off us. So I mean I don't think that, that swing is massive, but it's in sort of single-digit percentage points of share at this point in time.

Great. Thanks very much for that, John. That looks to have exhausted the questions for now. So what we might do is wrap up. I say thank you to the panel for joining us right now. We're going to take a short break for 10 minutes, and we'll look to come back at midday, at which point, we'll cover the New Zealand business, the Building Products segment, and Tania will round it out with a discussion of our financial framework. So thanks very much, and we'll catch you in 10 minutes. [Break]

Welcome back, everyone. We have one final session for you today, kicking off with our new Chief Executive of the NS BlueScope joint venture, Connell Zhang, who joined us in April. Then we'll hand over to Xu Huang, the President of our China business, who will give you an update on our operations there. Gretta Stephens will then give you an update on our New Zealand and Pacific Islands segment. And Tania Archibald, our CFO, will conclude today with a presentation on our financial framework. And of course, we'll have plenty of time for your questions and answers at the end of those sessions. Without any further to do, I'll hand over to Connell.

Hi, good morning. I'm Connell Zhang. I have recently joined as the CEO of NS BlueScope Coated Products joint venture, which is a part of BlueScope's Building Products Asia and North America segment. Prior to that, I was a President for Ecolab's Greater China business and worked with The Linde Group and have seen a variety of leadership roles across the U.S., Southeast Asia and also China. NS BlueScope is a 50-50 joint venture between BlueScope and Nippon Steel Corporation of Japan, primarily servicing the construction sector. Well, we have extensive footprint of coating, painting and steel building product operation across the major markets of Southeast Asia and the West Coast of North America. Like BlueScope in Australia, we have a strong brand portfolio supported by deep customer channels. Now taking a step back, the Southeast Asia and the West Coast of North America represents a huge opportunity for BlueScope. The Southeast Asia region alone [indiscernible] population of 662 million people, 20 times the size of the Australia and New Zealand put together. As the region continued to grow, so will the finished steel consumption, as you can see now, still lags the major economies such as U.S., EU and China. And when the COVID-19 [indiscernible] represents a short-term challenge, but there are supportive macroeconomic influences in the region where we operate. In Southeast Asia, in addition to increasing middle class wealth, the modernization of our agriculture and also the broad e-commerce, warehouse and logistics will drive solid demand for our construction products. In the States, the business environment has been very promising with all the major public and private investment into the building and construction industry. The recently announced infrastructure program with a major update to the transport network will drive new wave of construction activities. The already strong residential sector will see another boost as the increased consumer spending built into the new demand for the housing. And this is also the area where we see increasing prevalence of steel solutions with compelling quality advantages over other materials such asphalt shingles. Well, we have a very extensive footprint of the assets across South and North America. This put us in a very strong position to capture the growth from the thriving building and construction industry. We have a network of 9 coating lines with a capacity of 1.5 million tonnes a year and also 6 painting lines with 0.5 million tonnes a year capacity as well as 23 roll-forming facilities supported by extensive distribution and retail network, including more than 600 authorized dealers in Southeast Asia. We manufacture and market a wider range of the steel building products tailored to meet the needs of the individual markets. The multi-tiered brand strategy provides us the access to a diverse customer base. For example, our premium COLORBOND solutions are pitched at large industrial and commercial markets when we also offer a compelling range of fit-for-purpose products to serve the retail building and construction sector. Our vision is to be the premium branded building product company delivering innovative and sustainable solutions safely and responsibly. The fiscal year '21 has been a great year for us. We will continue to build on the success. And our strategy lays out the priorities for us to capture the future growth when keeping our people safe and meeting the expectations of all the stakeholders. Transformation is at the heart of our efforts to deliver the step change in customer experience and also business performance. We are focused on digital transformation to create the value for customers and articulate the value and capture the value when also improving our productivity and efficiency of our operations. On the growth side, we will step up our efforts in the market development to explore the new technology products, services, applications to capture the growth in the key growth segments such as electrical and electronics, solar, food and beverage and also the e-commerce warehouse and logistics. We also -- we're going to optimize our participation in the value chain of building and construction industry to differentiate us from local competitors and imports. With that, I'm going to now introduce Xu Huang, who leads our China business. Thank you.

