BlueScope Steel Stock

Good morning, and thank you for joining us today. I'm Tania Archibald, BlueScope's Managing Director and Chief Executive Officer. With me is David Fallu, our Chief Financial Officer. We'll take you through the FY '26 results, the progress we've made against the agenda we set at the half and how we're positioned for the future. We'll then take your questions.

I'd like to begin by acknowledging the traditional custodians of the various lands on which we meet and work today and pay my respects to elders past and present.

I'll begin with safety. There is nothing more important than the health and safety of our employees and contractor partners. BlueScope has a strong safety culture built on a track record of extensive engagement with our workforce and an ongoing commitment to learn and improve. Throughout the year, our Global Safety Refocus program guided our work on critical risks and the effectiveness of the controls that manage them. But our performance is not yet where it needs to be. The tragic loss of a contractor at Port Kembla in November is a stark reminder of the importance of our work in this area. Now that incident remains under investigation by the regulator, and we're engaging fully with that process and we are determined to learn from it as we do with every serious incident across the business.

Building on the progress we made in the year, we're continuing to drive a more systematic approach to managing critical risks and improving controls. This work is supported by our new functional operating model, which has brought all of our safety professionals into a single global team. This change is designed to bring the full force of the organization's capabilities to the greatest areas of opportunity and challenge as we seek to strengthen our safety performance.

Financial year '26 has been a defining year for BlueScope in which we've accelerated the delivery of value, which has positioned us well to capture the next phase of growth and returns. I'm proud of what the team has achieved and believe we're well placed for the years ahead. In February, we committed to accelerate value delivery across 4 pillars. On growth, peak CapEx is now behind us and 2 of our major projects have just moved from construction to hot commissioning and ramp-up phase. That's the new state-of-the-art metal coating line in Western Sydney, and the new low emissions electric arc furnace at Glenbrook in New Zealand.

On cost, in FY '26, we fully delivered the initial $200 million cost-out program, which we commenced just over 2 years ago and we've exceeded our targeted additional $150 million cost out program with the reshaped cost base in place from 1 July this year, delivering a simpler, leaner BlueScope.

On property, we've accelerated the delivery of value with a range of project deliverables through the year, highlighting the significant value in the surplus land portfolio. And finally, for shareholders, we've delivered a significant step-up in returns whilst maintaining a robust balance sheet. Put simply, we've executed on our commitments.

Turning to the headline numbers. FY '26 demonstrated the strength of the portfolio as we shift from a heavy investment phase to one of ramping up shareholder returns. Underlying EBIT of $1.27 billion was materially higher than FY '25, whilst second half EBIT of $716 million was above the top end of the guidance range supported by a stronger North American contribution, record Southeast Asian performance and delivery of cost and productivity targets more than offsetting cyclically low Asian steel spreads.

Underlying net profit after tax for the year was just over $800 million and the balance sheet finished the period in a strong position at $600 million net debt. With the major investment program ramping down across the next 12 months, we're continuing to ramp up returns to shareholders. The Board today approved an unfranked final dividend of $0.65 per share and an unfranked special dividend of $0.70 per share, which when paid in just under a month's time will see us delivering on our calendar year '26 commitment of $3 per share in distributions. Shareholders have been patient through the investment phase and that patience is now being rewarded.

Turning to guidance. We've entered the next half with solid momentum. We see continued strength in North America, a solid demand environment in Australia and early signs of recovery in New Zealand. In China, overcapacity continues to weigh on regional steel spreads. For first half '27, we expect underlying EBIT in the range of $860 million to $960 million, subject to spread, foreign exchange and market conditions. Now the assumptions that underpin this outlook are set out on the page and David will take you through the regional detail shortly.

BlueScope today is a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. Our purpose and bond are enduring and grounded in care and respect for our people, our customers, our shareholders and the communities in which we operate. We're guided by 3 key strategic themes that focus on customer value creation, operational excellence and shareholder value delivery. Our decision-making is supported by our long-standing financial framework which drives a focus on resilience and returns, a disciplined approach to capital allocation and an unwavering commitment to deliver long-term shareholder value.

We're strategically differentiated by our ability to combine highly competitive manufacturing assets with deep customer relationships, leading product development, extensive channels to market and strong strategic marketing capabilities. With a long-standing presence and deep manufacturing and market expertise across Australia, New Zealand, North America and Asia, we bring decades of know-how to every market we serve, and our in-country, for-country approach keeps us close to customers and end-use markets. Through these elements, we aim to deliver resilient through-cycle earnings, robust and growing cash flows and higher shareholder returns, all of which we're seeing in these results.

Turning to growth, where we've been working hard to deliver our 2030 $500 million EBIT uplift target. In North America, we're continuing to target more than $200 million of improvement anchored by North Star debottlenecking and our coated and painted strategy, including the BCP turnaround. In Australia, we're targeting more than $125 million, supported by continued growth in COLORBOND and TRUECORE steel backed by the new Metal Coating Line #7 and the plate mill upgrade, which will enable capability, service and quality improvements.

In Asia, we're targeting a $75 million uplift through capital-light growth of value-add products and solutions across Southeast Asia, and we're pursuing targeted growth segments in China. In New Zealand, continued growth in COLORSTEEL and the benefits of the newly commissioned electric arc furnace will enable the $75 million growth target.

During the year, we've made good progress on the major projects, which underpin earnings resilience and growth. At Erskine Park in Western Sydney, the new 240,000-tonne Metal Coating Line #7 achieved a significant milestone of metal on strip on the 4th of August. Production ramp-up will continue through this half. Now this is a state-of-the-art metal coating line with high levels of automation, process control and smart technologies. Now the project has taken longer and costs more than initially anticipated, largely reflecting the high inflation environment for capital projects as well as the extensive wet weather delays throughout the construction period. Now critically, this investment underpins our long-term supply of TRUECORE and substrate for COLORBOND, both of which achieved record sales in the year.

The new lower-emissions electric arc furnace at Glenbrook in New Zealand produced the first heated steel on the 3rd of August. Similar to the new metal coating line, ramp-up and transition to operations will occur across this half. Now this marks a key milestone for our New Zealand operations, enabling a step change in our emissions profile and most critically, a transition to a more flexible demand-responsive production model. The North Star debottlenecking program is progressing well across all 9 components, unlocking an additional 300,000 tonnes per annum of capacity at one of the best positioned minimills in North America.

The overall program is running on schedule and in line with budget with 3 of the project components now complete. The Port Kembla Plate Mill project remains on track with the processing upgrades already delivered and in operation. With the first phase now complete, the next phase of the project being the product quality improvements from the new furnace are on track for delivery mid next calendar year. Importantly, the plate mill upgrade delivers new heavy plate capability with broader application to defense, infrastructure and renewables projects. The transition schedule for the #6 blast furnace reline project has been pushed back to early second half FY '27, reflecting the scale and complexity of the project. And similar to Metal Coating Line #7 has experienced inflation in construction costs.

Number 5 blast furnace continues to perform strongly, which gives us flexibility in cutover timing and no impact to our operating risk profile. But importantly, the #6 reline project secures Australia's domestic supply of iron for up to the next 20 years whilst we work through our decarbonization pathway.

On climate and sustainability, we remain firmly committed to executing our strategies and delivering on our targets. In Australia, we're exploring various pathways for decarbonization. Now one of these is the NeoSmelt project that we're leading in joint venture with Rio Tinto, BHP, Woodside and Mitsui Iron Ore Development. NeoSmelt is an Australian industry R&D project designed to secure the long-term future of Australia's Pilbara iron ore industry and provides BlueScope a potential decarbonization pathway. The project is aiming to build a pilot direct reduced iron and electric smelting plant designed to use blast furnace grade Pilbara ores in DRI production, a major step forward from today's DRI technology. The partners are targeting a final investment decision by the end of this calendar year, subject to government support.

In North America, the North Star and BlueScope Recycling teams are ramping up the production of low-residual shred and reducing our reliance on pig iron without affecting product quality or mill efficiency. In New Zealand, the new EAF will deliver a step change in our site emissions by almost 50% and will reduce New Zealand's overall country emissions by 1%. The EAF, coupled with geothermal power supply, also enables new lower-emissions product offerings, which we're delighted to bring to market.

None of these investments have been straightforward, but they also underline 2 critical themes for manufacturing. Firstly, a reminder that capital is mobile and seeks the best risk-adjusted return; stable, competitive and predictable policy settings, attract long-term investment while uncertainty and structural cost disadvantage discourage it.

Secondly, where the manufacturing industry is today in Australia is largely the product of policy choices made over the decades. While other nations have competed intensely for manufacturing investment through a variety of strategies, Australia has largely stayed on the sidelines. Now is the time to change that. Australia's Future Made in Australia agenda is the most significant shift in industrial policy in a generation, and it provides a very real opportunity to reshape Australia's future. Public policy settings should help create the conditions that allow globally competitive manufacturers to invest, grow and succeed.

In turn, strong financial performance underwrites continued investment in capability and innovation, including lower-emission steelmaking. At BlueScope, we remain committed to a vibrant and competitive manufacturing base in Australia for the long term. That's why we continue to advocate for structural reform of Australia's energy market. It's why we support a level playing field via an effective trade remedies regime, and it's why we continue to drive Project NeoSmelt, which has the potential to lay the foundations for a green iron export industry.

Moving to cost and productivity. We fully completed our initial $200 million cost and productivity program in the half, which was a great outcome. Earlier this year, we went further and established an additional cost reduction target of $150 million on a gross basis. Now we've exceeded delivery of this target, so we now expect the full $150 million to flow into FY '27 as a net benefit. The team has done a fantastic job executing on this target and resetting our functional operating model. The result is a simpler, leaner, more agile BlueScope.

On property, our overarching objective is to accelerate the delivery of value from our 1,200 hectare portfolio, which sits in sought-after industrial locations with proximity to port, rail and energy infrastructure. Now as a reminder, over 60% of the total portfolio is already appropriately zoned and able to be developed. Across the year, we made great progress with activities ranging from planning and zoning to development activities and sales.

Moving into FY '27. Our focus is on progressing the logistics hub at Western Port as we commence the process of shortlisting proposals and the commercial and structuring work that supports value delivery from this initiative. We're also progressing opportunities for Port Kembla that are complementary to our manufacturing operations, including a focus on the development of an energy precinct along with other planning and development activities.

On shareholder returns, to quickly recap, in February, we announced a plan to deliver $3 per share in returns in calendar year '26, representing a material step-up in distributions to approximately $1.3 billion, which is around 10% of BlueScope's market cap. With today's dividend announcement, this plan is being fully delivered. Given the ramp-down in our major capital investment program and the ramp-up in cash generation, we've announced a plan to repeat the $3 share return in calendar year '27. This plan is supported by a robust balance sheet.

Before I hand over to David, let me step back and cover the macro and industry backdrop and the longer-term opportunities across our business. In Australia, construction activity remains resilient, supported by housing, infrastructure and nonresidential demand, and the medium-term outlook is underpinned by favorable demographics and a sustained housing shortage. Value-add and branded products remain key drivers of volume growth as our products and systems continue to gain traction.

As for spreads, regional overcapacity, driven by record levels of exports from China, continue to pressure spreads and margins in the Australian business. The Australian business has proved to be extraordinarily resilient in the face of the sustained low spread environment with a firm focus on cost and productivity and continuing to grow the value-add portfolio, providing tremendous upside operating leverage. In the United States, demand remains supportive across our key markets of auto, nonresidential construction and manufacturing. The data center rollout and broader e-commerce infrastructure have underpinned solid nonresidential construction demand.

More broadly, North America continues to be a great place to make and sell steel. The regulatory and an industry environment is favorable and supportive of the demand outlook across steel-consuming sectors and our footprint and quality of assets position us well to capture continued economic growth. We also have a clear runway to grow with the incremental expansion at North Star adding low-cost capacity into a market that remains structurally short of steel.

Across Southeast Asia, we have an outstanding footprint across every major economy. The region is becoming increasingly attuned to the value proposition that BlueScope has spent the best part of 6 decades embedding. Our positions are well established with latent capacity to capture growth in this fast-growing and dynamic region.

In New Zealand, demand conditions have been soft, but we're starting to see signs of recovery. Much like Australia, favorable trends in demographics and demand will drive medium- to longer-term volume growth for our product suite including the new low-emissions offerings enabled by the EAF. Whilst I set out a constructive picture on demand across most of our regions, cost escalation remains the persistent challenge. It was compounded this year by the Middle East conflict flowing through to fuel, freight and input materials, and it underlines why our relentless focus on cost and productivity sits at the heart of how we run this business.

Above all, it's the design of our portfolio that delivers value through the cycle, positioning us to capture our targeted growth while absorbing the headwinds along the way.

I'll now hand over to David to take you through our regional performance and the financial framework.

Thanks, Tania, and good morning, everyone. Turning to the regional performance, starting with Australia, which delivered underlying EBIT of $188 million in the financial year with a second half EBIT of $66 million. Domestic dispatches increased to 1.15 million tonnes in the half, driven by residential and nonresidential construction demand with COLORBOND and TRUECORE steel hitting a record volume with 654,000 and 155,000 tonnes in the year, respectively. The result reflects sustained low Asian steel spreads and a non-repeat of one-offs, partly offset by cost, productivity and value-added volume gains.

As an integrated, modern manufacturer in Australia, our priority is to keep growing domestic and value-added volumes while reducing costs to support margins. With performance remaining challenged by soft regional spreads, you can see the importance of focusing on shifting more volume to domestic sales and more of those sales toward value-added and premium branded products. And pleasingly, that trend has continued with our record COLORBOND and TRUECORE volumes this year. Cost also remains critical, and the operating model reset has helped in this space, but our work here needs to be ongoing, not only to offset inflation, but to enhance our earnings profile in concert with the work on value-added growth.

Turning to North America. North Star delivered underlying EBIT of just over $800 million in FY '26 with a second half EBIT of $484 million, up 50% on the prior half on materially stronger realized spreads and increased production capacity. We expect to see further benefit of the significant benchmark spread increase flow into FY '27 due to the nature of longer pricing lags and other pricing mechanisms to cover around 1/4 of North Star's sales book. The business continued to operate at full utilization and effectively managed its cost base to negate conversion cost increases in the half. North Star remains an outstanding asset, with its continued margin outperformance relative to peers due to operational capability, geographical location and a strong performance culture.

We continue to unlock capacity in the mill to grow our volumes and earnings from this great business. Buildings and Coated Products North America delivered an EBIT of $230 million in FY '26 with a second half EBIT of $101 million, 20% lower than the prior half. Across the segment's 3 component businesses, BlueScope Buildings performance softened slightly in the half with some seasonality and slightly lower volumes due to a temporary lull in new project work 6 to 12 months prior to the period as the market digested a range of trade policies and measures following [ Liberation Day. ] BCP performed in line with expectations, delivering a loss for the half, however, an improving performance across the period.

And Steelscape's performance improved on higher volumes as demand recovered from the prior period's tariff-related volatility. Across North America, our priorities are to continue to maximize volumes at North Star, expand buildings where returns are clear, selectively grow downstream value and deliver the turnaround of BCP. We are well positioned for growth in the region and the successful execution of these priorities supports the longer-term opportunity of bringing our painted steel value proposition to the North American market.

Asia delivered underlying EBIT of $177 million in FY '26 with a second half EBIT of $81 million, down around 15% on the prior half. The region is delivering strong returns with further upside to be realized from its unrivaled footprint for regional growth. Southeast Asia had a record year with all countries showing improvement from sales and marketing initiatives and operational excellence. The opportunity here is significant, not only from the strong positions our brands have in the market and the demographic tailwinds in the region, but also from the significant latency we have in the region to capture this growth, making it a very capital-efficient opportunity.

China was lower than the prior year on seasonality and weak domestic conditions. And as we've previously announced, we completed the sale of our 50% interest in Tata BlueScope Steel during the year. Our priority across this business is to strengthen customer propositions and selectively expand higher-value downstream solutions as the markets continue to mature.

New Zealand and Pacific Islands recorded an underlying EBIT loss of $1 million in FY '26 with a second half EBIT of $16 million. The result was thanks to improved product mix as COLORSTEEL delivered a record performance despite softer conditions, along with an improved cost performance. The EAF was -- installation was largely finished at the end of the financial year, which is a fundamental strategic reset of the business. The EAF will reshape the earnings and emissions profile of the business with the benefits starting to flow through and a full run rate following the FY '27 transition year.

Turning to the drivers of the year-on-year movements in underlying EBIT. Looking at FY '26 versus FY '25, the largest contributor was a material lift in net spreads driven predominantly by stronger realized pricing at North Star. Volume and mix contributed positively, reflecting the stronger domestic volumes in Australia and continued growth in premium branded products, including COLORBOND, TRUECORE and COLORSTEEL. Conversion costs and other costs reflected the benefit of our cost and productivity program, offset with inflation and escalation. As a reminder, our cost and productivity program benefits are not just sitting in conversion costs. They're across a range of buckets, most notably raw material costs, which actually more than offset higher conversion costs in the year. Comparing the second half of FY '26 to the first, similar dynamics applied.

Looking at the guidance period across our regions, noting the group first half FY '27 guidance range and assumptions Tania mentioned earlier, in North America, we expect a result more than 1/3 higher than the second half of FY '26, with North Star benefiting from stronger benchmark spreads and improved cost performance. Within BCPNA, improved volumes and ongoing turnaround initiatives support a stronger result. In Australia, we expect a result around 2/3 higher than the second half of FY '26, driven by higher realized spreads, stronger domestic volumes and continued cost discipline with impacts from major projects transitions reflected in the outlook.

In New Zealand and Pacific Islands, earnings are expected to be around 1/3 lower than the second half of FY '26, largely reflecting EAF commissioning impacts, partly offset by improved benchmark pricing. In Asia, we expect performance broadly in line with the second half of FY '26 with seasonally softer conditions in Southeast Asia, offset by stronger seasonality in China. Finally, corporate and group is expected to be approaching 3x the second half of FY '26 result. This primarily reflects a non-repeat of the $76 million West Dapto land sale profit recognized in the prior period.

Turning to our financial framework, which remains a critical guiding document and it's central to how we run the company. The framework remained unchanged. However, we've evolved the settings within it to reflect a stronger, more resilient earnings base, materially improved cash generation and confidence in the trajectory of capital expenditure within our growth projects now nearing completion. As we've noted in recent years, ROIC has been impacted by the once-in-a-generation capital program, adding to our operating asset base, while Asian spreads have held at bottom of the cycle levels.

In the year, ROIC improved, thanks to improved contributions from North America and continued strength in Asia. On cash flows, in FY '26, free cash flow was $240 million, impacted by our peak CapEx. As a reminder, shareholder returns are paid from operating cash flows less sustaining CapEx with the commitment to distribute at least 75% of this number. Importantly, with peak CapEx now behind us, the cash flows available to fund distributions will be materially higher going forward.

Turning to our balance sheet. Net debt at year-end was $600 million, well within our target range, thanks to stronger U.S. spreads and specific timing of cash flows. We also have ample liquidity, and we've taken the opportunity to enhance this position further in July to ensure a frankly, rock-solid maturity profile. The combination of the balance sheet position and liquidity gives us a great platform to support our planned returns in calendar year '27.

Capital expenditure was $1.5 billion for the year, in line with expectations with the second half being our peak CapEx for the half. The profile steps down from here. FY '27 CapEx remains slightly elevated as we complete the remaining $500 million of the program before normalizing further. As a reminder, our typical annual capital expenditure is approximately $600 million to $700 million with around $450 million to $500 million in sustaining CapEx and foundational spend and typically a further $100 million to $200 million in organic and incremental growth investments.

On shareholder returns, this calendar year saw us accelerate the step-up in distributions with a plan to deliver $3 per share in calendar year '26 and $1.65 per share paid during the half. As noted, the Board today approved the unfranked final ordinary dividend of $0.65 per share as well as a $0.70 per share unfranked special dividend as an alternative distribution to the previously flagged $310 million buyback program, which we've been unable to execute during the period. This sees us fully deliver our calendar year '26 plan with approximately $1.3 billion in distributions this calendar year. This level is significantly higher than the periods in the decades prior, by a significant margin.

As we look ahead, we've announced today that we plan to deliver at least a further $3 per share in calendar year '27, with the rebased ordinary dividend complemented by other methods such as special dividends and buybacks where available. BlueScope has always been a highly cash-generative business with the last few years seeing this directed to our major investment program. Clearly, we're getting back to more normal cash flow numbers, which support the stronger return levels. As such, it's exciting to see that our approach in this space is designed to be sustained, not a one-off.

And with that, I'll hand back to Tania.

Thank you, David. Before we take your questions, I want to reiterate a number of points. The results today demonstrate the strength of the portfolio and our execution capability. Earlier this year, we committed to accelerating the delivery of value. We've delivered on our commitments over the last half, and we'll continue this work into FY '27. With the major investment period ramping down, we're ramping up returns to shareholders with a significant increase in calendar year '26 planned to be repeated in calendar year '27.

