The story of the Port Kembla steel companies, like those of other industries there, had its origins in events elsewhere in Australia. The brothers who founded the Port Kembla industry (George and Charles Hoskins) in fact did so in order to move their existing steel operation located at Lithgow, inland from Sydney, to a site where it might be less disadvantaged by costs – in particular transport costs. The Lithgow site in turn had been set up in 1873 as a result of the inability to economically sustain operations at the Fitz Roy Iron Works at Mittagong, in the highlands south of the Illawarra, which operated from 1864. Cheap imported iron (often brought out as ships’ ballast) made life very difficult for the domestic industry of the day.
The Lithgow works (the Esk Bank Iron Works) had a small blast furnace operating by 1876. However it encountered difficult economic and market conditions, and the plant ran for a time as a cooperative of workmen, re-rolling iron from elsewhere. William Sandford then entered the scene, having come to Australia originally to set up a wire netting plant in Sydney for John Lysaght. Sandford became interested in Eskbank, first managing it, and then leasing it in 1886 and subsequently (in 1892) buying the entire plant and its colliery and ore leases.
With the optimism of Federation in Australia, and the expectation of trade protection for new industries such as steel, William Sandford spent heavily on plant and equipment, including Australia’s first steelmaking facility, a small open hearth furnace. But costs were high, capital scarce, and the expected protection not provided. Seeking help from the NSW state government, Sandford agreed as part of their assistance plan, to build a blast furnace at Eskbank. The furnace was fabricated in England and erection at Lithgow completed in 1907, at a cost of £100,000. Its capacity was 1200 tons per week. The cost however crippled Sandford’s company, and after his unsuccessful attempts to obtain further government assistance, his bank creditors foreclosed on the company’s overdraft, and sold the entire enterprise in 1908 for £202,000, to two Sydney ironfounders. The new owners were the brothers George and Charles Hoskins.
It was recognised early that Lithgow presented significant difficulties, principally in relation to transport costs for both inputs and products. While steaming coal was mined at Lithgow, it was not suitable for ironmaking use. Coke oven capacity had been constructed at Lithgow, but was a failure in not being able to produce coke of an adequate quality. For that reason coke had to be purchased from other sources – by 1917, South Coast coke ovens were providing around 80% of the ironworks’ needs. In 1916 a battery of beehive coke ovens (the last to be built in the Illawarra) were constructed at Wongawilli near Wollongong, and coke was railed from there to Lithgow for blast furnace use. Product also had to be shipped by rail to Sydney, and thence by sea to other markets. While the demands of World War 1 helped the company, by the 1920s the decision had been made to move to Port Kembla. This was the nearest deep water port to Sydney, and indeed had been selected as the site for a proposed (but never built) state owned steel industry.
Charles Hoskins (who had bought out his brother’s interest) arranged to buy a 380 acre (1037ha) site at Port Kembla in 1923, but died before work could be commenced on the new plant. His son Cecil took charge and oversaw the formation of Australian Iron and Steel Ltd (AIS), in 1927 with shares taken up through the Hoskins’ company, Dorman Long & Co Ltd, Baldwins Ltd (UK), Howard Smith Co Ltd, and a public issue for £1,000,000. He initiated also the development of the new plant, with the first blast furnace commencing operations in 1930.
Early operations were hampered by difficulties which might not be regarded as unusual in the development of a large greenfield production site in such circumstances – commissioning problems, late delivery of an essential raw material (limestone) rail link, and some industrial disputes. But these might have been overcome had it not been for the overarching impact of the Depression then engulfing the western world. An immediate effect of that was to limit capital availability leaving the Hoskins brothers unable to complete the Port Kembla plant. With ongoing difficulties, talks were initiated with the Broken Hill Proprietary Company (BHP). BHP’s own new works at Newcastle were similarly affected by low demand conditions, but its financial situation was far more robust than that of AIS. On 18 October 1935, by an exchange of shares, AIS became a BHP subsidiary, and the long period of industrial domination by BHP of Port Kembla had begun.
While AIS was the first and largest of the steel operations to emerge at Port Kembla, others followed relatively quickly. The first was John Lysaght Australia Ltd. John Lysaght owned a small sheet steel galvanising works In Bristol, UK in 1857 and became an early exporter of galvanised steel sheet to Australia. While the Lysaght product came to dominate the market it was not until 1921 that the company (John Lysaght Australia – JLA) commenced production in Australia, rolling and galvanising sheet from Newcastle steelworks. In 1936, after the AIS merger with BHP JLA purchased from AIS its sheet steel plant, and commenced to operate that while constructing its own new plant, the Springhill Works, which opened in 1939. That plant was to become a major user of strip product from AIS.
JLA became a public company in in Australia in 1961 with the issue of 20% of its shares to the public (the company had been acquired by Guest Keen and Nettlefolds (UK) in 1920). In 1969 BHP acquired a 24% holding in JLA and the following year established with GKN, BHP-GKN Holdings Ltd to hold a 50/50 ownership of JLA. In 1979 JLA became a completely owned subsidiary of BHP.
JLA in its turn had developed a related industry. In 1939, the year its own main plant was established, it linked with a US firm (American Rolling Mills, later Armco) to set up a jointly owned subsidiary, Commonwealth Rolling Mills (CRM), to produce the higher quality steel strip product which would be required for cars, appliances such as refrigerators, and other applications. That plant was also in Port Kembla, but not immediately adjacent to AIS or JLA. Eight years later, JLA bought out its US partner, and CRM became a subsidiary of JLA. The CRM plant rolled in 1967 the first coil of Colorbond – a product which became one of JLA’s principal assets. The works ceased operation in 2009.
Port Kembla also had its association with special steels (“stainless steels”). AIS produced special steels through electric arc furnaces in parallel with (initially) open hearth steelmaking and later basic oxygen steel making. That product left AIS as hot-rolled strip. In 1957, the Commonwealth Steel Co (Comsteel) commenced the construction of a new plant at Unanderra to take that strip and use cold rolling to produce thin special steel strip. The Commonwealth Steel Products Company had been formed in 1917 by a group of four NSW foundries as the result of a shortage of cast railway components. Over the years its ownership changed, with the Vickers Company (UK) taking up an interest and later in 1935 and 1939 BHP acquiring significant shares in the operation, then largely based at Waratah in Newcastle. By the time it started its Unanderra development it was a BHP subsidiary.
The Unanderra plant was a ‘greenfield’ site on what had previously been farmland, and was linked to AIS by rail. The plant was completed and in operation by 1959. The facility was later upgraded in 1973 with the addition of a wide strip Sendzimir mill, again cold rolling AIS strip product. That operation ceased in the 1980s when AIS closed its special steel arc furnaces. But the site had not finished its association with special steels. In the 1980s and early 1990s it was the base for technology development initiatives in the field of thin strip casting for special steels, with BHP and a number of international partners. The technology has largely seen application in the US.
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