Thanks, Connell. Great to be here. Dear BlueScope investors, my name is Xu Huang. I'm the President of BlueScope China. I've just celebrating my 5-year anniversary with the company last month. And over this time, we have successfully positioned our business as a niche provider in high-end markets. Our business is able to compete with other players in this market due to a range of advantages, from the premium brand position and a leading R&D capability through to the extensive sales network, effective single value chain business model and proven expertise. BlueScope China produces, markets and sells metal coated and painted steels, roll-formed products and preengineered buildings under our premium brand names. Metal coated and painted steel products are sold under the iconic COLORBOND and ZINCALUME brand names, with Coated China supplying distributors; roll-formers, including Lysaght China; contractors; and pre-engineering building manufacturers, including Butler China. Pre-engineering buildings are sold through the Butler brand and roll-formed goods are produced and market under the Lysaght brand, with both brands servicing the premium part of the China construction market. We leverage our premium coated and painted products with our in-house engineering and manufacturing capability to meet the needs of our important customers. Operating from 4 major sites in China as well as over 30 sales offices spread across the country, we employ some 1,200 people. BlueScope entered the China market in the 1990s, and we have grown our investment and experience over 30 years, servicing China domestic customers supported by a domestic supply chain. The pictures on the left are examples of our buildings of some of our 5,000-plus prominent customers. These customers represent some of the top 10 domestic local private entities in China based both on revenue size and China brand awareness. Our supply chain is also well established and strongly supported by some of our largest China-owned global suppliers of steel coil and other raw materials. Our business model of in China, for China is highly supported and encouraged by local communities. Over the last 5 years, BlueScope China's growth has outpaced China GDP growth. Sales and marketing activities has focused on increasing penetration into existing channels and developing new applications of existing products. This has included targeting high-growth end-use segments, as shown in the slides, which have each demonstrated growth rate on average twice that of GDP. Positioning as a premium supplier of coated steel was further supported through the launch of the next-generation ZINCALUME into the China market. Our sales success has been further enabled by a range of initiatives such as enhanced project management, sales capability and productivity improvement initiatives. We are building on our next 5-year strategy to continue our successful story in China. BlueScope China will continue to pursue high-growth industry boosted by continued industry transformation, consumption upgrades and urbanization as well as dual circulation strategy, placing greater focus on domestic economic and driving the mega trends in the building market. To achieve sustainable growth in coming years, we will build more capabilities focused on utilizing digital technologies and reducing carbon footprint to provide more energy-efficient and greener building solutions for our customers. In closing, our China business is focusing on servicing the premium industry building segment. We are in China for China, and we have been successful in growing our business in the last 5 years, and we believe we can do it in the next 5 years. Thank you for your interest today.

I'm Gretta Stephens, Chief Executive of New Zealand and Pacific Islands. And I'm pleased to be here today to update you on the progress in the business unit. NZPI is New Zealand's only producer of iron and steel and produces flat and long products for the domestic market and the Pacific Islands. We operate 9 sites, starting with iron sand mining at Waikato North Head; iron and steelmaking, flat, coated and painted products at Glenbrook; beam manufacturing at Steltech; long products at Pacific Steel in Auckland and Fiji; and our roll-forming businesses in New Caledonia, Fiji and Vanuatu. We supply products into building, construction, infrastructure, manufacturing and agriculture. Our flagship brands are the COLORSTEEL painted roofing, AXXIS steel framing and ZINCALUME steel. I want to take you first to the strategic principles with which we operate our business, and these are aligned to Our Bond in pursuit of our purpose. Our vision is a sustainable steelmaking future in New Zealand founded on ensuring we deliver a safe, engaged and progressive workplace; ensuring we're the preferred supplier for our customers; ensuring we deliver adequate returns through the cycle; and ensuring we strengthen our community by operating in the most sustainable and ethical way. We're predominantly exposed to the construction center across residential, nonresidential, infrastructure and engineering. Our manufacturing exposure is also weighted to construction as we supply steel to customers who produce painted steel products, purlins and other building components. The New Zealand construction industry remains robust despite the impacts of COVID on strong underlying demand. We are seeing massive pent-up demand for housing with bottlenecks being labor and more recently, building supplies. And similarly to many governments, New Zealand has increased infrastructure spend forecasts to support the economy. You'll be aware we recently completed a strategic review of the business. Many initiatives have been implemented, with a further few paused given the current strength in demand and steel prices. What we've done. We've eliminated a range of loss-making products, including closing our pipe and hollows mill and cold-rolled annealed production. We've completed the associated reductions in headcount with no involuntary redundancies. We've improved the performance across our supply chain operations and painted capacity. Some of our initiatives were directed towards the potential for a reduced domestic footprint, which hasn't eventuated. So we've put these on hold along with the associated role reductions. We also successfully trialed supply of plate iron to North Star as a pig iron replacement, but this is also paused due to strong domestic demand. Following on from the review, we've seen continued growth in demand for our premium COLORSTEEL suite of products. This is not due only to strong end-use demand but a considered marketing strategy, which has included enhanced campaigns, improved service offer, promotion of new products through industry focus and support for our roll-forming customers. We're now at the point where we're hitting capacity limitations in painted and coating. Over the last few years, we've achieved significant capacity growth through operational improvements with minimal capital. We're now at this stage that we require modest capital investment of around $10 million to install a dual-head coater to lift our capacity by a further 10,000 tonnes per annum, approximately a 15% increase. This will support further increase in demand and improvement to our service offer. I'd now hand over to Tania Archibald to talk about the financial framework. Thank you.