BlueScope enters this next phase from a position of real strength as a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. I want to close by thanking our people for their dedication through a demanding year, our customers and partners for their trust and our shareholders for their continued support.

And with that, we'll open the line for questions.

[Operator Instructions] Your first question today comes from Ramoun Lazar with Jefferies.

Just a couple of quick ones for me. Maybe if we can dive into the ASP performance a bit more in the half. Look, revenue per tonne was a step up across that business. So I'm just trying to break down what were some of the drags in that second half that you saw impacting those results? And then for the first half, if you could maybe just outline your expectations around the transitional impacts from the BF6 delays and the MCL7 ramp-up, that would be helpful in trying to get to a baseline earnings number for this business going forward.

Yes. No, Ramoun, look, I guess just in terms of the specifics around some of the ASP performance, I mean there was a component of one-off benefits not being repeated in the second half. You'll recall that first half, we had a one-off tax benefit in the first half period, which wasn't reported. And then there's -- as we're working through the stages of blast furnace 6 transition, we -- that has an implication for some of the operational costs that we saw in that second half.

Probably what's also worth adding in terms of the performance in the second half. We're working with low numbers. There's a lot of moving parts within ASP. It only takes a few things to occur, and it can -- it looks like it sort of has a significant impact. If I sit back and look at the business, the cost and productivity performance in Australia has been very, very strong. The fact that we're selling record levels of COLORBOND and TRUECORE. Thankfully, we've managed to start up Metal Coating Line #7, which is now in the ramp-up phase. That's going to underpin that long-term growth in COLORBOND and TRUECORE. We think there's a lot of upside there.

What we're dealing with is a reasonably solid demand in Australia, but we have a very low spread environment, probably a bit of an impact from FX as well. But we're dealing with probably -- with the lag impacts. The way the lag spreads work is probably one of the toughest spread environments that we've seen. So the fact that the Australian business is still profitable, it's demonstrated enormous resilience, and it says to me that we have tremendous upside in the business.

In terms of the outlook into the second half, there's a few factors, again, dealing with the low numbers. There's a few things like we ran a particular trial in the fourth quarter of '26 around using some higher pellets and lump that was part of the decarbonization trial, and that drove up the cost, which then lagged into the second half. There's probably a little bit of disruption, I think, in terms of how to think about the lags on iron ore and coal because what we're doing is building up a bit of stock in terms of the transition for the blast furnace. And so that will disrupt what you would have as the normal lags for iron ore and coal.

Got it. Any sort of quantification of those impacts, Tania or David, that could help us in terms of the first half?

Look, I think what we'll look to do, Ramoun, is probably more an overall review once we've gone through the transition of blast furnace 6 to see if we can provide you with additional help around the sort of the lags that you're seeing. But in terms of the overall sort of impacts from what Tania was referring to specifically, that's about between $20 million to $30 million impact.

Okay. That's helpful. All right. And then just the second one, just on North America and the pricing lags there. My understanding is there's a proportion of those tonnes that are now contracted on a fixed price basis -- or on formulas under fixed price basis. Can you maybe just touch on those, Tania or David, how they're impacting the first half? And then when those potentially get reset? And I guess, is that a tailwind or a headwind into the second half?

Yes. So the fixed price or fixed spread contracts, they've actually always been there. They've always been part of the mix. It's something that we decided to ramp up a little bit more post the expansion. And it just goes to how we target and partner with customers for the long term. For the longer-term perspective, it does reduce volatility, but I appreciate that when you have movements in the index in the short term, it can create a bit more of the near-term volatility. So it's more pronounced when you've got these high movements. I don't think they're necessarily going to go away. I think that will be an important part of the book going forward, not necessarily changing the component, but I think they're going to be there. But I think it's also about how we think about the longer term how we protect in down cycle conditions as well. So it's really just a bit of longer-term thinking. Now they do reset at the end of each calendar year. So it's not like they're a permanent structure. There is a renegotiation that occurs every year. Do you like to add anything there, David?

No, I mean, effectively, it's a bit of a component of how we hedge the sales book. These are typically contracts that are a lot stickier. There's quality and qualification requirements. And yes, it kind of forms part of how the North American team manage the risk around sales.

Right. And presumably, I mean, if they've set at the end of the calendar year, they'd be well out of the money compared to where spot prices are currently trading.

That's right.

Your next question comes from Owen Birrell with RBC.

I just wanted to ask a question around the $150 million cost reduction program. You provided a good split between, I think, 60% headcount reduction for '27 and then 40% external spend. I just wanted to understand, I guess, on the external spend area, are there any sort of key target areas that are obvious to reduce the cost there? And similarly, with the headcount reduction, if you can provide a bit of color around which divisions or which regions you're expecting to see that cost reduction from the headcount?

So I'll start off with the headcount reductions, and then David can give you a bit of flavor on the external spend. In terms of the headcount reductions, what we've done is basically put in place a 4% headcount reduction across the global portfolio, slightly less than that in Australia just because of the ongoing rounds of optimization that we've been doing over many years now. But broadly, it's about 4%. It's primarily centered around corporate functional and administrative roles. Now there is a number of operational roles in parts of the portfolio where we've gone a bit deeper in terms of uplifting the level of performance. But by and large, what it reflects is a reset of our functional operating model, whereby we've taken the functional teams, which were previously nested within each business unit and each sub-business unit, and we've moved them into global teams. And what that does is drive greater scale and efficiency, better focusing of effort. And it means that we've been able to take out a little bit of duplication that might have occurred over the last couple of years. And yes, so that's probably the best way to explain it, I think. And external spend?

Yes. So that's across a range of areas as we talked about through the FY '25 to '26 walk-through. So probably the largest component actually came from raw materials and IT. Within the SG&A functions, it's really been the opportunity to drive that in a much more coordinated way through having those functions come in into a central area of practice. And then from a raw materials perspective, it's primarily around productivity and efficiency in raw materials utilization, which has enabled the teams to drive an improvement in external spend in that space.

And can I ask just a question on the increase in Middle East costs. You called out sort of fuel and freight. Are you expecting a reversion in some of those costs if we do see a settling of the Middle East issues?

I think there will be some benefit that has to be -- I mean, it has settled a little bit. I mean we've seen it in, obviously, the fuel, the freight rates, raw materials, including paint. The biggest area of heartburn that we've had has been around the aluminum supply. We've now resolved that one. So I think it will come off, and we'll see it principally in those headline numbers around fuel and freight most specifically. But again, inflation is an area that we've obviously got to watch very, very carefully. We're not alone in this. It's probably a bit more pronounced in Australia than elsewhere, but it just goes back to that relentless focus on cost and productivity.

And I know you haven't -- unlike many other companies, you haven't called out that cost inflation impact. Do you have a sense of what that has been in FY '26 and how much it could revert into '27?

Look, I think in terms of the overall impact in FY '26, the Middle East reversion wouldn't be material. I think as Tania has said that we've actually seen -- it caused a lot of challenge around making sure your supply chain was resilient in that space. We had a couple of suppliers who were based in the Middle East that obviously had -- were the apex of challenge for us. We've resolved those. But I'm not expecting that -- that was more ensuring supply as opposed to it being something where I think we get an improvement in price year-on-year.

Okay. Do you mind if I ask a second question just on the sales side. Out of ASP and New Zealand, we noticed a bit of an uplift in the export volumes in the second half. I'm just wondering where are these volumes going? And are these volumes still profitable given some of the trade tensions that we're seeing at the moment?

Yes. The uplift in the second half is pretty much normal seasonality that you see. We often end up with a bit of a stock build in the first half and then a release in the second half. Yes, the -- given all the trade actions that have been incurring globally, you've obviously got the tariff all around the U.S. You've got Europe has put up the tariff wall. So yes, that does dampen overall returns that we earn on the export market. We did deliberately put some slab over into New Zealand. And that was really just backup planning as we start the new electric arc furnace. We go through the transition there. We just wanted to make sure that there was no operational disruptions to our iron and steelmaking. So there's a little bit of extra slab there.

I think, though, what it does underline is, again, the incredible importance in Australia of continuing to grow the domestic franchise, continuing to grow the value-add components in particular. And again, that's why the start-up of Metal Coating Line #7 is just so important to us. We still see ongoing growth in COLORBOND. We still see ongoing growth in TRUECORE and continuing to grow that and reduce over time the reliance on the export market to -- as a relief valve or release valve for the production volumes that we have coming out of the blast furnace is quite important to us.

Your next question comes from Harry Saunders with E&P.

Firstly, just a follow-on from Ramoun's. Just wanted to clarify that $20 million to $30 million quantified about the first half guidance for Australia. Is that across all the impact from the blast furnace and MCL7? And is that sort of expected to be confined largely to the first half? Is the sort of one-off so it should reverse? Like maybe how much of that is that depreciation transitional charge?

No. Sorry. Harry, I was referring to the impacts of cost into inventory through various trials that have been utilized within ASP as part of their ongoing decarbonization work. In terms of transitioning from -- to blast furnace 6 into full ramp-up, that -- we would treat that as FY '27 as largely being that transition year.

Okay. So you're not sort of quantifying how much is sort of one-off across the blast furnace and MCL7?

No, no, not at this point.

Okay. And, yes, maybe just on the working capital outlook given we talked about some potential build of raw materials ahead of the transition there across the first half and the full year?

So yes, look, in terms of work, I think the team has done a good job in terms of managing that in the context of those inventory builds. Again, in terms of the release of that, we would see that coming through in -- towards the end of FY '27 as a release. But the reality is that the -- there will still be a degree of elevated working capital to support the transition of both blast furnace 6 and the EAF through the course of FY '27.

Got it. And maybe just a follow-on, if there's any view in sort of North American steel spreads beyond the first half, I mean where -- I guess, do you eventually see that sort of settling at mid-cycle? And how long do you think this current strength could be sustained? And what do you think are the key drivers behind this strength?

It is an interesting question around North America. I mean, obviously, we have a very positive trade and macro environment that we're looking at, at the moment. More broadly, it's hard to come up with a better place to make and sell steel globally. If you put aside the tariff war, you've got a very large market. It's a very resilient market. We still see healthy demand there. What you have is very strong supply side discipline. It's obviously dominated by electric arc furnaces, so wonderful supply side discipline in terms of the ability to pull back in the face of demand swings. And I think for North Star, obviously, we have a very high-performing asset, probably the highest performing asset in North America.

In terms of how long it sustains for, we can't really control that. What we're focused on is maintaining the performance of North Star and continuing to grow that very valuable asset.

I would say, Harry, what we see at the moment is auto is quite healthy. I was asked previously around the impact of EVs coming out of China. But what we see is pretty robust demand in the U.S. The construction part of the market is reasonably strong. There's quite a bit of demand that's been put in there by data centers. And we know that part of the order book in the BlueScope Buildings area is about 20%, part of their backlog that they have into this half, about 20% of that would be made up by data centers. So we know that data centers is driving a degree of strength into the U.S. demand environment as well.

The next question comes from Lee Power with JPMorgan.

Tania, just on the -- I mean there's been a few questions on it, but the $150 million into one -- into FY '27 just on the cost side. Like where do you think the kind of escalation of conversion and other costs kind of tracking because I think that was $98 million in FY '26. So I'm just trying to work out, you obviously got a lot of cost pieces, but it feels like kind of was probably a little bit overly optimistic into '26. So what are you seeing from an escalation side into '27?

I might give you the escalation question, David.

Yes. So look, in terms of escalation into '27, outside of escalation that we've seen into sort of delaying cost in major projects. Broadly, it's been sort of within sort of more normal usual expectations. So low to mid-single digit across most of the areas of the portfolio. Our team has been doing a particularly good job around sort of management of energy costs we've largely reset to market in that space. So it's not the same degree of impacts that we've seen over the last couple of years.

Okay. And then the -- your comments just then, Tania, around the demand and supply outlook in the U.S. So clearly, it's like a very strong time at the moment. I mean you're still running a $750 spread in your assumptions for North Star, so that's still down from kind of spot levels? Is it more on the supply side or the demand side that you think drives that reversion?

It's probably a little bit of both, I guess. I mean, we simply take the standard formula. What I would say is that demand is really quite resilient. I think the other factor to note is that the service centers, they don't have a lot of inventories at the moment. They're relatively light on inventories. Is there anything you want to add?

No, look, I think the reality is it's largely a contract market fundamentally at the moment. There's a test that people have contracted volumes, they're taking it. And there's not a lot in the spot. And so I think realistically, there's an element of lag that's playing into that. And ultimately, as we go through sort of recontracting, you'll see that play into price, assuming that the spreads remain where they are.

And we are also watching the new supply that's coming online. Of course, the U.S. continues to be structurally short. We know that West Virginia will come online over the next 2 years. We're watching that very carefully. But broadly speaking, I think it's quite a positive demand environment.

Okay. And then just one final one, if I can. Just on BCP, it seems like you've made some decent traction there. Like how do we think about that in the U.S. going forward?

Yes. So the ambition remains absolutely undiminished, Lee. We -- I think we've made no secret of the fact that we're a couple of years behind where we wanted to be originally. But we still see a very large market opportunity for the value proposition and capability that we have. We have a relatively new management team. And whilst they might be new to BlueScope, they have deep experience in the industry. They're doing a lot of heavy lifting on improving the quality of the assets, the manufacturing performance and the lead times and basically bringing the lines up to the standard of BlueScope.

And so we're making sure that we're competitive to the tolling alternative, still very focused on bringing in the single bill option and ultimately, the branded offer. So we can still see the pathway there. We still think we still are targeting an appropriate return on the original invested capital. But yes, we are a couple of years behind, but we're making good progress. I spent a lot of time engaging with the BCP team and I'm very confident in that team, and I can see the progress that's being made in the business.

Your next question comes from Peter Steyn with Macquarie.

I was going to ask along the same lines as Lee. I was just curious in the fullness of time, what would your broad expectation be presuming you're still going to make midstream investments?

Yes. It's an interesting question, Pete, as to whether or not you actually need to integrate from the paint lines back through to metal coating and cold rolling and ultimately to North Star. I think it's an option that sits there. I don't -- I think there's a different set of mix that exist in the U.S., which may mean that, that's ultimately not required. I think that we can have a highly competitive business without necessarily needing to be fully integrated, but it's a question that we will continue to test. What we're very focused on right now is uplifting the performance of BCP and making sure it is competitive, again, in the tolling market and then ultimately in the single bill and ultimately the branded market. So I think it's an interesting question that sits there, Pete.

Got you. And then maybe just on the property side of things. Just a perspective on how you're thinking about balance sheet utilization in the context of that business. Do you generally see it as only a sale or how much of -- or is there an opportunity for on-balance sheet development to maximize value? And if so, which properties are you most likely to go down that route with?

Yes. Thanks, Peter. Look, in terms of how we look to approach that. But the most important thing for us is to sort of remove any of the uncertainties that kind of bring a discount to that property value. That's why the overall rezoning at Port Kembla is a huge benefit to us. And to the degree that we need to utilize our balance sheet to help support that, we obviously can. But I'd say that the kind of -- there's many ways that we can sort of look to ultimately realize or monetize the opportunity that sits there. And it wouldn't be kind of the first quarter call to utilize our balance sheet to be the primary supplier into that space where we can leverage off capability elsewhere.

So one could think about some specific partnerships, I guess...

Yes, exactly. You've seen us, obviously, where it's already effectively at full value like our residential property at West Dapto. That probably just lends itself towards a straight sale. There's not much point kind of partnering in that space. Where there's still sort of more opportunity for value uplift, that's where we will consider the partnership opportunities.

And if I could, just a little bit of an extension on the energy option PK. Could you maybe just color that in ever so slightly, just to understand better what your thought process there is?

So we're very mindful that with the land, the surplus land that sits around the manufacturing operations. We're very focused on how we can drive synergy for our existing operations. So we've been doing quite a bit of exclusive work around energy precincts, and that could form a variety of options, including, for example, batteries. We're also very mindful with Port Kembla of the long-term energy infrastructure that would be required for an eventual change in steelmaking. So I'm obviously thinking longer term here. So just in terms of the infrastructure that would need to be put in place, the easements that need to be preserved, that's all part of our longer-term planning around property portfolio.

Your next question comes from Scott Ryall with Rimor Equity Research.

Just 2 quick ones, hopefully. MCL7, so you've talked about now being in ramp over the course of the next 6 months or so. I guess what I'm wondering here is have you felt constrained in TRUECORE and COLORBOND steel volumes over the last 12 months? And I guess what I'm really asking, is there a chance of a nonlinear ramp-up relative to the targets you put out on Slide 9?

Yes. The challenges that we've had have been going on for a while over the last couple of years, and it became extremely pronounced during the COVID period. And it really -- you actually need to almost break it down to construction week -- production weeks. And we have experienced periodic shortfalls in supply. And what it does is create a not great customer experience. And so we're very, very focused on making sure that we've got the volumes there as and when our customers need them. So it's more about addressing the periodic shortfalls that do occur that create frustration for our customers.

But more broadly, we see good upside potential -- more than potential. We see the upside coming with continued growth in TRUECORE. Now we know that metal framing has grown across the Australian residential space. It's sitting just below 20%. We would have the lion's share of that. When you think about where it was 10 years ago, it was sub-10%. So we've made good inroads. I see no reason why we can't go significantly higher. I also see the opportunity with COLORBOND and continuing to grow there, not just in the roofing space but walling.

One of the things that we didn't actually announce in this pack because it came slightly too late, but we've also just commissioned the new digital print capability down at Western Port in Victoria. And that's a very exciting addition to the portfolio, and we think that's probably going to play an important part in the residential space, including walling applications. So there's a lot of exciting stuff going on in terms of the growth more broadly of the metal coated product.

Okay. Great. And my second one, obviously, a few months ago, you pulled out of the Whyalla process in terms of -- well, pulled out -- obviously, you're not filling it. I guess what I'm wondering, you've got -- that has gone -- you're obviously ramping up your capital management activities, whether it's reactive or proactive. I'm not really looking for a view on that so much as could you just make sure -- just describe how you make sure you don't miss out on valuable medium-term investment opportunities in the context of trying to reward shareholders for, as you say, an extended period of CapEx?

Yes. Yes. I think there's probably 2 questions in there. So firstly, on Whyalla. We've -- the reason why we're primarily looking at Whyalla is because of the very high-grade magnetite ores that are sitting there and whether or not that provides an opportunity for Port Kembla down the track. We remain interested in it. The consortium remains firm. We did not progress into the current phase, but we're obviously sitting there with our right of last offer. We're watching the process with interest, but I've been very consistent that whatever it would absolutely have to make sense for shareholders. And if we can't get that to work, then we'll continue looking at other options.

Now just in terms of the ramping up in capital management, we've been engaged in a very extensive investment program for quite a number of years now. And so that obviously puts a degree of constraint in terms of the shareholder returns. What we're seeing now is we've passed through peak CapEx. We've now got the benefit of the improved cash flows now and also coming through in the next couple of years. So it's a deliberate design to ramp up the shareholder returns. We're not constraining ongoing growth opportunities.

I think David mentioned in a couple of his earlier comments that we generally set aside $100 million to $200 million for growth opportunities on an ongoing basis outside of the major projects. There are some ongoing opportunities that we have in North America. We're looking at some potential options around BlueScope Buildings. We've got some capital-light options setting up in Asia. And we've got some ongoing opportunity for growth in Australia, which is not necessarily CapEx related. It's more around how we continue to grow our market share. So I don't see that we're in any way compromising our ability to grow. It's really about resetting the balance between investment spend and reallocation of capital to -- or returns to shareholders.

Your next question comes from Keith Chau with MST Marquee.

Tania, maybe a first question for you on capital structure and capital returns. Given that franking credits at the moment is not necessarily the most efficient way to return capital via special dividend. So the buyback, I think, has been extended to the end of August 2027 now. Just want to be clear, what are the factors that prevent BlueScope from buying back shares on market outside of corporate activity potentially going on in the background? Or a view on internal valuation. Is there something else that we should consider when assessing the prospects of that buyback being active?

Thanks, Keith. Look, the buyback is always an option. It's sitting there for us to use. The decision to go with the special dividend has a very simple premise. It is the most straightforward and clear way of delivering value directly to our shareholders. It's highly visible. And therefore, that's the basis that we've gone with for this particular half. We don't want to be accused of doing anything inappropriate. So obviously, the buyback was inactive for a period of time whilst that corporate activity played out in the year. But again, it's also reinforced to us the need to be very clear about the value that we are delivering to shareholders.

Okay. And maybe a follow-up on to that, Tania. Is there anything at the moment that constrains you from reactivating that buyback?

No, there's nothing that would cause us to stop reactivating the buyback.

