BlueScope Steel has delivered a sharp warning to fix Australia's "broken" energy market or risk losing key national industrial assets.
Managing director and CEO Mark Vassella says the company is "very concerned" about the state of energy markets in Australia, and particularly the impact on Port Kembla steelworks, south of Sydney.
He says energy is key to the industrial future of Australia, and high energy prices undermine the transition to low-emissions steelmaking which requires significantly more electricity.
"Australia needs an orderly energy transition that will ensure the sustainability of key national assets such as Port Kembla steelworks and, crucially, the thousands of downstream companies in the construction industry and our broader customer base," he told an investor briefing on Monday.
He said BlueScope had contracts in place for the next couple of years, which would insulate the company from the recent spikes in gas and electricity prices.
But in the medium term, he warned sustained high prices and supply shortages risked undermining the international competitiveness of Australia's steel industry.
"For too long, industry has suffered from broken energy markets, neglected by big energy," he said.
"Any future design of energy markets must therefore strike the right balance between affordability, reliability and sustainability."
BlueScope is working with CSIRO and Shell on using liquid hydrogen as alternative fuel in steelmaking, which requires extreme heat, but the technology is not yet commercially viable.
"Regardless of the technology pathway eventually adopted at Port Kembla, transition can only occur if we have firm affordable renewable energy," Mr Vassella said.
"And in the interim, continuing supplies of competitively priced natural gas supplemented with renewables will be essential until green steel technologies are commercialised."
The steelmaker on Monday reported a record $2.81 billion net profit after tax (NPAT) in the year to June, up 135 per cent on the year before, but warned of a less stellar outlook for the current year.