Thanks, Gretta, and we're now on to the final topic of the day with BlueScope's financial framework. Most of you will be familiar with our financial disciplines, which we've captured in the financial framework. The framework has been in place since 2017 and has been designed to optimize financial performance and hold us in good stead amidst the cyclical nature of the steel industry. It has 3 pillars: our returns focus, our robust capital structure and disciplined capital allocation. And I'll address each of these in turn. Firstly, our focus is on delivering returns greater than our cost of capital and maximizing free cash flow generation through the cycle. This reflects the capital-intensive and cyclical nature of our industry, and so the need to maintain strong disciplines around asset performance and asset investment decisions. ROIC is the primary measure of performance across all businesses, and our goal is for ROIC to exceed our weighted average cost of capital on average through the cycle. Performance over the past 5 years has been robust, averaging over 18%, with just FY '20 the outlier due to a combination of a cyclical dip in steel spreads and COVID-19 impacts. ROIC is also the primary driver of executive remuneration and our employee profit share plans, which have been progressively introduced across the group over the last 5 years. The objective of these plans is to encourage our team to behave like owners of the business through rewards that are more closely aligned to the shareholder experience. Net cash flow is also a key performance focus and provides the basis of our returns to shareholders. BlueScope has generated $3.9 billion of free cash flow over the last 5 years, an average of around $780 million per annum, and this is after spending over $600 million to date on the North Star expansion project. Turning to our capital structure. The industry in which we operate is cyclical, and so maintaining a robust capital structure is vital. A strong balance sheet gives us the ability to weather cycles and to have the capacity to take advantage of value-accretive opportunities. Given the position that we're now in, it means we can simultaneously deploy our financial strength for long-term sustainable growth and returns whilst also positioning the business for a low carbon future and deliver enhanced returns to shareholders. Over the longer term, our goal is to carry approximately $400 million of net debt, which includes the impact of operating lease liabilities, which came on to the balance sheet through changes to AASB 16 in FY '20. In the near term, our intent is to retain additional balance sheet capacity to fund our priority investments, which I'll recap on the next slide. Disciplined capital allocation is the third element of the financial framework where we seek to balance shareholder returns with investing for long-term sustainable growth. Our capital allocation framework guides the prioritization of investments based on a hierarchy of priorities. Firstly, we will always seek to maintain safe and reliable operations through our sustaining asset spend. Thereafter, foundation capital represents investments in systems and technologies, which are core to our competitive advantage. This is not just systems, including our customer interfacing systems, but our product and process technologies and goes to maintaining and improving our premium branded differentiated positions. Climate capital is to support our achievement of our decarbonization pathways. As I walked through yesterday, climate capital is considered critical in maintaining our long-term sustainability and as such, will be prioritized ahead of growth investments and shareholder returns where appropriate. We recognize that climate-related investments need to have an appropriate commercial overlay to ensure that decarbonization is being pursued in the most capital-efficient manner. Thereafter, excess capital is allocated in a disciplined returns-focused manner between growth projects and returns to shareholders, where our goal is to distribute at least 50% of free cash flow in the form of consistent dividends and on-market buybacks. In the August investor briefing, we laid out our investment priorities, and we've had a good response to the balance we've sought to strike between investing for sustainable growth and returns to shareholders. We believe that providing a clear, longer-term vision for growth is highly constructive, and we're excited by getting on with the project set out in the middle of the slide here, all of which are at various stages of investigation, planning or execution. On shareholder returns, I'll be clear that the target of delivering greater than 50% returns to shareholders is premised on actual cash flow, not prospective forecast, although we are naturally mindful of near-term trading conditions. You'll also be aware that we've reviewed our approach to dividends, and the Board has approved a new ordinary dividend target of $0.50 per share per annum. We expect this level can be sustained through the cycle under most scenarios, but naturally, the Board reserves the right to change this approach. Dividends remain unfranked until such time as we have utilized the $710 million of remaining Australian tax losses and we've begun to accumulate franking credits. That's a point that we could reach as early as FY '23 or FY '24 but will depend on future Australian trading conditions, which remain uncertain. Buybacks will continue to be an important component of our shareholder return approach given their flexibility and EPS enhancement they deliver when executed. The buyback of up to $500 million announced on the 16th of August commenced earlier this month and is intended to be conducted over 12 months. I'll reiterate that the timing and value of shares purchased will be dependent on the prevailing market conditions, share price and other factors. In short, we'll be taking a nuanced approach to execution. More broadly, the Board will monitor capital management in light of actual and forecast trading conditions as they develop. With that, I'll conclude this section of the briefing, and we'll move to a final Q&A session.