Okay. And then second one, I know there have been quite a few questions been asked on blast furnace 6 transition and also MCL 7. Maybe just put it simplistically, when is MCL 7 expected to be fully commissioned and producing at capacity -- or sorry, producing at a level that you're happy with from an efficiency standpoint? And then the transition from blast furnace 6, how far into FY '28 could that persist?

So MCL 7, I think the fastest that we've actually done in terms of ramping up a metal coating line is about 3 months. It can take a bit longer. It can take 3, 4, 5 months. Having said that, I've been hugely impressed with the commissioning stats that we're seeing. I mean, this really is a state-of-the-art facility, but it is early days. So across this half, basically, and then we should be hitting our straps into the next half.

In terms of the blast furnace 6 transition, so what will occur there is that in the next half, so in that January to June period, that's when we'll see the cutover from #5 to #6. We -- blast furnace 5, I think we mentioned blast furnace 5, which is the current operational blast furnace, is running extremely well for where it is in its campaign life. So we've actually got full flexibility in terms of the timing of the cutover. I would like it to be earlier in the half, but we just need to -- basically, we just need to do the cutover as and when we're ready.

If the cutover was to sort of occur, if it looked like it was occurring at the end of December, for example, we would probably push it out into January just because it's important that the teams get a rest. They've obviously been at this project for a number of years now. It's a very large project. We've got around 800 people on site. So it's very complex. But I would think some point, early-ish in the next half is what we're targeting for the cutover. That cutover, by the way, will generally take about a month in terms of ramping down #5 and ramping up #6.

Okay. And then the last one, maybe for David. There's been a lot of discussions on cost out today, but seemingly, the corporate cost guidance for the next half, at least, was higher than expectations. David, is there anything to call out on corporate costs that have ramped over the last period? And should we assume that the run rate for the first half of FY '27 is something that builds from next half onwards?

Yes. No. So primarily, the main piece there is the investment in property capability is sitting within that corporate number. So kind of like-for-like, it's actually a reduction in corporate costs, Keith. But primarily, what's sitting in there is effectively the build of property capability to drive the acceleration that Tania was referring to.

There's a little bit of tech spend in there as well. That change in the accounting standard obviously means that tech spend now goes from CapEx to OpEx. And because of the change in our functional operating model in the first instance, we've got a little bit of cost, I'm going to call it, $5 million to $10 million that's sitting in that corporate cost that will actually end up being reallocated out to the businesses. So just that functional model change has probably had a bit of an impact as well.

Okay. So the go-forward level on a half yearly basis is whatever the guidance was for first half FY '27, less the $5 million to $10 million going back into the divisions?

That's right.

Again, depending on the level of property activity. Yes.

Yes. And probably just for complete clarity, Keith, we haven't incorporated any sort of property realizations in guidance, right? We'll do that if we're reasonably proximate.

Your next question comes from Paul Young with Goldman Sachs.

First question, just to reflect on, I guess, the last 6 months and the approach from Steel Dynamics and also 7. And looking at your response and today with the announcement of $3 planned on of capital returns for next year, David, can I just look at the moving parts around your forecast operating cash flow for next calendar year, you forecast CapEx and looking at effectively what the implied free cash flow is, I mean, is it basically the $3 imply that you're going to pay out around 100% of free cash flow when you look at your scenarios?

Yes. So in terms of CapEx for next year, we've -- effectively, that's just over $1 billion, which largely reflects some of the delay and increase from the major projects flowing into FY '27. A bit over $600 million of that is expected in the first half of FY '27. Ultimately, as I said, we will have a minimum of 75% of cash flow going back to shareholders. So ultimately, that kind of sense the base. And depending on how we're seeing the sort of outlook more broadly, we'll take a view as to whether we sort of increase that level.

Okay. And then a question maybe for you, Tania, just when you look at the portfolio and again, your response to -- from that approach and you're doing everything you can on the cost, that cost out is not easy. I think the $150 million represents circa 3% of your $5 billion annual cost base when you exclude raw materials, but that program is going quite well. If you look at the noncore assets you sold, you sold India for a decent price above relative to book value. When you look at the portfolio, is there anything in the portfolio that you look at and go, well, there's ongoing opportunities to monetize. And maybe calling out, for example, China, where the carrying value halves and it sort of underperformed in the period or anything in the U.S. with respect to BlueScope properties. And just stepping back, when you look at the portfolio, is there anything that you look at and go, well, we continue to see in addition to cost down opportunity to unlock value for shareholders?

Yes. It's a good question, Paul. It's something that we engage on a very -- on a regular basis. And obviously, the India example is the most prominent one. We have already wound down the properties business in the U.S. So we've released pretty much now all of the cash flows. There's one project to go, I'm sorry, in the BlueScope Properties Group in the U.S. When I look across the portfolio, I -- at the moment, I see a strategic rationale for all of the assets in the portfolio.

What I've been particularly impressed with, I think the real gem of this year's performance has actually been our Southeast Asian business. Often, we get questions around the value of that business. And I think the efforts that we've been putting into that business over the decades are now finally starting to shine through. And I think it's got a big role to play in the portfolio going forward.

The China business is an interesting one. It's an intensely competitive market. It's a very weak macro environment. There's a lot of very exciting things going on in China. It's extremely innovative. There's a lot of IP sitting in China. We think it's a good business to have. It's obviously impacted in the last half with the cyclical impacts. I mean it is quite extreme in China in terms of the seasonality, I should say. We still think it's a good business. We think there's a lot of upside to be had with that business. So we're very keen to retain that business.

And I think more broadly, when I look at the U.S., again, the ambition with the BCP business remains absolutely undiminished. Again, we are 2 years behind where we wanted to be, but we see a very large market that we think that we can adapt to have a value proposition that will look a little bit different to Australia, will look a little bit different to New Zealand. It will look different to what we do in Asia. It will be adapted for that environment, but we see -- we believe that there is significant upside opportunity there.

So we're very comfortable with the set of assets that we have. I think I'd earlier called out the performance of the pre-engineered buildings business in the U.S. It's been performing at a very strong level. They've put a lot of time and attention into how they manage their backlog and their margins. They've got a good, healthy market that they're dealing with. So we're very comfortable with the portfolio as it currently stands.

Yes, that's clear, Tania. Can I then ask just a quick comment on Australian demand at the moment? I mean volumes were good in the half. Throughput volumes were good. I'm hearing about a COLORBOND price increase possibly flowing through in the December half. A&A volumes and just work on hand across the industry is strong exiting the half. And then we've got obviously the uncertainty around the new Australian government policy with respect to negative gearing in housing. Your sales teams generally have a sort of 1- to 3-month sort of view on order books on COLORBOND here domestically. What are they seeing on the ground, particularly in the last couple of months?

Yes. Good, healthy, solid demand. It's been quite resilient, probably more than expected. I think the approvals have continued to trend upwards. I think what we do see, Paul, is a bit of a 2-speed economy in the sense that Queensland and WA are performing very, very strongly. Melbourne and Sydney are a little bit more challenged, but I think that provides us upside opportunity in terms of the growth that we're going to see there.

When I look more broadly, industrial commercial is also quite positive. I think the outlook for infrastructure is also quite positive. There's a bit of strength in demand actually coming from data centers. Now this one, we find it difficult to quantify, but we do know that there's COLORBOND going in as roofing and walling part of insulated metal panels. We also know there's lot of beams going in there. So we see there's reasonable strength in demand. What we also see in the distribution channel is a fair degree of resilience. I don't think customers are sitting on a lot of inventory. I think they're buying very cautiously. But I think we've been impressed with the way that underlying demand has actually held up.

In terms of the government changes, I find it an interesting one. I mean I'm sure it will have some positive impact. But at the end of the day, it doesn't really alleviate the supply problem. And what really needs to happen here is we need the land to be freed up, the approvals to occur. We need the infrastructure to be put in place. Trade availability is a critical issue. And I think until we address what sits at the fundamental heart of supply, I think it's going to be a little bit of a challenge. I mean at the end of the day, we've got a structural shortfall in housing. And the more that we can do on the supply side levers, the better we will be.

Maybe another point to add, Paul, is obviously, we've got a reasonable exposure to A&A and those budget changes really don't have an impact in that space.

Yes. I notice that line is trending up. Okay. That's all positive.

The next question comes from Chen Jiang with Bank of America. .

Some of my questions have been asked. Just a few follow-ups, if I can. Firstly, on the Australia business, you mentioned the demand is strong in Australia, but in contrast, the Asia steel spread remains subdued and actually the spot spread has been declining and China net steel exports remain elevated to the rest of countries. So I'm just wondering for the TRUECORE and the COLORBOND volume growth, is that demand or strong demand across all of your steel products or just for the and COLORBOND like value-added products. I guess I'm just trying to understand the volume growth in the TRUECORE and the value-added. Is that driven by the demand -- strong demand in Australia or driven by like you are growing the market share like you mentioned over your competitors? I have a few after this.

Yes, it's a good question, Chen. Look, I would say that we have absolutely been growing share in TRUECORE and COLORBOND. But I think we've been -- the demand is reasonably strong across all of our steel products. I don't think there's any areas of particular weakness that we would see. But certainly, some of the added strength that we would see in TRUECORE and CORBOND would be around that share growth. And it goes again to the strategy that we've been driving for many years now, which is make sure we grow the domestic market, make sure we grow the value-add component of the domestic market, make sure that we have a quality product, a premium branded product that we support through the channel, including pulling through the end demand by the work that we do in marketing, advertising, et cetera. So there's a big, extensive program that sits behind all of that.

Sure. Is that across all your products? Or just for the TRUECORE and COLORBOND, you have strong demand?

So demand is reasonably solid across all products, all product segments. There's no particular areas of weakness that we're seeing.

Okay. Right. Got it. That's good to know. And then for the blast furnace transition to your newly relined blast furnace 6, I know a lot of questions have been asked. But I was wondering how long is the transition period? I understand you mentioned the cutover is next half and then about a month to move to blast furnace 6. I'm just wondering, generally speaking, I mean, you haven't done -- I mean, BlueScope haven't done blast furnace transition for a while. So are you expecting any volume impact and -- as well as cost for -- are you running 2 blast furnaces at the same time until your newly relined is running smoothly? How should we think about that beyond the first half FY '27?

Yes. No, it's a good question. So I think the last time we did a reline was back in 2009, and that was when we had a 2 blast furnace situation. And so back then, what you have to do is go like mad and reline the furnace at pace because you're obviously out of -- you're not producing and you obviously need that volume. Now since that time, we've shut down one of the blast furnaces. So blast furnace 6 has actually been sitting there as a mothballed blast furnace, which we've sort of kept carefully under wraps. And it's that blast furnace and the broader precinct around blast furnace 6 that we've been doing all of the upgrade work on.

So this is -- to be fair, it's not just relining the blast furnace itself -- the furnace proper. There is a huge amount of work that's been going into the whole infrastructure that sits around that facility. We can no longer run dual blast furnaces for any extended period of time. We simply don't have the infrastructure in place to do that. So what we've been doing -- we'll be doing is building stock ahead of the transition. And so that's some of the disruptions that you'll sort of see being impacted in the numbers right now. So we build stock, and then we will basically take down -- we'll run down #5 blast furnace. We'll ramp up #6. That will occur over the space about a month, all being well. And then we'll basically just do the full cutover and #5 will then become mothballed.

Right. And that is going to happen in second half FY '27, like how you are going to wind down blast furnace 5 and then ramping up blast furnace 6? And I guess that 1 month gives you enough time to commission BF6 from an engineering perspective smoothly.

Yes, yes, yes. So they'll do all of the prework that they can, and then they'll basically blow in the new -- the relined blast furnace. Hopefully, it will occur early in the half, although there's a lot of moving parts. So what we'll do in November at the AGM is we'll give an update then as to the timetable. We'll have a much clearer view then on the exact timetable for the transition.

That will be helpful. Can I squeeze in last question about your U.S. business, the BCP. BCP guided 1/3 higher, just on a high level -- 1/3 higher than the second half. Just on a high level, I'm wondering how much is due to your turnaround strategy? Are you gaining market share in volume? And how much is due to better demand in U.S.? Well, you mentioned a couple of times that the demand is solid in U.S., which probably led to better coating pricing or coating margin. I'm just trying to think how you think about your turnaround strategy to continue? Or it's just overall, the industry, the U.S. steel industry is sorted?

Just to be clear, so the reporting segment and the outlook segment is for BCPNA. It's not just BCP. So there's 3 businesses that sit within that. And there's a broadly equal uplift across each component of those businesses. So that includes the buildings business, BlueScope Buildings, so Butler and Varco Pruden. It's the Steelscape business, Steelscape ASC that sits on the West Coast and the BCP business. And the BCP business, that's much more around operational improvements in the business. It's not off the back of growing market share. It's fundamentally improving the performance of the underlying assets.

Your next question comes from Brook Campbell-Crawford with Barrenjoey.

Just on the U.S. pricing environment, you talked about fixed price contracts, which is helpful. But just on the shorter term and almost spot volume, I guess, seems that are on a 1-month lag. How are you seeing the sort of discounts to the benchmarks playing out? Is it tightening up through the course of this year and at the moment, just given, I guess, service center is pretty low and lead times are sort of ticking up a bit. Any commentary around that would be good.

Thanks, Brook. What I'd say is it's stable. It's in line with longer-term history. I think the discounts elevate during uncertain times, but there's nothing really uncertain around the current strong prices. So I would say relatively stable, Brook.

Okay. That's helpful. And Tania, maybe just a follow-up. You mentioned earlier on some options for growth in the U.S. buildings business and in Asia capacity as well. You mentioned that in response to another analyst's question. Do you mind just providing a little bit of color on a few of those would be good.

We just think there's some relatively low capital options to free up a bit more capacity and get some more throughput through our facilities in North America at buildings. So we're actively looking at some options there. When I look at Asia, when I look at the performance of those businesses there, we've actually got one metal coating line that's mothballed, another one that's reasonably inactive. It wouldn't take much effort to restart those metal coating lines. We've also got some in-line painting capability that we're thinking about doing some modifications to. And again, that gives us some relatively low capital opportunities to continue to grow that business. So again, I think that business where we've got a fantastic position across every major Southeast Asian economy. We've been at it for decades. We understand what it takes to be successful there. And all of those items that I mentioned, they're all within that capital envelope that David mentioned.

There are no further questions at this time. I'll now hand back to Tania Archibald for closing remarks.

Thank you, everyone, for joining us today. I know you've got very busy days, and we look forward to catching up with you all individually over the coming week.

Good morning, everyone, and thank you for joining us. I'm Tania Archibald, BlueScope's Managing Director and Chief Executive Officer. And with me today is David Fallu, our Chief Financial Officer. Together, we'll take you through our results materials before we take your questions.

I'd like to begin by acknowledging the traditional custodians of the various lands on which we meet and work today and pay my respects to elders past and present. Before I go any further, I need to address the most important issue for our company. In November, a young contractor, Jack McGrath, tragically lost his life whilst working on the #6 blast furnace reline project at Port Kembla. The impact has been profound. A family lost someone they loved and the BlueScope community lost a colleague. I want to acknowledge how deeply this has affected everyone, our employees, our contractor partners and the local community.

The Safe Work New South Wales investigation into the incident is continuing, and we're cooperating fully. I won't comment further on the specifics. But what I will say is this, nothing matters more than the safety of our people. Every person who comes to work at a BlueScope site has the right to go home safely. That is nonnegotiable. Our global safety refocus program continues and further improving our safety performance is my highest priority.

Before I run through results, let me address the recent acquisition proposal. As I said 2 weeks ago, the Board rejected that proposal, and I supported that rejection. The Board remains open to any proposal that genuinely reflects BlueScope's fundamental value, but we are not sitting here waiting. We're getting on the front foot to unlock BlueScope's value.

Two weeks ago, I laid out my agenda as BlueScope transitions into a new era. Let me bring you up to date on the progress and where I'm leading the company. BlueScope is a manufacturer built with strength and built to win. We're now approaching an inflection point as our investment phase ramps down and we ramp up delivery of value to our shareholders. To do this, we're becoming simpler, leaner and more agile. We're accelerating the realization of value from our 1,200-hectare surplus land portfolio. We're increasing our shareholder distribution target to 75% of free cash flow, and we're planning to deliver $3 per share returns this calendar year. Shareholders have been patient through our investment phase. That patience is now being rewarded.

Turning now to first half results. BlueScope delivered underlying EBIT of $558 million in the first half, up $249 million on the prior corresponding period. This result demonstrates the strength and diversity of our portfolio. We achieved solid profitability despite historically low Asian steel spreads. ROIC remained stable at 8.1% as we progress our major capital investment program. Reported net profit after tax was $391 million, and we finished the half with net debt of just $2 million, essentially an ungeared balance sheet. On capital management, and I'll come back to this in detail. As I noted earlier, we're planning to deliver $3 per share in shareholder returns in the 2026 calendar year.

Looking ahead to the second half, we expect underlying EBIT in the range of $620 million to $700 million. The improvement on 1 half FY '26 is on the back of stronger U.S. steel spreads and improved sales volumes, which offset the impacts from softer Asian spreads and higher foreign exchange rates. I'd also like to call out that our guidance is predicated on a $0.70 FX rate. As always, these expectations are subject to spread, foreign exchange and market conditions. As I said earlier, BlueScope is a manufacturer built with strength and built to win. We have high-quality assets, leading brands and exceptional people with deep steelmaking and manufacturing skills. Our job is to accelerate execution and ensure we capture and deliver the full value of what we've built.

We're organizing our work around 3 core themes. First, customer value creation. Customers are at the heart of everything we do, our products, our service, technical capability and reliability. We must continue to earn our customers' trust and repeat business. Second, operational excellence. We'll continue to focus on productivity at every level of the organization, revenue, manufacturing, functions, capital efficiency, every dollar counts. Third, shareholder value delivery. As we move from investment to returns, we're strengthening cash generation, putting our resilient balance sheet to work and rebasing shareholder returns substantially higher.

Our major project pipeline is nearing completion, and this is what sets us up for the future. The North Star debottlenecking is progressing well across all 9 project components. Now this will unlock an additional 300,000 tonnes per annum of capacity at our best-in-class mini mill. The new Western Sydney metal coating line, MTL 7, is nearing completion following weather delays with start-up expected around the middle of the year. The new metal coating line adds 240,000 tonnes of coating capacity to support continued strong demand growth for COLORBOND and TRUECORE Steel. The Port Kembla plate mill upgrades are on track and will enhance our product and service quality, enabling us to provide our customers the product specifications and quality they demand.

The New Zealand electric arc furnace is in cold commissioning with hot commissioning expected in the coming months. The EAF will transform the operating model for New Zealand, improving demand response capability and lowering costs. The #6 blast furnace reline and upgrade is progressing well. Outperformance of #5 blast furnace provides us with strong commissioning flexibility targeted for the second half of this calendar year. And we're getting ourselves ready for the future. The NeoSmelt joint venture, which BlueScope is leading, aims to develop the technology that allows Pilbara iron ore to be converted into molten iron using lower emissions direct reduced iron technology rather than the traditional blast furnace route. The feasibility study for the project is progressing well.

This slide captures the core of our value proposition. We have high-quality assets, a resilient business model and significant upside. There are 5 key drivers of our accelerated value delivery across growth, operational excellence, land realization and shareholder returns. This is really what sets us up for the future. Let me take you through each of these value drivers. Our growth initiatives are targeting a $500 million EBIT uplift by 2030. In North America, we're targeting more than $200 million in earnings improvement. And as I mentioned, the North Star debottlenecking is well underway, and we're progressing our coated and painted strategy, including the BCP turnaround.

In Australia, we're targeting more than $125 million in earnings improvement. COLORBOND and TRUECORE steel demand continues to grow and will be supported by the new capacity for Metal Coating Line #7. This is consistent with our broader strategy of premium and branded products. And also, just let me make the point that this year marks the 60th anniversary of COLORBOND and nearly 100 years of steelmaking at Port Kembla. In Asia and New Zealand, we're targeting around $150 million of improvement, particularly through value-added products. And in New Zealand, the EAF model creates new opportunities as it's commissioned. Our existing $200 million cost and productivity program is progressing well. We've now delivered $190 million of annualized benefit, up from $130 million at the end of FY '25. And you can see the breakdown of the cost initiatives for the half just gone on the pie chart.

Our new $150 million cost reduction program is now underway, and this is about creating a simpler, leaner, more agile BlueScope. We're streamlining leadership teams and functional areas and rationalizing activities across the business. The full set of initiatives are targeted to be in place by 30 June this year with the full run rate delivered in FY '27. Importantly, this work provides a platform for further simplification and productivity improvements. Now on to property. I want to make the point that our surplus land portfolio of around 1,200 hectares is in sought-after industrial locations with port logistics and energy infrastructure. And the majority of the land is already appropriately zoned and able to be developed. We're accelerating realization through a dual work stream approach, firstly, by accelerating the early wins. In the first half of this year, we agreed to sell 33 hectares of West Dapto for $76 million, which will deliver more than 350 residential lots.

We've also put in place a ground lease at Glenbrook in New Zealand for a 100-megawatt battery storage facility. And we're now commencing a process for a 65-hectare logistics hub at Western Port. This is already appropriately zoned with attractive logistics infrastructure, and we're underway in our process to find a development partner. In parallel, our second work stream, we're advancing broader partnership structures, including assessing a master developer partnership across the balance of the surplus land portfolio. This brings me to capital management and shareholder returns. BlueScope's more resilient earnings base and stronger cash flows allows for an evolution of the settings in our financial framework.

We're putting the balance sheet to work and rebasing shareholder returns substantially higher. We'll now target net debt of up to $1.5 billion with the ability to move above that if needed. And we've revised the shareholder distribution target to at least 75% of free cash flow, up from 50% previously. That means we're enabling strong returns on an ongoing basis. For this calendar year, we're planning to distribute $3 per share. This includes the $1 per share special dividend announced in January, $1.30 annual ordinary dividend level, starting with a $0.65 per share interim dividend in the first half. And this will then be topped up with a $310 million on-market buyback program or other return method equivalent to $0.70 per share.

I'll now hand over to David Fallu to take you through the regional performance and detailed financials. David?

Thanks, Tania, and good morning, everyone. Before running through the detail of the business unit performance, you can see from an overall group perspective, the benefit of our diversified portfolio, placing us in a strong position, both financially and operationally. That's also thanks in no small part to the incredible efforts of all our people across the regions, which continues every day. Turning to ASP. Australia delivered underlying EBIT of $122 million, down from $130 million in the prior half. The result reflects softer realized spreads on lower domestic and export pricing with benchmark Asian steel spreads remaining depressed through the half on the back of export levels from China.

In this environment, we were still able to grow domestic dispatches, increasing to 1.1 million tonnes, largely driven by residential and nonresidential construction. COLORBOND steel sales performed well, remaining robust at 322,000 tonnes. Cost escalation was offset by improvement initiatives and supported by a one-off $22 million retrospective tax credit. Moving to construction demand. Both dwelling and non-dwelling now represent over 3/4 of our domestic volumes. We continue to see strong demand in alterations and additions and the nonresidential pipeline across a range of industrial uses remains solid. We've spoken previously about the importance of mix and our strategy to shift more volume to domestic sales and more of those sales towards value-added and premium branded products. And you can see we've continued to make progress in this respect.

Pleasingly, the long-term trend is apparent, particularly with COLORBOND steel volumes, which are up 25% on the first half of 2016 and TRUECORE steel is up 155% over the same period. And these have been critical to supporting ASP's earnings at low spread levels. North America showed the strength of this market and our strategic position within it, with underlying EBIT of $447 million, up $115 million on the prior half. North Star delivered EBIT of $321 million on significantly stronger realized spreads. The business again operated at 100% utilization of available capacity and achieved a new daily production record during the half as debottlenecking projects increased capacity. Buildings and Coated Products North America delivered EBIT of $129 million.

BlueScope Buildings improved materially on higher volumes. BCP's performance improved as turnaround efforts continue. However, it remains loss-making in line with expectations. The U.S. economy is steady with resilient consumer activity and key end markets showing demand at healthy levels. Nonresidential construction is plateauing near historically elevated levels. Auto demand remains solid and manufacturing indicators are showing positive signs.

Turning to Asia. We delivered underlying EBIT of $97 million, up $27 million on the prior half. The stronger result was driven by improved cost performance and effective pricing management in Southeast Asia, combined with higher premium volumes across the region. Pleasingly, this performance was broadly based across our geographies with improved performance in Indonesia, Malaysia and Vietnam and continued strong performance in Thailand. China's results were higher on typical seasonality, although softer than the prior corresponding period given China's soft domestic economic conditions. And on the 31st of December, we completed the sale of our 50% interest in Tata BlueScope Steel to our joint venture partner, successfully concluding our investment in this region. New Zealand and Pacific Islands recorded an underlying EBIT loss of $18 million.

Performance was impacted by the EAF transition, including increased raw material consumption and stock build activity to cover commissioning. Electricity costs remained elevated, which will be addressed once the EAF is operational with the first power contract, which commenced in December this year. Domestic dispatches were stable as macroeconomic conditions remain soft. Pleasingly, we've seen a similar dynamic to what we see in Australia with an improved mix of value-added product sales, particularly the likes of COLORSTEEL.

Turning to group EBIT variance. The slide shows the key drivers for our first half result compared to both prior corresponding period and the prior half. Both comparisons show similar dynamics with stronger spreads, particularly in the U.S., improved volumes and lower conversion costs, including from our cost and productivity program. Looking now to the second half outlook across the regions. North America is expected to deliver a result approximately 15% up on the first half of FY '26, largely on the benefit of higher spreads at North Star. Australia is expected to deliver a lower result against a backdrop of challenging regional spreads and nonrepeat one-off items. Asia is expected to deliver a softer result on typical seasonality with Chinese New Year, and we expect New Zealand will return to profitability as the EAF is brought online.

Corporate costs are expected to be the same, noting the West Dapto sale now sits separate from ASP in this area of our reporting. Now to the financial framework elements. Our financial framework is designed to drive performance and disciplined capital allocation. This has been critical during a unique period of capital investment. As we now have line of sight to the conclusion of this CapEx program, we have the opportunity to adjust settings with a shift to substantially higher cash flow and shareholder returns. On returns, we're targeting ROIC above our cost of capital through the cycle and maximizing cash generation. Group ROIC has improved to 8.1% with North America at 13.6% and Asia at 17.5%. Cash flows are lower, reflecting the capital investment program, which is beginning to roll off. From a balance sheet perspective, it remains robust to support investment and returns.

We will now target up to $1.5 billion in net debt, up from the previous $400 million to $800 million range. This reflects our confidence in the earnings base and cash generation of the business. At the half, net debt was just $2 million with liquidity of approximately $3.2 billion. As Tania noted, on our major project pipeline, we are investing in our business to deliver sustainable earnings and growth. Capital expenditure was $681 million in the half as we commence -- as we progress our major projects. You can see CapEx peaking for the full year this year and stepping down in the first half of FY '27 as these projects complete.

As flagged earlier, on capital management, we're rebasing shareholder returns substantially higher, commencing with $3 per share in the calendar year for 2026 and targeting at least 75% of free cash flow to shareholders going forward. As you can see on the slide, this is a substantial step-up in returns and will deliver overall distributions of more than $1.3 billion to shareholders in the 2026 calendar year, with the expectation for an ongoing higher level of shareholder returns moving forward.

And with that, I'll hand back to Tania, and we'll be here for Q&A at the end.

Thank you, David. Before we close, let me thank Mark Vassella for building the foundation for BlueScope's new era. His exceptional leadership over the past decade leaves BlueScope in outstanding shape with a transformed portfolio, a robust balance sheet and a clear strategy for growth. I'm honored to build on that foundation. I'd now like to summarize our presentation this morning. We're approaching an inflection point at BlueScope. The investment phase is ramping down and delivery of value to shareholders is ramping up. BlueScope is becoming simpler, leaner and more agile. And we're accelerating the realization of value from our 1,200-hectare surplus land portfolio.

As a result, we're increasing our shareholder distribution target to 75% of free cash flow, starting with a plan to deliver $3 per share in returns this calendar year. This really is a new era for BlueScope, and we've only just started.

We'll now open up for questions.

[Operator Instructions]

Your first question comes from Ramoun Lazar from Jefferies.

Just a couple of questions for me. Just maybe starting off with ASP and that result in the first half. I think on an underlying basis, it looks about $100 million of EBIT ex GST benefits versus the $130 million in the June half of last year. Spreads were pretty similar around that $200 a tonne level and domestic volumes are also pretty similar. Just wondering what's the -- what are you seeing there that's driving that step down in the earnings sequentially? And then obviously, there's a weaker guide into the second half. Just keen to get a bit of color on what you're seeing in ASP a bit more.

Ramoun, nice to chat. The -- I think fundamentally, it's the macro environment that we're dealing with, and it's fundamentally having pressure on prices. And it goes back to the point that we've made around very large amounts of product coming out of China, exports coming out of China. Normally, you would see something like 50 million, 60 million tonnes coming out on export markets. I think we're now well north of 120 million tonnes. That ongoing pressure, which has been there for a couple of years now, it has a fairly significant impact. on the environment, just the general environment that we're operating in. I should also point out there's an element of impact to export prices that we can also achieve, and it goes back to the same issue.

So I actually think if you put it in context, the Australian performance has been outstanding because to be at bottom cycle spreads for such an extended period of time and still maintain the level of profitability that we have is a great result.

Yes. Got it. And just on that, I guess, those realized prices that are being impacted, are they also at sort of cyclical lows in terms of import parity price or export parity price that you're achieving?

Yes. So what I'm referring to is the more IPP-based products, the commodity products clearly linked to the regional pricing, and they are at low levels in line with the benchmark prices that we put out there.

Okay. Good. And then just one, maybe, Tania, keen to get your perspective. It's been about 6 weeks now since the Board rejected the SGH approach. You've obviously come out with a number of initiatives to step up shareholder returns since then. Just wondering maybe on asset realization or running a process to sort of break up the business or try and realize value from parts of the business. Is there anything you can share with us around that and what the Board is doing at the moment?

Probably the way I think about it is in 2 streams. One is we are fundamentally focused on running the business well, and there's clearly a series of initiatives that we've laid out in the materials. Of course, there's the cost and productivity targets that we've set there. There's the delivery on the growth and there's the acceleration of the land value. And of course, then as we ramp down the CapEx -- that obviously frees up quite a bit of capacity in the balance sheet when we've got the benefits of that earnings improvement coming through, and we want to put that into the hands of the shareholders. But of course, more broadly, yes, we continue to evaluate all options and whatever it is that we can to realize value for our shareholders.

Your next question comes from Harry Saunders from E&P.

Firstly, just wondering if you can provide more color on where the $150 million of additional cost out would come from? And perhaps what could we expect in FY '27 itself? So not the run rate, but what you could see dropping through and whether we should be viewing this as -- some of it is an inflation offset or fully incremental?

Thanks, Harry. So in terms of the $150 million, it will come from right across the entire portfolio. This is actually something that we've been working on for quite some time. We started at the back end sort of in the second half of last year. It comes from right across the portfolio. It's not targeted at the operational, the frontline teams. It's more around corporate administrative support and functions. It will be a combination of headcount and spend.

But really, what it reflects, Harry, is we've been making investments in capability across the business for quite a number of years now. There's a lot of capability that's now embedded within the business units. And what that allows us to do is simplify some of the corporate structures and take advantage of the capability that we have established across the organization. In terms of the run rate, the plan is that we'll basically be at the full run rate of $150 million by FY '27, the start of FY '27. It is a gross number. So there will be some level of inflation that impacts that over time. But basically, we're targeting to have that $150 million by FY '27, start of FY '27.

Start of '27. So the majority of that should actually be seen in the P&L. And therefore, where could you take that corporate cost line to?

I can't comment specifically on the corporate cost line.

Yes. Harry, I might jump in. As Tania mentioned, that cost support is across all of the businesses. So I won't specifically sit within the corporate cost line, particularly areas like external spend reviews and things of that nature. But I guess we would expect a typical inflation build within the FY '27 year. And so this will be obviously well in excess of that.

Got it. And just a follow-up. Wondering if you could provide a time frame on giving a surplus land valuation across the group and potentially what could that Western Port value gain on sale look like potentially if that is to be sold?

Yes. So look, in terms of that parallel pathway that Tania referred to, Harry, the most immediate steps have been the West Dapto sale and then the process will run across the 65-hectare logistics hub in Western Port. As you've seen with the West Dapto sales, these are from our surplus lands and have been held at historical costs. So it's a very low cost base and the majority of consideration falls to the bottom line as profit. In terms of an overall valuation for the surplus land, I've seen various reports out there. As we go through the second limb that Tania outlined around the master planning and partnership process across the balance of our surplus land. That will give us an opportunity to provide a more detailed view around valuation of that land, but we need to go through that process first.

And maybe if I can just add to that, Harry, just in terms of the Western Port parcel, there's some data points that I think you can access some relevant development around Cranbourne, some logistics activities around there. So if you have a look at the developments around Cranbourne, which I think is just to the north, that will give you some good data points in terms of the Western Port potential valuation.

Your next question comes from Daniel Kang from CLSA Australia.

Just wanted to hone in on the sustained low Asian spreads and the domestic Aussie business, which continues to be weighed down by it. Just wondering if you can discuss where you see any available opportunities to lower the breakeven cost at Port Kembla and to reduce that earnings drag.

Thanks, Dan. Nice to hear from you. I think in terms of the sustained low Asian spreads, I mean, at the end of the day, I think it will eventually recover. I mean the steel industry does tend to be quite cyclical, and this is a longer-than-normal cycle that we are seeing. In terms of lowering the breakeven cost, that's something that we work on every day. The cost and productivity programs, particularly in the manufacturing space do a lot of the heavy lifting, and it comes from a broad number of areas, whether it's raw materials, optimization, whether it's energy optimization, whether it's the spend that we incur, how we manage our maintenance spend, et cetera.

So -- and the functional costs and the corporate costs overall. So there's a lot of work that goes on around cost and productivity. But from our perspective, what we're also focused on is growing the value-add part of the portfolio. So it's one thing to have that highly competitive cost base. It's another thing to make sure that we continue to invest and grow the value-add part of the portfolio. And that's why Metal Coating line #7 coming on later this year is very important to us because it's a critical lever in supporting the growth we have, the ongoing growth we have in COLORBOND and in TRUECORE.

Swinging over to the U.S. Just interested in your thoughts on the U.S. potentially scaling back on steel tariffs. And then just more broadly on the U.S. market, thoughts on upcoming new capacity and, I guess, potential further U.S. industry consolidation.

Yes. So I think on the tariffs, that was a bit of a curious one that popped up over the weekend. I think the first headline said something like the steel tariffs were going to be rolled back. And I would stress, I think it's all speculation at this point. And then there was a little bit of detail that started to float around across Saturday. It's really focused on what's referred to as derivative products, which is products imported into the U.S., which contain steel. We've seen various reports, which would suggest that for those products that contain small amounts of steel, they would potentially have a lower tariff. I saw one number of 15% -- but then, of course, going up to products that contain essentially almost 100% steel, so steel pipes could potentially have a tariff of 100%. So it was a little bit curious.

At the end of the day, it's a bit of a peripheral issue. North Star does not compete based on tariffs. It's a privileged asset. It's a highly productive asset. It's well located. It's close to its customers. It's close to its raw material source, and it competes on its merit, not based on tariffs. So again, I think it is a bit of a peripheral issue. In terms of the U.S. market, in terms of new capacity. The U.S. is still fundamentally short of steel. It's still an importer of steel. And so -- and it's a very large, I would call it, a large rich, deep market. It's relatively well protected even today's standards might be relatively high, but it's still always been a relatively protected market, and it's one that we see a lot of opportunity and notwithstanding some of the additional capacity that's coming online.

And of course, there's always been capacity that's come offline over the years, including a number of the blast furnace operations. So I think it's a great place to make and sell steel.

Your next question comes from Chen Jiang from Bank of America.

First question on your capital management program, the target of the net debt target up to $1.5 billion with the ability to move higher when needed. I guess you will be finishing your investment cycle, heavy CapEx cycle end of FY '27. I'm just wondering what's the rationale of increasing net debt target from the previous $400 million to $800 million, given your CapEx will be off in 18 months' time. Is this mainly driven by, I guess, increasing capital return program to shareholders? If you can provide any color on that, that would be great.

Thanks, Chen. I think what it goes back to is we've been involved in a large-scale capital program across many years now. And if I go back to 2018, when I first became the CFO, we started putting a bit of capacity onto the balance sheet back then. You may recall we ran net cash for quite a number of years because we were very mindful of the reline coming up. We're very mindful of the major expansion projects that we had in the pipeline in the U.S. and other activities that we wanted to undertake, including, for example, the metal coating line #7 in Australia. So as we've gone through that very major capital program, we can now see the light at the end of the tunnel. We're coming into the final phases of the reline project, Metal Coating Line #7.

We've obviously passed through the major expansion at North Star. There's still some level of expansion activity that's obviously still going on at North Star. We've built the new pipe and tube mill at Unanderra. The plate mill is advancing well. But we can see the back end of that unusually large and long-term capital program starting to ramp down. And as we ramp down the spend, what we're looking to do is ramp up the returns to shareholders. And we felt it was a nice thing to signal as part of the CEO transition.

Mark obviously put a lot of effort into those investments, those capacity expansions and improving the resilience of the business right across the portfolio, including New Zealand. But as we -- I'm now the beneficiary of that. So we're ramping down the CapEx and ramping up the returns to shareholders. And of course, when you come to the balance sheet, you simply don't need that level of capacity sitting on the balance sheet given the reduction that we see in the CapEx profile. We've got plenty of capacity to fund the remaining capital investments that we do have, notwithstanding the low spread environment that we have in Asia.

So I think really the CEO transition, we see it as a bit of a change in the era as we ramp down the CapEx and we ramp up returns to shareholders. And clearly, what we're trying to signal here is that we want to place more value into the hands of our shareholders. Our shareholders have been very patient for a long period of time as we've undertaken those very significant investments. So it's a good position to be in.

Sure. I understand, Tania. So to summarize, you are willing to leverage up your balance sheet a little bit. It is mainly because the CapEx cycle is off, return will be higher. Is that how I should summarize?

It's probably worth pointing out, as much as it's $1.5 billion, that still includes leases. And on a normal mid-cycle basis, it's only about 1x leverage. So this is a pretty prudent balance sheet. At low cycle spreads, it will be something like 1.5x. So this is a very prudent balance sheet. I think it's what you should expect for a company of the size and nature of ourselves, particularly as we come into the back end of a major capital investment program.

Sure, sure. Maybe a last question on your -- the new annual ordinary dividend per share increased -- well, just more than doubled from the previous $0.60 per share per annum now to $1.30 per share. I'm just wondering if this $1.30 per share annual ordinary dividend is derived from the new capital allocation framework, returning at least 75% of free cash flow to shareholders. I guess that 75% of free cash flow to shareholders also includes buyback. Is my understanding correct? Is that $130 plus buyback, which kind of equals to 75% of free cash flow?

Yes, that's right, Chen. Although I'd say the ordinary dividend positioning is still very much in line with a view of a level of ordinary dividends that we're able to pay at all points in the cycle with alternative forms of distributions enabled to achieve that minimum level or go beyond should we determine. So really, the ordinary dividend component is set around being paid at any point in the cycle.

Your next question comes from Paul Young from Goldman Sachs.

Good to see you're on the front foot with the step-up in shareholder returns, which all makes sense. Tania, first question is on the Aussie business and the downstream and actually the $125 million EBIT target by 2030 within the $500 million total at the group level. Just looking at the COLORBOND and TRUECORE sales in the half, which were pretty resilient considering that resi is not really firing in Australia at the moment. And actually, I think your volumes in the half were actually run rating at a higher rate than your CY '26 volume targets. I understand Metal Coating and MSM is late a little bit late, but neither here nor there. But just curious around the volume forecast you put out a bit to the market.

And also what margin you have actually in that number? Because it actually, to me, actually seems a little bit conservative. Just wanted you to comment just on the $125 million and how you think about considering you're on the front foot, just how conservative you think that is or et cetera?

Thanks, Paul. Nice to chat. Look, it's clearly a core part of our growth strategy for the Australian business is continuing to grow the premium branded value-add part of the portfolio. We're making fantastic inroads with COLORBOND. I think there's a really big opportunity for TRUECORE. We're obviously making very good progress there.

We like to think that over time, that with TRUECORE, which is a very large potential market, addressable market, we'd like to think that we can get to similar share levels over time as what we have with COLORBOND. We've got a very compelling value proposition. But of course, we do need metal coating line #7 to be in place because at the end of the day, we're periodically short on capacity now. And so this is really about addressing the shortfalls that we have at the moment and underpinning the growth going forward. In terms of whether they're conservative, I don't know.

We sometimes do get being accuse of conservative. I think we're quite comfortable with the growth projections that we have out there. There's probably some other elements that also sit there beyond just straight COLORBOND and TRUECORE, but they're the main ones that sit within that growth outlook.

Yes. I think, Paul, the only piece I'd add is when we put these targets forward, we've done that with a sort of mid-cycle view of market. So to the extent to which you have a view that market continues to grow or expand, that will be an opportunity for us.

Okay. And then secondly, just on the portfolio tenure. I know you made some comments on how you look at or how the Board is viewing the strategy going forward and just the review. But just specifically on the Asian business, and it's been really a conversation for the last decade about whether BlueScope keeps this or not. You've just sold India, I think, for a pretty decent premium to book or probably a decent premium to NPV.