That's great. Thanks, Tania. We will have a final panel right now. We've got Connell Zhang on the line. We've got Gretta Stephens. Here with me, Tania, of course, and Mark Vassella as well to help conclude our day. We have a number of questions in the webcast queue, which is great. Thank you for those. [Operator Instructions] I'll move to the first question, and it's for Connell on NS BlueScope. Can you please elaborate on the risks you see around new integrated mills shifting trade flows to a self-supply structure, including which countries and how much capacity and BlueScope's exposure to this? Over to you, Connell.

Thank you, Don. Now firstly, we did take a note that there have been some announcements around new capacity building in some of our ASEAN countries. But there's -- first is how credible these are or how many they can actually become reality. That's something we all need to think. But to be fair, given ASEAN is a net importing -- steel net importing country, and also the greater growth potential over the many years, it's actually -- it's kind of natural to see there will be more steelmaking within the country. Now from our perspective, what we see -- first off, we do look around and optimize our value chain participation, including optimizing the cold-rolling. But we also see more importantly is actually build up our customer, the network, and also -- as I mentioned, and also the dealer network of our creative brand, the portfolio in this region. That really will become the barrier for our competitors to enter into. So overall, we look at the overall strategy here to defend from the coming competition, but that really with our overall value chain for optimization and also that the brand that built up.

Thanks very much, Connell. And Mark Vassella, there's a question here from Owen Birrell as it relates to China. He raises the point that the ongoing deleveraging of the property sector could see a prolonged slowdown in property growth and demand for steel products. Are you seeing any evidence of this? And how much flexibility do we have in our business model to adapt to market fluctuations or such a slowdown?

Yes. Thanks, Don. Thanks, Owen. Clearly, very topical at the moment with the issues that are emerging, particularly in that residential space in China. We have a very small exposure to that, in fact, I think hardly anything at all. And as Xu mentioned when he did his presentation, a real focus for us around the commercial and industrial space in those markets where we see continued growth in commercial and industrial and not different in some segments than we're seeing in other places, like the last-mile logistics distribution space. So we've had a really strong year in China. China has bounced back very well from the COVID circumstances, a record year for the team there. And as they're doing their current 5-year plan that Xu's talked about, the expectation is that we will continue to see growth, particularly in those highly growing commercial and industrial spaces.