So if you look at the carrying value of the Asian business, sits around $1 billion or so. How do you think about possible monetization of that business through either JV partner, Nippon or someone else? And/or how do you think about from a replacement value perspective, just to sort of see how you look at the potential hidden value of that Asian business?

Yes. It's interesting you use that phrase hidden value. the ASEAN business, in particular, sits in one of the fastest-growing regions of the world. And what we have is a footprint that is unparalleled. It would be extraordinarily difficult to replicate that today. I think Connell and the team are doing a fantastic job in terms of the strategy that they have. It's very much a premium branded value-add strategy. We think there is enormous opportunity that sits in that market. I, of course, am very familiar with that part of the world. I spent 8 years within the ASEAN region. And so we're actually quite confident with the value that can be derived from that part of the portfolio.

I think what's also important to add is there's plenty of capacity that sits within that business. It doesn't need any significant amounts of capital to be injected in it. There's a lot of upside there. So we're quite confident in how we think about the business. I think the India exit, I think at the end of the day, India is a good market -- was a good market to be in, but we felt it was time to move away because there was more value to be had in the hands of Tata, and it was time for us to step back and simplify the portfolio across Asia.

So I think at this point in time, we are very comfortable with the position that we have. We're well positioned in every major Asian economy. And I think that's going to stand us in good stead going forward.

Your next question comes from Peter Steyn from Macquarie.

Perhaps just keen to color in the property partnership process a little bit better. If you could give us a bit of a status update on how you're thinking about partnerships, what level of engagement, how far along the process you are and whether that sort of means that some of the realization opportunities are perhaps a little bit closer than what market participants would tend to think. Just keen to understand at a deeper level of detail, please.

Yes. Thanks, Peter. In terms of -- from an overall perspective, the -- I guess, the short term has been around those parcels of land that have been readily available. And that was West Dapto, and we've announced today the 65 hectares at Western Port, which is a discrete logistic hub opportunity. And obviously, we've been progressing for a number of years opportunities within the site adjacent to Port Kembla and Glenbrook in New Zealand. And you've seen the benefit of some industrial leases that we put in place there. In terms of the master planning and partnership opportunity, that's a process that, again, we've been largely working internally, and we will look through the course of this half moving to external engagement with potential partners to work through what that may look like.

Now that will be a full spectrum of opportunities in terms of how we approach partnership there from ownership and development, joint venture to potentially some other realizations. But it's quite important to recognize that as we've said for a while, those sites are co-located to our operational sites that will continue to be operational sites. And so we'll want any sort of activity there to be sympathetic and ideally adding value to those regions through leveraging off the infrastructure that we have at those sites. So that's really how we sort of plan to dual track the property opportunity.

I guess it's fair to say that you do seem to have a greater sense of urgency on trying to bring these to some form of realization. Does that mean that your strategy potentially alters in favor of realization as opposed to development in any way?

I don't think so. I mean, clearly, the shorter-term opportunities have been more opportunistic in nature, and you've got the ability to do so. But by and large, those -- the majority, the vast majority, the sort of remaining 1,100 hectares is something that we will continue to take a very important long-term approach because of its proximity to the operational sites. I think in terms of timing, we've had the ability to leverage off work that's been going on for a number of years now, much in the same way as we've got the opportunity to leverage off the capital investment side that's coming to a conclusion.

It's probably fair to say that having Michael Yeend on the team has really helped turbocharge everything. I think Michael has been with us for a year now. He's a very experienced property developer, and he's been the driving force behind the acceleration that you've seen. So this is not something that we dreamed up over the last couple of weeks. This has actually been in the works for the last 12 months and again, leveraging off the work that has been going on for a number of years.

Tania, perhaps a last quick question. Just thinking about your medium-term CapEx outlook, how do you think about the guardrails of what you'd be spending '27, second half and beyond?

Yes. So look, I guess we've kind of sent out the guardrails for next half and the half thereafter. As we -- you will continue to see the sort of glide path of that coming down to more normalized levels. That being said, to the degree to which we can find opportunities for growth, we will consider those investments with the business. But effectively, you're seeing that CapEx reverting to more of a sustaining level of CapEx given the significant investment that we've undertaken through that period.

Your next question comes from Lee Power from JPMorgan.

Tania, I think you mentioned about the 150 that you said it was a gross number. Are you willing to give us a net number? And then maybe for ASP specifically, do you think this gets steel cash breakeven below $200 a tonne?

No, I can't give you a net number. Thanks, Lee. But it's obviously a very significant opportunity that sits in front of us. In terms of ASPs component, yes, there will be a weighting towards ASP. That's obviously a large part of the portfolio. I think the key thing is that we're quite confident or very confident in our ability to deliver on that net number, and you should expect to see that in the results at the start of FY '27.

I had to ask. And then you've had a couple of questions on realization ASP. Like if I look at the -- it was a pretty big headwind in the second half. Like it looks like on commodity product, it was down $100 a tonne from where we were in August 2025. I get like the moves in freight and you've obviously got a value-added business. But like what are the other dynamics we need to think about with the realization piece. So is it just literally when HRC recovers, you get more freight and therefore, the realization recovers at the same time? I just kind of struggle a bit with the moving parts because it's clearly been a bit of a headwind on the last 6 months.

Part of the issue, I think we deal with Lee, is you're dealing with the law of low numbers. It doesn't take much of a swing in any one of a number of moving parts, and it can have a fairly significant impact. I think FX is the other component that needs to be considered. So there's FX impacts. There's freight movements that go up and down. And again, it is an intensely competitive environment given the sheer scale of exports coming out of China. So any number of those factors or a combination thereof can have a significant impact on the numbers.

Okay. That makes sense. And then just a final one. I mean it doesn't sound like you think that the $1.5 billion net debt target is particularly like a stressed balance sheet and not out of whack with your peers. Can you just to give a range, like where do you think the other end of the acceptable range would be nowadays, if you're willing to talk to that?

I think if you look at a sort of broad view of the industry, Lee, you'd be sort of seeing 2x is probably where the average sits. We've sized this at 1.5x at the bottom of the cycle, about 1x through mid-cycle.

Really the other -- I think the key principle here is we're very well aware of the nature of the industry in which we operate, the cyclical nature of it. We recognize that we need to maintain a resilient balance sheet, and we're certainly not going to be confusing or compounding financial leverage with operational leverage. So we believe that we're taking a typically prudent approach to the amount of leverage that we can put on the balance sheet. If we had to go further, I think we could readily do that. We'd simply have a plan to bring it back in over time. So we're quite comfortable that what we've put out there is readily achievable.

Your next question comes from Scott Ryall from Rimor Equity Research.

Hopefully, my 2 will be relatively quick. Tania, you -- in the -- well, and maybe, David, I guess, on Slide 26, you talk about the BCP business expected to deliver reduced loss through ongoing improvement. I guess I'm just wondering what -- in terms of the glide path for that business, is there a time where you'd be willing to say you can take that out of being a loss-making business, please?

Thanks, Scott. Nice to chat. The reality with BCP is we're probably a couple of years behind where we wanted to be. I've spent quite a bit of time in the U.S. recently. I've been there twice in about the last 8 weeks and spent a lot of time with the BCP team. They've got a new leadership team. I'm very happy with the team that's been put together. They've got a very clear plan in terms of what they're working on. The market is still there. There's absolutely a good market that's sitting there, but we've got to get some investments.

And when I say investments, I'm talking mainly about resource investments and sort of low-level things that we need to fix, but there's just a number of them. And so we're very, very focused on uplifting the operating performance of the lines to improve and get to the quality and service delivery performance that we want. I'm expecting to see significant progress made across the next 6 months. And so we'll obviously give you an update at the next results. I should say that we have pretty clear expectations about what that business should be contributing as part of the 2030 growth targets as well.

The value there is -- the value opportunity there is very significant. So BCP largely operates at the moment as a tolling business. What we've been introducing is the single bill offer. In terms of the opportunity to introduce the branded offer, again, this is a very large market, and we see very significant opportunity there over time.

Yes. But you're still -- the reality is to get the volume growth, which is what you need presumably to turn it around, you're still doing the quality investments and that will just take some time, right? You'll update us every 6 months, but that will take some time.

We will. And I should say there's been a lot of hands on deck, in particular, over the last 6 to 12 months has been a huge effort in terms of supporting the business and drawing upon the broader BlueScope network. So we're quite -- I'm quite pleased with where we are. I think we see quite an improvement. We just got a way to run yet.

All right. Good. And then you've obviously had a lot on your plate since you took over, reformulating strategy and working with the Board on approaches, et cetera. In none of this, I've seen any mention of Whyalla. So I was just wondering if you could update in terms of what BlueScope's view on the Whyalla process is at the moment, please?

Yes. So Whyalla still remains an option for us. We're still participating in the process. We're still engaged with that process. But at the end of the day, it still has to make sense for shareholders. I mean the primary reason why we're looking at Whyalla, of course, is because of the resource base that sits there, the types of ores there that could be consumed down the track in some form of direct reduced iron technology. So it is an interesting option. We continue to be very engaged with the consortium that we put in place a while back now. So we're continuing to have some good conversations. But at the end of the day, we need to think about Whyalla as an option that ultimately has to make good commercial sense.

And do you have a timing for when that -- is that expected to play out over the course of this calendar year, as an example?

Potentially. I think at the end of the day, there is quite a way to run with the Whyalla process. The process itself is being run by the administrator. It is probably quite a large complex issue that they're dealing with. And I think any solution will also be dependent on funding that would need to be provided by government and also the finalization of feasibility studies because you can't obviously make a decision to invest in something if you ultimately really understand the economics of it. So there's quite a way to go, I think, in the Whyalla process.

Your next question comes from Owen Birrell from RBC.

I just wanted to drill into some of the wording that you've put into Slide 12, which is that targeted growth to 2030. And mostly just that headline, which says that the $500 million EBIT uplift to 2030 is to be supported by macro normalization. I just want to understand what you mean by macro normalization. I'm assuming that doesn't include any sort of spread recovery, but I am assuming that, that includes some sort of building or construction market recovery. Just wanted to confirm that that's actually the case. And then we look at that $500 million EBIT target, how much of that is actually reliant on a building market or construction market recovery?

Yes, Owen. So in terms of the $500 million uplift, that's separate to spread recovery. And what it assumes is a mid-cycle end market use. So primarily where you would be seeing the material change would be in relation to the Australia and New Zealand markets, which would still be at a relative low point in terms of residential construction activity. So really, that's what's meant by that comment there.

Are you able to go into that number then? You're talking about, call it, $300 million from Australia and -- or actually, what's that -- you're probably looking at around about $200 million from Australia and New Zealand. Of that $200 million recovery, how much of that is just housing market recovery versus operational change that you guys are undertaking?

The majority of that delivery will be operational change. So the way to think about it, Owen, if you look at total domestic volumes, I'd describe that as at a relatively low level of activity now, kind of if we were to sort of move towards where it's been historically, it's been at sort of that more of that 2.4 million, 2.5 million tonnes. The increased volume over and above that is really a reflection of share.

I'm not sure if you get where I'm going at, but like in terms of -- if the market just normalizes by itself, won't you deliver the $200 million target ex any other sort of investment you make?

Look, if the market normalizes, you will get a benefit from the fact that we've got a higher share position, but there is still an element of growth in share volumes. If you look at what we're trying to achieve in TRUECORE, within New Zealand, I agree, the majority of that is coming from the normalization in the market given the investment in the EAF has largely been completed.

Of course, we do need the capacity expansions to be in place to support that growth as well.

Okay. And just to confirm that this $500 million EBIT is relative to -- is it calendar '24? That's the base year.

That's it. Yes.

And can you give us an update on how much of that $500 million is actually be achieved? At this point now that we're coal at almost 2 years?

Look, the majority of that is really coming from sort of the North Star expansion. That's really the one that's kind of progressively comes online. The other ones really are reflective of a step change once the capacity comes online through the course of this year and next.

Essentially nothing out of Australia and New Zealand at this point.

Pretty much.

Okay. And then just I wanted to just touch just on the following slide, Slide 13, where you talk about your working capital reduction target. You're targeting a $200 million to $300 million release by the end of FY '26. Half-on-half, it's a little bit difficult for us to sort of back calculate how much of that you've actually achieved. But I'm wondering if you can give us an update on how much is to go in second half '26 to hit that target?

Yes. Look, the majority of that target will largely be achieved through the progressive realization of land in the BlueScope Properties Group. In terms of -- from an other area of focus is going to be around inventory. But for the FY '26 period, there's obviously the build of inventory as we go into the cutover for blast furnace 6 and the EAF commissioning in New Zealand. So following FY '26, more of that opportunity will be delivered through inventory reduction.

Yes, that footnote on 2 is very important. Yes, there will be an impact as a result of the transition. I mean it's -- you do have a bit of operational disturbance there with the transition with the blast furnace and the EAF...

Okay. So it's not necessarily going to flow through into the accounts that we will see.

With the exception of obviously, the realization of the properties portfolio.

Yes. Can you give us an update on that? Apologies if I missed that anywhere. But how much has been realized at this point?

That's being progressively realized. And in terms of that target, it would be sort of around $180 million to $190 million of that target.

Just to confirm, is that the U.S. entities that you're discussing there?

It is. The U.S. properties group effectively sits in stock in terms of their investments, which is obviously not where the historical cost of our Australian land bank sits.

I think there was one project that was realized in the half.

Correct.

Your next question comes from Charles Strong from Jarden.

Just on skills and the West Coast environment, could you comment on what you've seen there? What gives you confidence about improvement into the second half and how you see that medium term?

Do you want to take that one, David?

Yes. So look, I think the team has seen a good opportunity in terms of managing that business through a fairly volatile level of activity. It's an import market. So it obviously had probably the most interruption from the tariff volatility. They've done a good job working through that position. And what we're seeing is they've had an ability to be able to manage the margin in their book in a far more effective way than they've been able to do it at previous periods where they've gone through weakness in their end markets. So I think that position is set up well as we move into the second half under more normalized levels of activity.

Great. And then just on the North Star guidance, what are the moving parts from a conversion cost perspective? And how much should we be thinking about in terms of the energy cost impact?

Yes. So the team have done a good job in terms of how they've worked on raw material costs, and we've seen an improvement in those non-benchmark conversion costs that you see in sort of alloys and fluxes. And I think that's been really important in terms of how they manage to offset the increase in energy costs that they had transitioning to their new energy contract. So that's all been incorporated in that space.

Your next question comes from Will Wilson from UBS.

Quick one from me. It looks like healthy TRUECORE volume growth and also COLORBOND to a lesser extent in the half. Just on the new Western Sydney metal coating line coming on soon, can you just remind us of the ramp-up here from a tonnes produced perspective? And also just your ability to manage that up or down with market demand?

Yes. So the total capacity that will come online in Western Sydney is around about 240,000 tonnes. In terms of the ability to ramp it up or down, metal coating lines are pretty straightforward. I mean you can switch them on and switch them off. That's the beauty of them. So we'll obviously have a look at the market conditions as we get closer to the ramp-up. We've also got to think about crewing levels and time frames that it takes to recruit and train new crews. We've obviously got a plan that we'll start off with as we go through the ramp-up period. Generally, there's a period of around about 3 months once you get metal on strip and you work your way towards full operating conditions. But again, there's a lot of flex capability that sits within that model.

And Will, I think it's important to point out that we run these metal coating lines as a network. And so the opportunity is not just how we manage MCL7, but how we manage the network that MCL7 enables us to unlock with our newer lines typically being more efficient.

Yes. Okay. So if you wanted to, you could effectively bring on the 240,000 tonnes within 6 to 12 months.

Yes, taking into account the network comment that David just made, yes.

Your next question comes from Keith Chau from MST Marquee.

First one, Tania, maybe I'm hoping this isn't just a matter of semantics, but your answer to Ramoun's question earlier in the briefing around evaluating all options to realize value for shareholders. Is it possible for us to confirm with you that you are actively engaged with third parties as suggested by the media? And I only ask just given there is another offer or there has been another offer for the group. So if we can get a clearer answer, that would be great.

Sorry, Keith, I might be about to disappoint you because we just simply don't comment on anything that might go to any conversations with any party. I think all I can do is reiterate that we continue to evaluate all options to accelerate the delivery of value to our shareholders.

Okay. Second one, just on your property, maybe one for David. But David, you mentioned before that you've seen a couple of valuations or I guess, a tens of valuation on BlueScope's property portfolio. BlueScope's indicated itself that it could be worth up to $2.8 billion using West Dapto as a read-through. I guess maybe the debate is just around the sensibility of using that as a proxy for as value. So if you can comment on why that $2.8 billion has been published and whether it is sensible for A value? If not, why not?

And also one of the key points of contention for property is the level of remediation costs required to get those land lots to market. So I mean my understanding is that remediation has taken place over the years as those properties have come surplus to requirements. But just if you can give us an indication of what remediation expenditures are required across the surplus property portfolio, please?

Keith, I might start off with a couple of comments, if I can. Where the $2.8 billion comes from very simply was we wanted to highlight that there is very significant value that should be attached to the surplus land portfolio. And all we did was point to what we sold Dapto for and just applied that to the rest of the portfolio. But it wasn't meant to be saying that it's absolutely $2.8 billion on the mark. What it was pointing to is that there is very significant value that sits here. And there's a broad range of opportunities.

This is prime industrial land. It has fantastic infrastructure associated with it, road, rail port, energy, et cetera. And so we think there is significant value associated with that. The majority of the land has already been appropriately zoned. In terms of remediation, it's probably worth pointing out, I think it's about 1,000 hectares is actually just buffer lands. It's pads. And so it's not necessarily former sites. So yes, there is -- part of it is former sites. That's the #1 works. And the area around Port Kembla, but there's a lot more land than just that.

So the remediation costs, I don't think we could give you a clear number, but I feel like they might be a little bit overblown if there's a conversation going on around remediation costs at this point, bearing in mind that most of the land is -- has not been previously used for -- in an operating environment. David, did you want to add anything to that?

No, look, I think that's right. And obviously, sort of the 2 areas that create a challenge around the property realization piece is rezoning and rehabilitation costs, given there hasn't been -- given it's already zoned appropriately for development, and there haven't been intense activities on any of the sites. That's why we feel we're in a position now to actually undertake those master planning partnership discussions to -- and that, I think, Keith, then gives us the opportunity, as I say, to present a more robust view around potential valuation and realization pathway.

Okay. And maybe last one, if I can. The step-up in net debt, obviously, that's a big change from prior targets. We've gone from net cash position to a range of $400 million to $800 million to $1.5 billion. certainly take the point that CapEx requirements and loads ending after this year. But given the significant change in the debt target, are there any changes to the costs associated with the debt, whether that be debt or any changes in covenants on the debt load?

Yes. No. So this all sits within existing facilities, Keith. And if you have a look at the maturity profile that we've got, particularly with a recent extension, that's not going to have an implication for us over the short or medium term.

And let's be clear, we're still aiming to maintain investment grade here, and it's still a pretty prudent level of debt for an organization of our scale.

There are no further questions at this time. I'll now hand back to Tania Archibald for closing remarks.

Thank you, everyone, for joining us today. I know you've got an exceptionally busy day. Please reach out to the IR team for any questions. And of course, David and I and the team, we look forward to engaging with you over the coming weeks. Thank you.

All right. Good morning, everyone, and welcome to Glenbrook. It's the heart of steelmaking and COLORSTEEL in New Zealand. On behalf of the team, my name is David Fallu, I'm the group CFO. I just want to welcome you to site. And for those joining on the webcast, really appreciate your interest. So we'll be holding a session split across 2 pieces today: one, covering New Zealand property and sustainability. And then after a break, we'll have an opportunity to walk through the site with some really exciting investment that's happening here as we transition to the EAF. Just from a housekeeping perspective, in the unlikely event of emergency, please just follow your host, hear the evacuation alarm. The gathering point for those on site today will be the grassfield just behind this building. You'll be with members of the BlueScope team at all times.

So please just follow instructions. We'll be providing instructions around walkways, mobile phones. Safety is the #1 paramount importance for us here. We want everyone to be going home safely. Just on that topic of safety, you will be aware that last week, we had a tragic incident, a young man at our Port Kembla Steelworks was fatally injured. We're working with our contractor partners to support the family and our team members are deeply impacted by that event. There's a full investigation that we're working with, with the regulator and our contractor partner through the course of that.

It's important for us to go through that process. We will be transparent where we can be, but we won't be providing additional details given where we are in that process at this time. But just to reinforce that every moment, every shift, every site to just follow instructions and manage with the team accordingly. I'm really glad that we're actually holding our ESG Day here in New Zealand. That's not just because I have a deep affinity. My daughter was born here. There's investments that we're undertaking that have application across our portfolio, which we'll talk to.