Thanks, Mark. While you've got the floor, we've got another question on China here from Dan Kang at CLSA. Just pointing out the geopolitical tensions at the moment and whether there's been any sort of customer response to that and how the in China for China model holds us.

Yes, Dan. I mean good question. I'd clearly prefer if there was a much more -- a stable diplomatic or geopolitical situation between our countries. It's not just obviously Australia. But from our perspective, as again, Xu pointed out, we are a local business. We buy locally, we transform the product locally and we sell the product locally. So we're a different business than other businesses that operate in China. And Xu and the team manage that particularly well. But clearly, I think it's in everyone's interest for the political or diplomatic situation to improve, and let's hope it does so over the medium term.

Thanks, Mark. [Operator Instructions] I got a couple of questions here for Gretta actually in relation to New Zealand. Paul McTaggart at Citi points out that the residential housing boom over New Zealand has been even stronger than Australia arguably. And he wants to know how long can this persist given the current low immigration rates due to the COVID impacts.

Yes, it's a good question. I think you saw in the pack the upward curve on residential housing consents just shooting up to levels that New Zealand has never seen. In terms of how long it can persist, note that, that graph is actually a 12-month rolling average, which means it's higher at the moment. There are -- although we have decreased in immigration, there are still over 30,000 Kiwis overseas looking to come home. The lack of MIQ spaces is a very hot topic over here. The government is well behind in its building program for social housing, Kainga Ora. So there's a huge pent-up demand still. The bottleneck is primarily the availability of housing land and then construction labor, although there are obviously construction material shortages now across a number of sectors. So I think it can persist for a very long time. We're kind of looking out with our customers sort of 18 months into the future and are not seeing any substantial drop-off.

Thanks, Gretta. And Chris Schade of Martin Currie is interested in understanding the impact of recent lockdowns and how this has changed or affected our midterm outlook, if at all. I guess a key point here is if at any point we had any outlook impacts that were material, we'd be communicating those to the market. But maybe just at a New Zealand level, any impacts and how do you see it, Gretta?

Yes. Well, certainly, we've been in level 4 lockdown in Auckland now for 5 weeks. We've heard, actually, just yesterday, we'll be back out into level 3 by Wednesday of next week. So that has stopped construction and manufacturing to a large degree in Auckland through that period, but the rest of the country has continued to be open for business and also our customers have continued down there. We're not seeing any material impact to sort of our forecast for the year. There's a bit of a delay, but everybody is just itching to get back to work. So it's sort of up hauls, but things will pick up strongly again as soon as we're out to level 3. So level 3, all construction and manufacturing activity can restart.

Thanks, Gretta. That sounds very promising. I can see we've got a question on the telephone line, so we might go to that, if we can, please, operator.

We do have a question from Simon Thackray from Jefferies.

Thanks for the update. It's always good to get the divisional detail on product and manufacturing initiatives. We're seeing quite a bit of focus as we should on value-added products in today's materials, Mark. But you have reminded us several times that there's exposure in the commodity end of the product spectrum. Could you give us a feel perhaps today versus even, say, 3 years ago, 4 years ago of your mix of truly commodity-exposed volume to value-added volume?

Mark, go ahead.

Simon, I think if you -- yes, if you have a look at the details in the packs, both the full year pack and the information, you can get a sense of what the numbers are, particularly that 6 monthly volume chart that we put in our half and full year results. I mean, clearly, our objective is to sell as many domestic tonnes as we can. That was the fundamental shift we made in the company back in 2011 when we got out of exporting 3 million tonnes of hot-rolled coil. So that was a fundamental shift for the organization. So it's about selling domestic tonnes, and it's about value adding as much as we can to those tonnes. And I think what you heard from Kylie today, in particular, at ASP, even things like our TRU-SPEC product, which if you look at it from a perspective of is it value added, it's basically a plate product. But what we've done quite cleverly in that space has added value -- have added value to it, produced a super high-quality product that has displaced a whole chunk of imports and allowed us to grow that market. So a broad definition of value add versus commodity, I think it's a bit more nuanced than just saying if it's silver or it's got a funky color on it, then it's value add. I think we're actually adding value right down the chain as we push into some of these more sophisticated products. So it probably depends a little bit on your definition, mate, of what's the commodity product. Of course, we sell hot-rolled coil into markets like the pipe and tube, which is -- pipe and tube market, which is pretty much as commodity as you get. But our focus continues to be to push those products into domestic sales and to add value wherever we can. And I think TRU-SPEC is an interesting example of that.