I'll provide a brief overview before we get started, just for those who are a little bit newer to the BlueScope story. In terms of -- we've had our purpose, our bond and our Transform, Grow, Deliver strategy has been in place, and we've been executing against that for some time. The investments that I say that we're making here have a high degree of application to that. If we think about the EAF that we will be taking coal commissioning at the end of this year, hot commissioning at the beginning of next year. It has an opportunity for us to manage that highly cyclical New Zealand steel market to move us from a very rigid operating model to one with far more flexibility to help us manage at the bottom of the cycle conditions that we're experiencing today.

The EAF investment is the single biggest industrial decarbonization opportunity that's happening within the New Zealand market and being supported by the New Zealand government. It provides a technology that we're utilizing here in New Zealand is one of the key pieces of attraction that our joint venture partners in Western Australia are seeing with the NeoSmelt investment opportunity where we're looking at the decarbonization options for hematite Pilbara ores. Sue will talk to the market opportunity that it creates for decarbonized product within the New Zealand market in addition to the success that we're having with COLORSTEEL product in New Zealand in soft market conditions, similar to what we're being able to achieve with COLORBOND product within the Australian market. And finally, from a property perspective, the adjacent lands at Glenbrook will give you a good insight as to what the team are trying to achieve across our surplus property portfolio across Australia and New Zealand, which we've got Michael Yin joining us, who will take you through that information as well.

So by the end of today, you should have a much better appreciation, not just for what the team are driving within the New Zealand market, but also from an ESG and property perspective as well. Our investment proposition really remains unchanged. We combine top-tier irreplaceable assets, premium brands and a disciplined financial management approach to deliver resiliency and growth. has enabled us to manage throughout a soft Asian pricing environment across Australasia, a volatile environment across the U.S., all whilst undertaking a once-in-a-generation investment program, which sees us at peak CapEx levels being concluded this year. And as we work through this year's program, it really sets ourselves up for cash flow generation that underpins our investment proposition moving forward.

Now that portfolio of assets that we have provides us with diverse regional exposure with our multi-domestic strategy of in-country production for in-country consumption. And that's proving even more important as we go through a period of elevated geopolitical issues. Across Australia and New Zealand, it provides us with a clear focus on building and construction segments given the regions that we're operating within there and the products that we're offering. And our earnings profile is increasingly moving to that more favorable North American market with now over half of our earnings coming from that region.

Now a couple of weeks ago, we did make a refinement to that portfolio, where you will have seen that we've agreed to the sale of our [indiscernible] BlueScope joint venture in India. And whilst it's sometimes disappointing to see an investment in a particular region come to an end. I think it's a good outcome for our business, for our shareholders, reflects the value that have been created within that region over the course of the last decade, but probably also reflective of the respective joint venture priorities and enables us to focus on the priorities in the portfolio that we're driving and we'll run through today. In terms of those priorities, we set out at our half year results last year and updated at our full year results, the short- and medium-term focus that we have, particularly around the areas that we can control. In the short term, that cost and productivity program remains on track, focusing on that $200 million improvement position.

Just as importantly, the investments that we're talking about and that peak CapEx period is really about underlying some growth investments, the majority of which conclude this year, set us up for expanding that domestic sales, setting up for expanding those domestic sales into value-added and premium branded products, which enables us to get more of that product outside of the export market and away from the commodity swing of low pricing.

Now I said last night to some of you who I was able to catch up with that kind of today, I really encourage you to put your models away. We've got great representatives from the Investor Relations and treasury team here who can work through with you around some of those specific modeling areas. But this is really an opportunity to engage with the who and the how of the activities that we're having on site and really put our ESG, property and operational transformation in context. But rest assured, underlying everything we do is a very robust financial model that guides us from a business performance perspective and guides us around the initiatives that we're prioritizing and really sets our focus for how we manage the balance sheet and investor returns.

So in terms of the team today, we've got a diverse and experienced team that, again, I'd encourage you to engage with. From the executive team, we've got Robin Davies, Chief Executive of our New Zealand operations; Michael Yind, who's leading our property aspirations; Deb Cordal, Chief Executive around climate change and sustainability. And from the New Zealand team, [indiscernible] will take you through both the market and the operational side. We've got respective team members across the board here today as well. So again, I really encourage you to take the opportunity to engage with what these leaders are achieving in the marketplace because there's some really exciting activity that's being undertaken. So maybe with that, I'll hand over to Robin, Chief Executive of our New Zealand business. Thanks, Robin.

Thanks, David. Welcome to New Zealand Steel. We're really excited to have you all here today. It was great to catch up with a number of you last night and kind of share some perspectives and get a warm up for what's coming today. I'm looking forward to catching up with the rest of you today during the course of this morning and also excited to share the progress on the electric arc furnace project and perspectives on the market. So just a quick bit of background on myself.

As you can tell, I'm not from New Zealand originally, joined from Tata Steel Europe in 2008. So I've been with BlueScope coming up for 18 years. So it's kind of a 30-year sort of industry career. Worked in most parts of the operation at New Zealand Steel, steelmaking, rolling and finishing, became the GM of Pacific Steel when we acquired that from Fletcher Building in 2015. I was also the President of North Star between 2017 and 2020, where we started the expansion project that you'd all be pretty familiar with. So I was lucky enough to come back to the New Zealand business and then start as a Chief Executive 4 years ago.

So I've had a strong history within BlueScope, seen some of the cycles and been part of the difficult cycles and also part of the significant growth story that you have seen over the period. We've got, obviously, [indiscernible], General Manager of Sales and Marketing, which will be able to share some of the perspectives of difficult economic conditions, but also some of the great growth story that we have. And [indiscernible], who's got a long steel -- iron and steelmaking track record within New Zealand Steel and South Africa. He's the Project Director for the Electron project, and we'll continue to run that facility going forward. So I think we've got some great talented people within the business. And the rest of the New Zealand Steel lead team are here for you to kind of continue the conversation over lunch and during the course of the plant tours.

So just a quick reminder of the segment overview, flat and long product producer, long products being reinforcing through the Pacific Steel acquisition, bought that business in 2015 from Fletcher Building. And really, there was a play around reducing that export exposure. As you can imagine, as a flat product producer entirely previously, we had a very long hot-rolled coil exposure into the commodity markets, and I was able to kind of turn export product into a domestic kind of margin. So it was a great success as an acquisition.

You can see the broad sort of footprint. We've got the Glenbrook steel manufacturing facility, the mine site at [indiscernible] North Head, which is about 20 kilometers away, and the rolling mill facility at Odahoo was part of that acquisition. We also have supply chains reaching into Fiji, New Caledonia and Vanuatu and they're sort of more typical of the sort of [indiscernible] pre-engineered building type businesses where we have color steel and color bond supply chains and [indiscernible] and what have you into those kind of market segments. They're pretty small, but they are strong kind of margin contributors in their own right from in-country margin and what we realize in the specific region.

And we do have a reinforcing -- a small reinforcing business in [indiscernible], which is also part of that acquisition from Fletcher Building in 2015. So employees around 1,500 across the whole footprint, around 1,200 employees at the Glenbrook steel manufacturing site that we're on today. A little bit of the history. Obviously, we celebrated 60 years this year, and it's got a very kind of interesting kind of time line from the early 60s slightly unconventional, some would say we had some mining operations and a metallic coating line back to the 1968. So our metallic coating line today is actually the same metallic coating line that we had then, gone through many upgrades since then, a pipe making kind of facility and a color steel, we had a paint line commissioned in the early '80s, which is obviously very significant for us.

You'll get to see where that paint line is today in a quick tour. And essentially, the sort of mid-80s saw us commission what we know today as the integrated iron and steelmaking operation and rolling mills. So that's essentially the footprint we have today was sort of commissioned in the mid-80s. So an interesting kind of history. Government sort of started by the government, really pioneering difficult kind of period through this period and then the mid-80s where it kind of turned into the facility that broadly is today.

You'll see the point at which BHP Steel acquired New Zealand Steel, a dual pot metallic coating line to adopt the BlueScope kind of technology, galvanized steel and [indiscernible] as it was the first generation. And then obviously, the BlueScope spinout from BHP the Pacific Steel acquisition in 2015, which is very significant for this business. We were really able to turn 200,000 tonnes of hot-rolled coil exports into about 200,000 tonnes of domestic reinforcing, which was very significant in terms of margin improvement at the time.

And then 2023, we were able to kind of strike up the strategic partnership with the government. As David mentioned, very significant decarbonization project, 800 to 1 million tonnes of carbon reduced. It's about 1% of New Zealand's total footprint. So we're able to kind of strike that kind of arrangement with the government just over 2 years ago, time flies when having funds about 2 years ago. And we've been able to kind of execute quite strongly since then, and we'll be able to get a sense of that as we kind of go through today's presentation. And in 2024, we essentially adopted the next-generation technology for COLORSTEEL, which essentially is the COLORBOND DNA.

So we commissioned that in our metallic coating line and relaunched [indiscernible], and Suzanne will share a bit more of the detail of that. And again, back to that milestone, 60 years. So it's a very interesting kind of history. Some of what we're doing in some ways is back to the future. This early mining and iron making operation and billet production used an electric arc furnace ironically in a very rudimentary kind of way and was unsuccessful, but some of what we're doing sort of goes back to some of the early kind of stages of how New Zealand Steel was formed. Just a quick update.

This is -- it's a unique kind of iron-making process in a global sense. So this is what makes this particularly interesting and relevant as BlueScope and other steelmakers around the world contemplate the decarbonization options. So we've got iron sands. We've got titanium magnetite that occurs on the West Coast of New Zealand. So essentially, it's a low-grade iron ore. We use thermal coal, which is typically used in power stations. It's got some specific requirements from a calorific value and sort of reactivity perspective. We put it through 4 kiln multi-half processes. So this is the DRI process essentially is referred to as a fluidized bed and coal is the reductant essentially rather than what we know today natural gas or hydrogen.

So that is how this DRI process was formed back in the '60s. And again, this footprint was built essentially in the mid-80s to what it is today. Then we have 2 melters or electric smelting furnaces as they're known globally. And obviously, that's an important technology as various parts of the world consider their kind of feature. So this is essentially the modular nature of this has allowed us to kind of contemplate the change the electric arc furnace because it's not just one of something we've got. We've actually got 4 kilns and 2 melters.

So you can quite efficiently contemplate using 2 kilns in a melter and halving this kind of process essentially, which is where the large carbon emissions reduction comes from, essentially halving the coal input in a total sense. We recovered vanadium. The iron sand is rich in vanadium, and we sell that as a byproduct on the global kind of market, and it's very volatile from a pricing point of view, but it does get some cost recovery at certain points in the cycle. We consume internal scrap, and we use basic oxygen steelmaking, which is fairly typical. It's got some nuances, but fairly typical of what you might see at the [indiscernible] Steelworks or other basic oxygen steelmaking sites.

And then in 2015, we installed the billet caster. So we cast slabs and billets in the same kind of facility, and you might be able to get to see that today. That was part of the capital investment in 2015, where we bought the Pacific Steel business, installed the billet caster and label metallurgy furnace. And then that's how we service the flat products market and the long products or the reinforcing kind of market. So that's kind of an overview of what is still a unique kind of process. And why does it work? It relies on historically low-cost iron sand input, historically low-cost coal. Coal has become more expensive over time and been disturbed by Russia-Ukraine conflict and that sort of stuff. So it's kind of become a bit more volatile. But the economics are low-cost inputs.

There's a lot of energy required to convert that raw material, which makes this quite a carbon-intensive, energy-intensive kind of process, hence, the opportunity or the need for change. So in terms of why did this EAF project come about? I guess there's an obvious imperative to reduce our carbon emissions footprint, a very high intensity level compared to our international kind of peers. There's obviously regulatory pressure from the emissions trading scheme in New Zealand where we're under carbon price pressure over time, and that is starting to escalate. As you can imagine, whilst carbon price is volatile, when we get into $60, $70, $80 a tonne of carbon and industrial allocations start to fade away, you model the business in its current configuration and looks very challenged into the future.

So there was an opportunity to consider an electric arc furnace conversion. Why is that? Because it is a modular process, so we could drop half of the process out, install electric arc furnace. New Zealand has a 500,000 tonne scrap market that's exported. It's got renewable energy on the grid. And there was an impetus from government to make significant reductions in its carbon emissions footprint. So there was a, let's call it, a meeting of minds where we needed to do something about the steelmaking operation, certainly in the short to medium term. And essentially, there's an opportunity with a willing government to support that sort of change. So we approved that project just over 2 years ago. And obviously, you'll see get a sense today where we are from an execution point of view. So it's sort of quite fortunate in terms of configuration, and it's got some enablers. I guess, from a BlueScope point of view, we talk a lot about the enablers that you need to make a change. Obviously, you need the scrap you need the energy inputs, and we were able to kind of secure those as part of the project upfront. And whilst it wasn't kind of seen as a directly value accretive as such other than it provides, as I explained going forward, much better down cycle kind of performance where we haven't got this fixed -- complete fixed cost and exposure to the selling -- the international selling prices.

So I'll explain a little bit more about that as we go through. So just in terms of some of the benefits, we talked about a very difficult trading performance in FY '25. And essentially, based on the improved electricity kind of costs, and the raw materials benefit in the down cycle between the coal iron ore input versus scrap, that would have had a much better performance or resilient performance in the bottom of the cycle. So as you will have seen, we're entirely exposed to the international hot-rolled coil price. And when your costs are fixed, you've got kind of nowhere to go in that down cycle. And that was exacerbated by extremely volatile energy kind of pricing, which we'll talk a bit more about going forward. Flexibility to match production demand.

So really, when you've got a much higher proportion of variable cost, you can more confidently scale down the operation when the market is weak and scale it up when it's stronger. So having the benefit of working at North Star, I was able to kind of see that higher percentage of variable cost and you're able to kind of -- whilst North Star sold out all of the time, you are able to, from time to time, variabilize your cost base very quickly because it's largely scrap and electricity. So you're able to kind of move your cost base around and match the demand more accurately.

We do have the ability to adjust the raw materials mix going forward. You can imagine there will be periods where the iron sort of input is cheaper than scrap, and you're able to kind of flex the ratios to optimize the business. That's quite a neat opportunity for us that's yet to be kind of fully modeled, but you can imagine that's a real advantage to be able to switch the raw material kind of mix. And some would say, why not go 100% to start with? 500,000 tonnes of scrap domestically arising is barely enough to maintain the kind of domestic demand overall. So we felt it's an important kind of option to maintain a cost-effective iron-making operation at this point.

And then I guess, going forward, we do see there's a real opportunity where we'll have a differentiated product offering for low emissions product in New Zealand. So the low global warming potential product is being specified. It's being preferred and ultimately should start to command a premium either in the New Zealand market or globally. I think that's yet to be determined fully. But there's no doubt that the price of carbon will ultimately find its way into the price of steel. So again, just relating to the sort of BlueScope strategy, the transformation for us, obviously, the EAF model, whilst it's the new steelmaking technology, for us, it's a complete business model change.

So it's a real transformation. 40 years ago, we installed the steelmaking technology we have today. So this is a bit of a once-in-a-generation kind of change for us. And as well as we've got a number of artificial intelligence and asset intelligence programs underway to focus on new technology and much better customer experience initiatives from a digital point of view. In terms of growth, we still see real opportunity to kind of grow premium branded products in New Zealand and particularly where the low embodied carbon offering kind of plays its part. And I think, again, how we interact with the energy market, having fixed price contracts help to sort of manage to shed load when it makes sense.

I think that's -- we really have the opportunity to kind of lower the weighted average cost of electricity going forward with these power contracts that we have in place. And again, just safe and resilient business with strong returns. This business has been very volatile through the cycle. It's been difficult to understand how the kind of cost base works. And I think this model -- this business model provides a much more consistent earnings profile over time and just kind of help us build confidence to keep reinvesting. The global safety refocus, I think that applies in all parts of BlueScope to varying degrees. We've got to really sort of double down on what has got us to a very good safety performance and maintain and improve that. And again, optimizing the kind of the [indiscernible] model and the EAF model going forward is pretty key.

And I guess the license to operate, that really is a comment about how we interact with the community in a broader sense and the New Zealand Inc., but also be able to work with the government in a constructive way and provide solutions -- we have found it difficult over decades to really have constructive meaningful discussion in that sense. But I do think we were able to kind of find a sweet spot and sort of improve our, let's say, perspective in a New Zealand -- from a New Zealand government perspective and how important domestic manufacturing is. So that's been work of decades to try and break through that paradigm because typically, I think the New Zealand government has got a lot of work to do in terms of how it supports its industrial base as we all know.

Just back again to the business performance, you'll see the Asian hot-rolled coil price and the shape of it, and it essentially follows our earnings profile. You can kind of see what -- when you've got a fixed cost and you get price exposure, what happens, but you can kind of see that, that volatility creates a lot of uncertainty for us and investors and everybody. So you can imagine trying to break this cycle has been a key driver for me to find a way to how do we kind of flatten out that profile because I'm sure it's very frustrating and confusing for lots of people.

So a way of doing that, of course, is trying to protect this downside with a scrap spread business that we've sort of described. So you've got a much stronger correlation between scrap and hot-rolled coil, obviously. And then the other aspect was the electricity cost. We've experienced horrendous power pricing over the last couple of years. We've got cogeneration on site and some hedging, but the spot price volatility, which we've sometimes been exposed to has been horrendous in the last couple of years as experienced by lots of industrials.

And we've been fortunate enough now as part of electric arc furnace, gain confidence in the business model and secure those contracts over 10 and 11 years with Contact Energy, as you probably will have heard. So we think those contracts are quite innovative. They're not just straight fixed price contracts. They have knockout periods within there that allows Contact to monetize high price periods and allows us to kind of take load off. So I think we've been able to share some, hopefully, benefits there and get an internationally competitive power price that makes -- that is obviously a ticket to a game to run electric arc furnace.

We essentially had to have those contracts even contemplate moving into this business model. And you can kind of see as the economics and the cycle has kind of changed, volumes have reduced because the margins of those export markets get weaker and weaker, particularly when your cost base is challenged. And you kind of see how weak the domestic volume has been recently, and Suzanne will talk a little bit more about the specifics of that. So at this point, I'll hand over to Suzanne McKandry, our GM of Sales and Marketing, to give you a bit more color on the specifics of the market.

Hi. For those of you that I didn't meet last night, yes, I'm Sue. So I'm the GM of Sales and Marketing. I've been here 5.5 years. Our team's remit in sales and marketing covers our customer service team, sales, marketing, our product application development, our pricing team and our data insights team. So it's great to have the opportunity to share a little bit about our market and our product suite. So you'll see for the New Zealand domestic market with our combination of flats and our long products that our product ends up largely used in the construction market. Alongside kind of our heavy plate product, Pacific Steel and the Ls product actually adds positively to our presence in the infrastructure market.

Unlike some of our other BlueScope counterparts, in New Zealand, we don't have a downstream presence. So our sales strategy is completely upstream, supplying to our major distributors with Fletchers, EZ Steel, steel and tube distribution and Vulcan and our network of roll-forming partners, [indiscernible], Steel & Tube, Roofing Industries and Freeman to name a few. As Robin has already said, the New Zealand trading environment has been super tough in the last 3 years. And you'll see from the graph on the right-hand side there, our metal coated and painted products, whilst down have actually held reasonably well with kind of the detriment being in our flats and our longs product.

Now some people might say, that's quite interesting because if we're looking at our economic indicators, consents coming off the high of COVID, residential consents are actually holding quite well versus the past. And even though we've got some ups and downs in our nonres, the graph shows that it's kind of growing. What we're seeing in New Zealand, though, in the last few years is extreme inflation. You would have seen we were kind of in that 5% to 7% range, significant interest rate rises as well. And so we're seeing a lack of completion to those consents within the 2-year period.

So anecdotally, in great kind of trading environments, we would see completion rates to consents around the 80% to 90% -- and there are reports of our completion rates against consents to be in that 60% to 70% range. So that kind of helps explain some of the declines that we've been experiencing. At New Zealand Steel, we offer a full suite of products covering our base commodity products, hot rolled coil, plate products through to our metal coated products and obviously, our significant flagship value-added premium brand in COLORSTEEL, our painted offering in the domestic market. Pacific Steel, our longs product. And Pacific Steel gives us a really unique opportunity in the New Zealand market. We can supply product from the ground up, which is very exciting, particularly as the EAF comes on to board with low-emission steel products and [indiscernible].

So [indiscernible] is probably the closest business, we would have that would be kind of downstream. So they take the plate from New Zealand steel and make custom designed and manufactured optimized beans for the construction market. Taking a deep dive into our flagship brand, COLORSTEEL. COLORSTEEL has been New Zealand's favorite roof for 40 years, market-leading in New Zealand. With our very unique coastal environment, coastal and geothermal environment actually, the attributes of high durability, enhanced corrosion resistance and low maintenance means that those attributes are really desired by consumers in the New Zealand market.

For our kind of more moderate environments, we offer a market-leading 50-year warranty as well. Unique to New Zealand is another product range we have called [indiscernible]. Basically, we add a condensation kind of ventilation fleece to the back of the color steel product. And it actually negates the need for roofing paper. So for the trade, it actually means that they can install roofing and cladding quicker because they don't have to wait for the paper to go up and then the steel on top.

It actually means they can work in all weather conditions as well because you're not having downtime for the rain and wind with the paper. And from the consumer's point of view, it actually creates drier, warmer homes. So as condensation rises, the fleece absorbs the water and then releases it in an environment when it's fit for that. And it creates warmer dry homes. It's sensitive choice asthma society approved as well because New Zealand actually has one of the highest per head of population incidences of asthma in the world. Like Australia with COLORBOND, we compete in New Zealand with tiles as well. Uniquely, though, for New Zealand, these tiles are actually metal-based with a coated technology on top of them. And we also have a prepainted long-run competitor but that's through Fletchers, Pacific coil coaters through Color coat. So we actually have quite a competitive roofing environment in New Zealand. And through really strong sales and marketing leadership, we have great strength of brands, 85% brand awareness, strong conversion rate at 90% for those people that consider the brand through to more than 50% that would have color steel as their preference for roofing against our competitive set there.

And as Robin also alluded to, during the very tough economic cycle we've had, actually Color Steel has gone from strength to strength. So that kind of sales and marketing leadership, both B2B and B2C has meant that during that cycle, when our commodity products has been declining, we've seen the opposite in COLORSTEEL with very strong growth. So what's next for us in terms of continuing to kind of keep that growth in COLORSTEEL going? In August '24, we launched COLORSTEEL [indiscernible] And as Robin also mentioned, that was where we introduced the COLORBOND DNA through the Activate technology, the AEM.

What we also did at that time, though, was take to really differentiate our product in the New Zealand market. The AEM introduction has allowed us to have just one substrate that now can go across almost all environments in the New Zealand market. So it's so easy for specifiers to specify us because they just need to name COLORSTEEL. The roof is too, there's no question what they need to put on their roofs. It can just be COLORSTEEL. And that's been game-changing for us with our roll formers as well. One substrate, one set of colors means they can reduce their working capital. So it's a really strong benefit for them to be partnering with us.

You'll hear a little bit more from Rob today and the [indiscernible] team on our paint line expansion so that we make sure that as the market returns, we're ready with the extra capacity we need to supply the market and definitely continuing our strong focus on sales and marketing leadership across the market. But I say wait, there's more. The other opportunity we really have is with our low-carbon, low-emission steel products, understanding strength of brand, understanding what value-added premium brands bring to our performance for our high scrap products that we'll be producing both across the board actually, but starting with our longs product and our reinforcing product, we've created a new brand called [indiscernible].

Pacific Steel will lead the launch of the decarb range. And I'll just explain a little bit about that. So with our reinforcing product today and the way we manufacture our products today, it has a very high GWP at 3.95. To achieve a Green Star 5 or 6, we need to be halving that number. So any product supply to achieve a Green Star Building 5 or 6 would need to be under 2. When we go live with the EAF, our standard blend, which is a blend of scrap and liquid iron will achieve a GWP of 1.89, which is pretty phenomenal. So off the bat, we can be supplying that product, which today would be fully imported because we can't supply those numbers. And then incredibly, when we produce using 100% scrap, the longs product will achieve a GWP of 0.489.

And actually, we have to say when you're considering A1 to A4, it will be the lowest rebar emission product available in the New Zealand market. And as Robin said, that will have some premiums to it, which we're working through now, but it goes back to that, what can we add, how do we differentiate ourselves. And on that note about all things EAF, Conrad is going to come up and take you through the [indiscernible] story.

Thank you, Suzanne. Good morning again. And I think just a quick introduction. David did a great introduction, but I'll just add a few notes. I started my career in 1991 as a graduate as part of the Anglo American graduate program in South Africa, and I was then employed after my studies until 2008 at Highford Steel and Vanadium, which is a very similar operation to this in that it is also quite a low-grade magnetite ore that we mined and process at that facility, and we also used to extract vanadium very similar to the New Zealand steel arrangement. So I started my career here, worked in the front end at New Zealand Steel in the iron plant and then also at the mine site for a short stent and then lately in our steelmaking department.

So I joined the project right at the start during the concept stage, and I was the operations leader in the project and then the opportunity came up to become the Project Director. And Robin was kind enough to offer me the role, and it's been a great journey. Right. So I think enough of myself. So what -- the first thing I want to show you is a 3D model that we've developed, and that is really to show groups and interested parties of what the general arrangement of our new EAF facility will look like.

So I'll just talk through that. So you can see there's a conveyor leading into the plant. So we will feed shredded scrap onto that conveyor onto the main feed system to the EAF. You can see there's the main feed system. And right where those yellow hand starts is the post-combustion chamber, where we actually preheat the scrap as it travels through that chamber before it is deposited into the furnace.

We will preheat the scrap around about 500 degrees on that conveyor, so -- which really gives us good energy efficiencies. That's really the reactor or the crucible, the arc furnace with electrodes. And then this is our hot metal addition system, the hot metal from the iron plant, which we will decant into the electric arc furnace. This building there is the transformer volt. That's the Q1 system. 5 transformers will be installed in that area, which will power up the furnace. And this really is just a bird's eye view of our fuel extraction system plus our bag filter. To the left there, you can see a water treatment plant as well.

All right. I think we've covered most of these. We can carry on. next slide. Thank you. I just want to point out some of the key features of the furnace. So that's the scrap feed system. This is the open-end system where we will load scrap with a magnetic crane as well as this external feed conveyor, which you saw in the 3D fly-through. This is not a conventional conveyor system. It's actually a vibrating feed arrangement and the scrap travels towards this area where it enters the post-combustion chamber or the preheat tunnel. Now this preheating is done by the post-combustion, which is an exothermic reaction of our off-gas, and that's mainly CO that's generated inside the furnace.

And the scrap, so it's a counter current flow, the scrap travels towards the furnace over there and our off-gas travels in the opposite direction before it exits through there to our back filter system. The good thing about this as well, besides the energy efficiency, it's about -- you need to scrap up to 500 degrees before it is deposited into the furnace. It also drives off moisture. So in the wet season, it's actually quite a safety feature as well. If you compare it to a conventional bucket charge where you discharge 80 tonnes or 86 tonnes of scrap in our case, you do have some reaction during the wet season or like in areas where it snows and there's a bit of a reaction when you charge that. There can also be like sealed containers, undetected going into the system, and that will actually -- that will react in that chamber and it is an enclosed area.

So from a safety point of view, that is pretty good. I'll just point out our hot metal additions. So the energy that we get from the hot metal, it's obviously because it's in the region of about 1,400 degrees when we discharge the hot metal into the furnace, and it contains around about between 3.5% and 4% carbon. Inside the furnace, we inject oxygen at supersonic speeds to actually burn off the carbon and oxidize other impurities to then be dissolved in the slag. The carbon that burn off is obviously the exothermic reaction again, and then that means you require less electrical energy.

Just as approximate numbers, if you melt 100% scrap without hot metal additions, our power consumption will be roughly about 350 kilowatt hours per tonne. If you add hot metal and scrap in the ratio that we are going to do, which is close to 50-50, it's about 182, 183 kilowatt hours per ton. So obviously, a big advantage. The other advantage of that, conventional arc furnaces, if you produce flat products from arc furnace steelmaking, you need to add a certain amount of virgin iron units to dilute residuals, especially copper. Because when you do flat steel production and copper levels are above the high and it's extremely sensitive to the copper levels, you get what is called in metallurgical terms hot shortness.

It's basically just the process of copper precipitating on the grain boundaries, which causes surface defects on flat products. Not really an issue with when you do reinforcing bar because of the -- it doesn't really affect the mechanical properties of the reinforcing bar and the surface qualities in the specifications aren't that demanding in terms of rebar.

Right. So 1 power system, I'll quickly go through that before I go to the furnace itself. There's 5 transformers. It's basically a giant inverter you invert from AC to DC back to AC. Now the advantage of that, it's a modular system. We've got 5 smaller transformers, 515 MVA transformers. It is also future-proofed. In the future, if we have to start to -- in the absence of iron have to start to add BRI or HPI, this power system is designed that we can still maintain our tap-to-tax cycle time of 38 minutes should we need that. It's also building redundancy. It's basically N+1 system. We will run all 5 transformers, but we can still maintain full production on only 4 transformers in the case of a breakdown.

So there's quite a bit of future proofing that went into that design as well. The furnace, you can't really see inside the furnace here. The 3 electrodes, that's electrical energy. And then we've got 3 burners on the side wall, which will inject the oxygen, natural gas as well as carbon. Now the oxygen is actually -- it's injected to oxidize the impurities in the furnace, which floats out in the slack and you drain the slack off. Electrode consumption in terms of the Q1, another benefit of the Q1, very low electrode consumption. It's a major conversion cost for our furnace steelmakers is electrodes, very low electrode consumption.

So that is really very, very comparable to world best sort of standards in terms of electrode consumption. High level of automation. So in terms of our safety, there's a lot of thinking that went into the design as well because we will have robotic sampling and temperature measurements on this facility, also tapping from the control room rather than out on the floor. And we've actually invested significant money in terms of the safety features of this furnace, which were basically. If you look at the tender submission that we've got from [indiscernible], which is our OEM provider, those are additional extras, and we decided to invest in that as well. So just in terms of our time line on the project, we are on track.

In fact, we're starting cold commissioning next week. The cold commissioning process is a stage process, and that will take us right through to about mid-March when we expect to make the first heat of steel from the electric arc furnace. Just some pictures there to the left, that's the arc furnace, it's the bottom and the top shell that we installed, some more pictures at the bottom of the furnace. And then this is just the stack on our back filter.

All right. So just to give you an idea, so we've done a bit of a fly through. So last year, on the 6th of June, we broke ground for the first time. We drilled the first bearing pole. And that was the first contractor that we engaged. It was a really good solid performance from that contractor. And that was followed by the -- our civil contractor who started with all the civil construction, really good performance from that contractor.

I guess we were very lucky as well in terms of timing of our project. Due to the construction downturn in New Zealand, the availability of those contract resources were really good. And I think it's fair to say that for our major contracts, the pricing that we got was fairly sharp. So I think we were really in terms of that timing of our execution, it was really good. And you can just see how that landscape changed, and that started on the 6th of June last year. And I think you'll have an appreciation for that when we take you through the area later today. This time lapse video is not 100% up to date up to yesterday.

I think the last -- the last footage on this is probably start of September. So you'll see a bit of a different landscape out there today. The other thing I will add, and I think you will see that when we're out there today, this is a brownfield project, and it is right in the middle of our existing ongoing operations. So credit to my team and also the operations team in the steel plant that made it work. It is -- it's got its own set of unique challenges. But I think we came through that in pretty good shape.

Yes. So this is -- again, that is the -- on the right-hand side, that big precast concrete building is the transformer vault. And then you can see towards this end year, that's the whole feed system. And there, you've got the furnace. This is before the shell was installed. That is just a to frame for the furnace. In terms of our -- just maybe a quick fact while we look at the time lapse, contractor presence at the moment is we sort of peaked at around 260 contractors on site on a daily basis within our construction boundary. And that's besides our projects support team, which is about 40 people. Thanks, Ron. I'll hand back to you.

Thanks, Conrad. Look I think it's the time lapse and what you'll see today really kind of brings it to life. It's a very significant activity, particularly those you might be expecting a brand-new building in kind of in a flat paddock building it in the middle of an operating plant is quite the challenge. You need to do that from a capital efficiency point of view. It creates complexity in the short term, but it's certainly the right way to do it to integrate it with the existing steelmaking facility.

So just in terms of transition, as you can imagine, it's been a complicated kind of period, as you'll see when you go there in terms of building it inside the running facility. And then we've also -- you've got a quick drive past some of the existing iron-making operations. As you can imagine, we're very conscious of managing those assets to end of life. We're trying to be very careful about capital spend on assets that are getting turned off in 6 months' time. They tend to underperform as we try to optimize that kind of R&M and capital.

So it's been an interesting kind of period from that perspective. So there's been additional kind of downtime in terms of the changeover and commissioning process. And of course, the ramp-up sees us -- we don't turn one steel facility off and it went on in the same day. There's a kind of progressive process over 3 months where we start making a bit through electric arc furnace and a bit less through the basic oxygen process.

And of course, we have to be very confident about switching certain assets off because some of these things are one-way doors once you turn certain things off. So we have to be very confident that we can service our customers in domestic market before we turn equipment off. So it's an interesting kind of time from that perspective. And then you can kind of see some of the impact on the operations and the impact on yield losses.

And obviously, we're holding higher working capital in the form of scrap and finished goods to help us kind of take some pressure off that kind of 3- to 6-month kind of process in the second half of this financial year. So we're carrying high steel inventories. We actually imported some slab from Port Kembla to kind of make sure that we could kind of manage through that sort of period. So we are carrying higher working kind of capital through that sort of period. And on paper, financial year '27 should be a full electric arc furnace operation.

But the next 6 months post commissioning is going to be a very challenging kind of period for this business. But certainly, in terms of capability, we've had the North Star team heavily involved in the inception of this project. They'll support us on commissioning and training. So we're able to kind of reach into the rest of BlueScope and kind of leverage off the experiences that we have across the globe. Just in terms of the enabling factors, I think we've covered some of this before, but you can imagine a good electricity contract and scrap contracts were ticket to the game before kind of progressing with this. [indiscernible] contracts in place, 300,000 tonnes using some quite cost-effective rail solutions, backloading billet, we make billet steel in the form of billet.

We send that with a train to [indiscernible], and we'll do a backload of scrap. So it's about as efficient as you can get with the backload from the Sims yard, hopefully, of 100,000 tonnes will travel in that direction. It takes trucks off the roads, and it's just fundamentally the right thing to do. So we're trying to get that up and running for the starting process. And I think we think we have a very innovative set of power contracts with Contact Energy.

The first one starts next week and then the second one starts in full in December '26. So we think we've got a pretty competitive commercial rate for electricity. And it's just this graph is trying to show, I guess, what is the volatility, I guess, of power pricing and then the kind of what the averages have been. You can kind of see that the average is $200 a megawatt hour. You cannot run a steelmaking facility long term on $200 energy. It just doesn't work. So we've been able to contract power back to what I would describe as FY '18 sort of levels without -- you can kind of see I'm just moving my mouse around kind of carefully there.

But it's -- there are decent prices in the context internationally and domestically. And I think we've been able to provide value with our demand response because of the technology we're putting in. And I think the likes of Contact Energy see value in that interaction with the large industrial like New Zealand Steel. So hopefully, it's a valuable partnership going forward. And I guess get scrap. It's just reemphasizing the scrap spread relationship over time.

And this will just give us a much flatter earnings kind of profile as we kind of go forward and more predictable for external parties in terms of how we manage a sort of operation going forward. And again, as complicated as this business has been to describe sometimes when you've kind of got this kind of thermal coal and low-grade iron ore, it's complicated and it doesn't follow the normal trends.

We're trying to give you some sense here of -- we've got a hot-rolled coil for 75% index for 75% of our product. Color steel is obviously priced in a very different way. And then scrap. Scrap will be a fairly substantial proportion of our mix. So hopefully, that gives you a sense of the kind of moving parts in our cost base. We've got the Newcastle index for thermal coal and broadly what our consumption rate. So hopefully, it just gives you some sense of what the economics of the business looks like.

But I would imagine this is a conversation that develops over the next 12 to 18 months with the help of the Investor Relations team to kind of firm up what the economics of the business look like. Just a quick wrap-up. Obviously, the only steelmaker in New Zealand. I think it does give us a strong in-country for-country kind of position, flats and longs, and we have the opportunity to kind of grow domestic premium branded kind of products. Suzanne has given you a good sense of examples where we've got good positions, particularly in COLORSTEEL.

And I think that sort of the COLORSTEEL growth story in a weak market, I think, is a good representation of that. Much better flexibility and resilience of the electric arc furnace kind of model and gives us all sorts of options going forward. And then really kind of how do we optimize scrap electricity and just get the best out of the kind of technology. And as Conrad has explained, we've got some quite a neat technology package. We're not first in the world doing it, but we're sort of getting -- there are other tried and tested technologies now that are showing some real competitive advantage. advantages for that electric arc furnace operation. And I guess, 60 years of operating experience within the country and also able to kind of draw on BlueScope's capability for project execution, electric arc furnace operations. So we've got a strength within the group of this sort of work that's, I think, very valuable. Okay. I think that's it. All right.

Fantastic. Thanks, Robin. We'll just get ourselves set up for a session of Q&A. For those, we have a webcast running at the moment. So just for the benefit of those online, I'm Don Watters, the Group Treasurer. I'll ask David Fallu, Robin Davies, [indiscernible] to join us up here at the front. We do have microphones here. Again, just for the benefit of those listening on the webcast, when you put your hand up for a question, we'll just wait for the microphone arrives so that people have the context for what you are asking, and we will flip between questions in the room and questions coming through online. Again, for those online, now is a great opportunity for you to post questions, so we can make sure that they get asked here with the group on stage. I'm going to throw to the floor here now.

Owen from RBC. Just a quick question on that EAF models benchmark spread that you just presented there, Robin. I know that there's no iron sands in that mix that you've got there. Just wondering how we should try and include that within that spread or broadly within your EAF cost modeling here. Is that -- I'm assuming that forms part of the raw materials bucket, but just wanted to confirm where that is.

The biggest movement in our raw materials change between scrap is really the coal. If you look at ratios of cost, coal will be a significantly higher proportion of that iron cost as it compares to the iron sand. So the thermal coal, let's say, MU index today would be USD 110 exchange rate delivered freight into New Zealand, that's a large chunk of that sort of cost. So it's probably of the order of 4 or 5x the iron sand delivered cost. We've still got a pretty cost-effective delivered cost of iron sand into that model.

Okay. And then just another question, I guess, with regards to the scrap component within that EAF spread that you provided. You did highlight there's quite a degree of internally generated scrap. So I just wanted to get a sense of your scrap mix proportionately, I guess, either today or as we go forward, how much of that scrap is internally generated?

Yes. So today, Owen, we've got about 90,000 to 100,000 tonnes that's generated through internal kind of yield processes and recycling. So if you said today, we look to -- we've contracted -- they are contracted minimums of 300,000 tonnes and about 100,000 tonnes of internal scrap, and we propose to be able to make 300,000 tonnes of liquid iron. Obviously, as you can imagine, they've all got yield, you've got to yield some of that down to convert back to sales tonnes, but that's the raw materials mix that we'll have available. And ultimately, then we'll optimize that to suit the market conditions. We do think the electric arc furnace has a nameplate capacity of about 800,000 tonnes. if we choose to sort of push that far either because the domestic market is strong or we've grown our domestic position or there's some export opportunities that are compelling at the time.

Harry Saunders at E&P. Firstly, just one for Robin or David. I appreciate you've said there's $80 million of EBIT upside at the bottom of the cycle with EAF. Can you just give a sense of any potential upside for mid-cycle in New Zealand from the projects and perhaps what the existing mid-cycle EBIT is for the business in your view?

Yes. So look, in terms of that comparison is effectively to the FY '25 operating position, right? So it's not just the market cycle. It's also the position that Robin was referring to in relation to energy. So kind of from a pure like-for-like, that will be sort of different depending on all of the underlying. Moving forward, the ambition that we have for the project is effectively at mid-cycle that enables the New Zealand business to achieve effectively our ROIC target for those businesses, and that's effectively sitting at just above 14% return at mid-cycle once we've fully ramped up through to production, and that's the ambition for the business. And you've kind of seen that in history. And as Robin has mentioned, this is really taking away the volatility on the downside.

Great. Just a follow-up as well. Can you just talk through the transitional earnings impact that was flagged sort of the timing of this and maybe potential ballpark? And have we seen any impact already as you're sort of managing existing assets down within that first half guide that we had?

Yes. So look, the short answer is that there will be a degree of operational impact. Some of that impact is being felt already, as Robin mentioned, we're now managing a production process that's effectively end of life. And that comes with a degree of uncertainty in terms of the operational performance of those assets and the energy that goes into it. The quantification in terms of the impact of that, I would not describe at a material level for BlueScope. It's obviously at a material level for New Zealand given the level of earnings that are existing within the business today, but something that we'll work through, through the course of this half and next.

[indiscernible] from Bank of America. Just a question on one of the slides. It looks like you don't need the furnace, the blasting, but just replacing by EAF. Why can't we just convert everything by using scrap to EAF from a cost perspective? I guess it looks like iron sand is very expensive as well as thermal coal 3 to 4x cost versus sand. So what's the thinking behind that if you have enough scrap in New Zealand?