And with that, Mark, I mean the observation, your implied observation...

You didn't sound convinced.

We're always willing to learn. Yes, yes, correct. The domestic premiums that apply both in New Zealand and in Australia, what's been the trend of the domestic premium for prompt delivery, for the availability, et cetera, of product?

As we called out in August, we've had a second increase in COLORBOND pricing. That's a reflection of the market and what's happened with our -- in the material competitor products. And import pricing, IPP and premiums, they are things that get assessed on a monthly basis. And as we get the ability to improve those premiums, that's what we do. And if you think offshore, of course, we're at a very interesting stage right now with contract renegotiations in North America. And some of the early indications of discounts to indexes are showing that the pricing power has shifted after some period of time, decades perhaps, of the pricing power being more in the hands of the buyer. So that's an ongoing [indiscernible], and we try to optimize it, obviously, wherever we can for local service for quality, for stockholding, further processing, et cetera, et cetera.

And then just finally, just rounding back to yesterday's sort of announcement, I guess, in looking at greenfields painting and coating in the U.S. The extent to which you have the confidence that you're leveraging some of this work around the globe in painted and coated, that gives you a competitive advantage to the local market? Or is it just simply that the market is so enormous that there's just room for another player in that market?

Well, no, I think we would obviously consider both the scale of the market, the size of the market, the regional nature of the markets, as we touched on earlier in some of the questioning around the North Star expansion but also the capability we bring. And perhaps even, as I touched on a little bit yesterday, single bill versus double bill, potentially the ability for us to bring something a little different. We already sell COLORBOND in North America. We export some product in North America. We have a customer there and a customer base there. Of course, as you pointed out yesterday, we also have a very similar model out of Steelscape as well. So we've got some experience on the ground there, but that's all part of the assessment we're going through just to get our heads around what the business model looks like.

Thanks very much, Simon. That actually rounds us out. It doesn't look like we have any more questions at this point in time. So a big thank you to the panel for your involvement today. And thank you so much to all of you who have listened in and participated. We know it's been a pretty wild couple of days on the financial markets, and so we're so grateful you've taken the time to join us. Before we conclude, I will just hand over to Mark Vassella just for some closing remarks at the end of the day.

Thanks, Don. And I'd like to thank Don and the team. There's a massive amount of work that goes in this, so I hope you guys have got some value out of it. I would have much rather have done it with you in the room at Port Kembla. So we've tried to do it as efficiently as we can using the technology. And hopefully, that's worked. What I said to you yesterday was the sort of 5 things that I hope you might take away from this sort of things that we think that make us different. We are a purpose-led organization. And the focus on sustainability, I think, is something that we're all quite proud of. And hopefully, you've been exposed to that over the last couple of days. The work that Tim Rodsted started with us and his team, the work that was going on in the businesses and now the emphasis with Gretta and her team. I don't think there's any doubt that we have really high-quality portfolio of assets. We have leading technologies. We've got leading products. We've got leading brands, and we've got good supply chains. Tania has just, again, reiterated the financial strength of the organization. That's something that we remain and continue to focus on. What's really most exciting, I think, is that financial strength, we have the ability to apply that both to the longer-term growth plan for the organization and the initiatives that we've got on foot but also in terms of shareholder returns. And probably the sixth thing that I would highlight that I didn't ask of you yesterday but I hope you can take away is what we're trying to do over the last couple of half days is give you exposure to as many of our people as we can. You see lots of Tania and I and Don and Chris. But what we tried to do over the last couple of days is give you some exposure to what I think is a pretty diverse and incredibly talented group of people, something that we continue to work on. And hopefully, that gives you some sense of the confidence that we have in the business because of the capability of the people that we've got inside the organization across a whole range of subject matter. So hopefully, that's been a value to you as well. So look, thank you for your time. Thank you for your continued support. As Don said, I know it's been a crazy couple of days. And for you to dedicate the time to be interested in us and listen to us, we truly appreciate that. So thank you. And everybody, take care. We'll talk soon. Thank you very much.