Look, I think if you look at the export market, the export market for scrap is somewhere 450,000 to 500,000 tonnes depending on the economic activity. That obviously is exported from all over New Zealand. So you can imagine probably, say, 300,000 tonnes of that is available in this region as in, say, north of Central North Island. So you can imagine, as you kind of start to look to secure the whole scrap market, which is actually what you would do because we can imagine that domestic market can get to 500,000 tonnes. So you are starting to really stretch the domestic in a market in that scenario and potentially your freight cost to achieve, say, the bottom of the South Island, your freight costs will start to increase in that scenario. So you'll start to stretch the domestic available scrap market. And of course, once you turn that iron sort of operation off, it's off, right? So there's no going back there. And we are confident that we can get a cost-effective iron-making operation that at periods of the cycle is probably significantly cheaper than scrap. So you do have that ability then as you can see that, that model in itself can perform pretty well. The scrap gives you the resilience in the bottom of the cycle and a much more flat earnings profile. But we do think that iron operation is valuable in the long term because we do have a very low delivered cost of iron sand still relative to international kind of benchmark. So we think it's still cost effective and it gives us a raw materials mix that allows us to flex the capacity up significantly because the New Zealand scrap market is about 500,000 tonnes and 300,000 is available with low freight cost, it starts to increase if you're coming from the bottom of the South Island. So it's really -- it's an option as we kind of do the transition. And we may well reflect on that going forward that scrap only is the most sustainable kind of model in the long term, but it's certainly how we plan to transition the business today. We think we can have a cost effective. We're not running an uneconomic kind of model. We think it's still through the cycle has got its place to play, particularly when new power contracts are in place and we've optimized the [indiscernible] operation. So we think we can get that cost base into good shape.

And this effectively refers to the lack of rigidity in that new model. And so we talk to value and use as part of the optimization of inputs into our facilities, and that gives the New Zealand team a greater opportunity for effectively that value and use process.

Just one, just in the context of a very weak domestic backdrop, I guess, how are you thinking about the ramp profile of the EAF given domestic looks like it's about 320,000 tonnes at the moment.

Look, it's a good question. I think it's the ramp profile is as much around managing that kind of cost base of the whole operation as you point out, a weak market. Look, there's no doubt that you can kind of see how weak the market is in the graph that Suzanne put up. Clearly, there's some upside there in the recovery. You have to assume there's an upside there in the recovery. So hopefully, our timing is actually quite good there in terms of ramping up the new technology and then the domestic market is kind of following that. So it's about managing steel inventories. Yes, to your point is, is it compelling to make a vast amount of steel today given those economics? The answer is no, clearly, both domestically and internationally with tariffs in all sorts of places. So -- but we will have a pretty cost-effective steelmaking model once we transition. So we will be more competitive, margins will improve. So you will get the benefit of those fixed cost recoveries by running the volume that we'll find the sweet spot, I suppose, in that sort of ramp-up. But again, we want to dial the technology in as quickly as we can and get it commissioned. And as you imagine, we are running some assets at the end of life. So we need to make a call because we can keep investing in assets. And if you invest too much, then you have to write them off or they fall short. So we're trying to kind of optimize that kind of turning the kilns on the melter off. And they are big decisions, but we need to be pretty confident that the new configuration is working well before turning those assets off because they are essentially off then permanently.

And one final one, just on the power contract, the new power contract that starts in December. Should we assume a $10 million or so benefit in the second half, I guess, from that power contract given some of the figures you put up today? And then David, is that sufficient enough to offset some of those costs? Or do you expect a bigger net cost impact in the second half given with that power contract?

I think in terms of the second half impact, that would be of the order, I think, to manage the sort of cost that we've seen in terms of the interruption to operations through the pre-commissioning period.

Lee Power from JPMorgan. David, just maybe going on the power contract. I'm not that familiar with renewables and what's kind of driven the run-up in recent times. Is there any kind of pass-through mechanism or anything else that's going on around the power contract that we need to be thinking about if it were to keep going up?

I guess probably that relates to 2 aspects. One is in terms of the electricity cost within New Zealand, high degree of hydro renewable base generation within New Zealand. as a result, a degree of intermittency when that translates to a drought environment, which has been relatively rare if you look at the beautiful green environment outside, but was something that we experienced through the course of FY '25. That resulted in the significant increases in electricity pricing that the team were referring to. In relation to the specific power contract that we're undertaking, it's a geothermal contract, so effectively a firmed renewable source. So therefore, much greater certainty around the pricing side of things. And so that's effectively a contract regime that gives certainty over a longer time frame. But as Robin mentioned, with gives and takes around the modulation that we're able to offer into that contract as well.

Yes. So those contracts are essentially fixed price with small escalation for 10 to 11 years -- so we will have in that contracted kind of level, contracted to 80 megawatts, which is probably 80% to 90% of our total load will be contracted. So we won't experience any of that kind of volatility that we've seen previously. So they are starkly different to the arrangements we've had previously.

Okay. And then for Suzanne, can you maybe talk a little bit about how you actually price the painted and coated product here? Like, I guess, in Australia, there's a clear substitute product that you could look at in clay [indiscernible], but you don't -- you have a bit of a different dynamic given there's a steel feed for that. So is it IPP? Is there something else going on? Just trying to...

Yes. For about 75%, 80% of our products, the flat products, that is IPP based. I mean it's kind of a combination of metrics in terms of pricing that, steel indices, IPP, freight metrics, what's happening in the raw materials. So we take combination view in terms of pricing those flat products. In New Zealand, they're priced kind of bimonthly for longs, quarterly for the majority of the flat commodity products. There's a few like Axis Steel for framing and our [indiscernible], which have a bit still based on that profile, but a little bit longer in terms of fixed pricing for group homebuilders and the likes in terms of how those contracts work. In terms of COLORSTEEL, similarly priced to the way COLORBOND is priced in Australia in terms of kind of that 12 to 24 months, taking into relation kind of market conditions, cost base, CPI and the likes, but certainly premium in its price position.

Scott Ryall from Rimor just over here. My questions, I think, are mostly from for [indiscernible], but maybe Robin jump in if you need. Could you -- the implication, I think, of what you said in your presentation is you're actually missing out on low carbon steel sales at the moment. Could you just quantify roughly how big that market opportunity is just in volumes? And then how much time do you spend talking to the Australian folks about some of the value-add products there? You mentioned the framing product. I don't know if that's the same as [indiscernible] as an example. But is that something where you will go both ways in terms of this product is going gangbusters here, why don't you try it there and vice versa? Just talk through your integration with the Australian team.

So I'll start with that one. Then in terms of integration with the Australian team, well integrated. We have a kind of a global sales and marketing group. So we're meeting monthly, sharing all of our learnings. The ASP and New Zealand team are meeting kind of -- well, actually all the time, but formally 4 weekly sharing kind of exactly what's happening in the market, what initiatives we are undertaking and the success we're having with those. In terms of steel framing, particularly, yes, we definitely engage with the team in Australia around the learnings that they've had in terms of the route to market, particularly the route to market. The New Zealand market is quite fragmented in terms of the supply chain for that, but we certainly see a huge opportunity for steel framing. Steel intensity in New Zealand has grown dramatically since the Christchurch earthquakes. So there's a massive opportunity for steel framing in New Zealand, but still at its infancy. So we definitely take the learnings from the Australian team that have built an incredible market in TUC. In terms of lower emission steel coming into the country, definitely in the rebar, that's exactly where we're seeing it, not so much in plate product yet, although there is a huge interest in that. It's hard to quantify exactly. We do get the information from stats, but it's not obviously always clear. So maybe in the 5% to 10% range of product coming in of our tonnes.

5% to 10% of imports.

Yes, of our value. Yes. Sorry, of our tonne base. So we're probably talking, I don't know, maybe even 10,000 tonnes of product is already coming into the country for low-emission rebar.

So if you thought of the reinforcing market today might be 120,000 tonnes in a weak market. So you might say, 10,000 tonnes out of that would be in that low GDP sort of area. So the market is weak today relative to what it would normally be. So I think it's -- yes, that's about right. I think 10,000 tonnes.

I think -- did you have a question down the back there?

[indiscernible], Westpac. The question around the transferability of this new exciting technology into other markets. How important is it that the electricity that you procure is 100% renewable. So for example, is this technology attractive and beneficial from an emissions perspective in an environment where perhaps the grid electricity or the source of electricity is not 100% renewable? And where does it tip over? I guess in terms of how we talk about our emissions intensity, we are using the grid factor to kind of determine that, even though we have got a contract with -- contract for difference that is theoretically associated with the geothermal power station, we still take the grid average. Now the grid, of course, is in New Zealand anywhere between 85% and 95% renewable. So it's reasonably good in the first place. So you're starting to get into diminishing returns in terms of carbon intensity because the grid moved by 1%, you just -- so we don't sort of count that it's 100% renewable electricity in those numbers. So that's the number with the grid the grid factor. So it's -- and obviously, the technology then because of what Conrad explained with -- we are 100% scrap, high renewable energy and a very -- as efficient as energy consumption as you can get, then it's pretty low -- very low on an international comparison level. So does that answer your question? Absolutely. So on parts anyway. So good on you for taking a conservative approach on the grid electricity, but I think it's quite interesting to understand where -- at what percentage. So like how would it work in Australia, for example, and so on. So that's the answer.

To your point, it is conservative. We're not claiming those electrons came from the geothermal power station if that's what -- yes. Okay.

I think the other aspect in terms of the applicability of the technology and the benefit from a decarbonization perspective, which we'll talk to is -- that electric smelting technology, we're trying to see how that applies to hematite ore production, which is the predominant ore body in the Pilbara, and that would enable the utilization of DRI and potentially gas-based DRI. So it's not so much the benefit from the electricity that's utilized in the smelting component, but the decarbonization opportunity in the iron making from the DRI process that it enables.

Yes. And I think that geothermal generation because of its firm nature is a real advantage in New Zealand because of its -- David pointed a hydroelectric, solar, wind has got the intermittency, which makes it very hard to firm, but the contract is a firm contract because it's backed by a geothermal power station. So it's quite a neat in-country advantage in that sense.

Okay. We don't have any questions on the line. We might take one more question off the floor before we go to. I think, Tim, you had over the Okay. All right.

Sorry, [indiscernible], just again on the green steel pricing, like the imports, is there any material difference between what green steel is getting now versus nongreen? I guess it's rebar, obviously. So it's a little bit of a different piece, but it would be kind of interesting to hear.

Yes. I think across the very low emission steels, we're not talking about our standard blend, but like the 0.4 blend. Anecdotally, we are hearing of the premiums that have been coming into the country. I think it's -- we're at the phase of kind of testing those premiums in the market and socializing our service offer. I think it's not for Pacific Steel and also New Zealand Steel. The premiums that we can attribute to Color Steel and other brands we get just isn't from the product alone though. It's actually from our service offer as well. So short lead time stock, drawdown stock, cut to length. There's options that the large mills actually can't do. So we kind of take that total view alongside the low-emission steel as to how we price that.

Just quickly, Ram, I think you had one more question.

Just one for David. Just the 14% ROCE mid-cycle, what are you assuming there for domestic tonnes at mid-cycle, what should they be?

So in terms of that would be a sort of mid-cycle performance in end markets as well. And I guess to the point around some of the comments that were made around the opportunity of low-carbon product, a lot of the infrastructure projects that were put on pause, those are the sort of programs that we would expect to see sort of reengagement from a volume perspective and from a government project perspective, an expectation that, that's going to have a requirement for a lower carbon and local content requirement as well. But in terms of construction activity, again, a bit like our assumptions when we put up the growth initiatives and earnings expectations coming from those, they're effectively set at mid-cycle construction levels across Australia and New Zealand.

Very good. Thanks. Great questions, and thanks, team. We're going to take a 15-minute break for some morning tea. We'll get going in 11:05, we'll jump into the property and push up a piece at that point in time. For those on the line in Melboure and Sydney, that be 9:05 Melbourne Sydney time.

[Break]

We'll start in a couple of seconds. We've got Michael Reay, who leads Property and Infrastructure. So I'm sure you'll be all really interested to hear about what Michael has got going on. So we'll bring the webcast back on in a tick. [indiscernible] finished charging his computer, which is handy. And yes, feel free to jump up, use the bathroom, obviously, as you need to through the thing. But thanks. I'll bring Michael up now.

Good morning, everyone. So my name is Michael [indiscernible]. For those of you I haven't met, hello, and we can have a chat a bit later on this morning. I'm not a steelmaker, unlike a lot of the other presenters here by background. My background is actually in civil construction and property development. So I'm a civil engineer by background. civil engineer by background, and I've worked -- I started my career out in construction, civil construction and infrastructure and also property and then transitioned into property development fairly early on in my career. So I've done property development in the U.K. at some of the large REITs, Stockland, [indiscernible], I was the Head of the Industrial Origination before joining BlueScope, and I was also at Qube for nearly a decade, doing a [indiscernible] role where it was a property and infrastructure development role in Harmony with an operational business. So the function that I've been brought on to do for BlueScope is to look at the nonoperational land holdings, which are significant. There's about 1,250 hectares of the nonoperational land holdings and look at unlocking that value for the business. So the value is fairly broad, obviously, the commercial value, but also the value to the adjoining operational businesses, and we'll have a bit more detail on the sites and where these nonoperational land holdings sit and it will hopefully make a bit more sense on how the property strategy and the development strategy links in with the operational businesses. So the nonoperational land portfolio, we have Glenbrook that we're at now. There's about 450 hectares that surround the site at Glenbrook.

We have 2 sites in [indiscernible]. First being the Port Kembla site that's adjacent to the operational steel works. We have a site at West Aapptto that's also in the Illawarra a bit further inland, and we have the Western Port site also known as Port of Hastings. Now all these sites have fantastic infrastructure connectivity, so power infrastructure, port, de port infrastructure, rail infrastructure. Some don't have the ports. Obviously, the port infrastructure at Port Kembla and Port of Hastings. West Apto, Glenbrook doesn't have the port infrastructure, but all the rail connected, all are power connected. The West Aapo land is in a growth area, a residential growth area within the [indiscernible], which has -- gives it certain -- leans towards certain attributes for property development. Glenbrook site pretty much surrounds the operational steel business and the Western Port site, as I said, on the Port of Hastings. So when we've put together the strategy on what do you do to develop these sites to unlock the value -- we've looked at particular asset classes, what are the synergistic assets that will be complementary to the steelworks that will add value to the steelworks as well as unlock the commercial value that you can get out of developing the land. Primarily, there's 4 use cases or asset classes that these areas will be master plan to be able to develop energy and energy-related assets. So we have a good example that we're going to talk about today being the BES at Glenbrook. So that's a battery energy storage system, a grid battery, grid-connected battery and other energy-related assets such as high energy users, data centers and any other industrials that have a high power consumption need. The reason why they are a logical asset class is because of the zoning and also because of the connectivity with the power infrastructure, grid-connected power infrastructure at Glenbrook, grid-connected power infrastructure at some of the other sites as well. Logistics, logistics infrastructure, as I said, the port assets, rail assets, obviously, developing assets that can then leverage off those bits of infrastructure and utilize them to give them that additional logistics value of the type of tenants that you would put in the sites there. Downstream businesses, manufacturing, so there, whether they're industrials that are either upstream or downstream of the seal business, where they provide services or products for our operations or downstream using our products.

Those type of industrials, again, pretty clear synergies by having that co-located with the Seal Works. And then we have more of a softer educational R&D type function of asset classes. These sites, they're enormous. So there's plenty of room to be able to master plan and accommodate all these different uses on the sites. So the value unlock, the potential benefits, obviously, the commercial benefit of developing this land and getting that commercial return out of it, but then also some of the other indirect benefits that will be adding value to the operational business.

Power cost, power reliability with some of the energy-related assets, supply chains and getting additional volume through those supply chains and you can get an optimized utilization of supply chains that will reduce logistics costs. The diversity of workforce that we can get in the areas that we actually employ people that then will also give us a deeper pool of employees that we can actually bring into the business. So these sites, as I said, fairly sizable. For those of you that don't appreciate what 200 hectare looks like, so the 200-hectare Port Kembla, 450 hectares here, 200 hectares is about the size of the Sydney CBD. So these are enormous landholdings that will take time to master plan and develop out. So to be able to actually develop this land because they are so large, we need to do it, look at multiple different delivery models. There won't be a single model on how we will deliver and unlock the value. So there's a bit of a spectrum, low-cost development model. So where we are fairly passive role doesn't require a significant amount of capital. We can then unlock and increase that value without too much involvement by externals and whether it's through ground lease structure or a minimal capital investment from BlueScope.

The middle scenario will be partnering with developers and capital partners to be able to develop out a higher capital-intense development out of those different asset classes. And then a direct land sale, which is kind of at the far end of the spectrum, which is ones that we don't see a synergistic benefit having a long-term holding in the land. Most of it will be somewhere between the low cost and partner and develop. There may not be a lot of land sale. We'll do that on a case-by-case basis, but it will depend upon the development as to exactly which model we would utilize. One of the key considerations in any of the models we use is to make sure that the development use is complementary to the operational business isn't going to create a problem in the future for that operational business and ideally make the operational business a higher value, more resilient because of having this development co-located to it. I've got a couple of examples to -- which are almost at different ends of the spectrum.

[indiscernible] land sale that we've already earmarked, so that is in our residential growth corridor area. The land is already zoned as residential. This is the only part of the current land holdings that we have that has a residential zoning. Majority of all the other land holdings are already zoned as industrial. Because this is in that growth area and the nature of the residential to be developed on that land is large lot subdivision. The best way for us to add value to BlueScope is to go through and put that into the development market for large lot subdivision that will then obviously support the use of our products and then also unlock the value out of that land. So we are going through a process on that now to be able to release that into that development market, which for those of you that are from Australia, which I think is the majority, obviously, housing supply is a very big issue in Australia.

So being able to get this zone land into that development market is obviously in the interest of the government, in the interest of the community and obviously, interest of BlueScope to be able to have more houses getting built. The Glenbrook example, which is a little bit different. This is a ground lease to Contact Energy. It's linked in through and was done in parallel negotiations with the energy contracts that were discussed earlier. So this is looking at as an infrastructure play. It is a ground lease for the development of a BES. They lease the site. They've put the capital in to develop the BES, but now we have that energy infrastructure co-located on our site, which quite obviously adds value and resilience to the energy infrastructure that then our energy needs are a little bit more fortified as far as the electric arc furnace into the future. They're in the process of commissioning the first 100-megawatt battery with then plans to be able to then expand that to 300. They have resource consent, which some of you believe are aware of as recently as I believe it was this week to be able to extend that through to a 500-megawatt hour battery, so which is a pretty significant grid battery to then connect through. The attraction to the site for Contact Energy, fairly obviously, the power connectivity, which I discussed earlier, zoning and the fact that, obviously, we're a big power consumer.

So if you colocate the energy assets with energy consumption, it makes sense for all parties. I might hand over to Deb for climate and sustainability.

Thanks, Michael. Good morning, everyone. My name is Deborah Caudle. [indiscernible] joined BlueScope earlier this year as Chief Executive of Climate Change and Sustainability. My background is from the mining industry, where I had a 25-year career initially as a metallurgical process engineer working in direct reduced iron and then in investment banking and CFO roles. In September this year, we published our FY '25 sustainability report. In that report, we outlined a revised framework, providing an overarching view of what sustainability means at BlueScope. We moved from 5 outcomes to 4 sustainability focus areas. And today, I'll be focusing on safety, climate and our products. Firstly, just to touch on a couple of the other aspects of sustainability at BlueScope.

On inclusion, we're very much focused on cultivating an inclusive culture and diverse workforce. We have a gender-balanced ELT and Board and female participation remains at 25%. On social impact or human rights, we've made good progress within our business and our supply chains, including undertaking targeted worker assessments, particularly focused around the contractor migrant populations, -- and that's both at our own sites as well as undertaking supplier third-party audit programs as well. During the year, we also refreshed our code of conduct to further reinforce our commitment to ethical behavior across all regions and levels in the group. Turning to health and safety, which is fundamental to everything that we do. The loss of young man's life at the Port Kembla Steelworks last week is a tragedy and a devastating reminder of why safety must remain our absolute focus. As David noted at the outset, we won't be providing further details today, but we will engage to the extent that we can at the appropriate time. Our approach to safety has a strong focus on enabling and engaging our people to design better risk control solutions, improve the effectiveness of those controls and strengthening leadership capability. Our approach includes balanced use of lead and lag indicators to gain insight on performance. The global refocus on safety program is well established and embedded and supported by our people.

A key aspect is freeing up our leaders to spend more time on the shop floor, focusing on those foundational leadership practices, and that includes tiered audits, enhancing and updating our codes of practice and improving our management processes to gain insights and learnings that are then shared across the organization. Uplifting our safety performance remains a commitment and focus across the organization. Moving to climate. Steel is a critical enabler for the energy transition, and it spans all parts of the renewable generation, whether it's onshore and offshore wind towers to solar farm arrays and the infrastructure that's required for transmission. There's certainly a bright future ahead for steel's involvement. And our steels, it's their strength, their durability, their recyclability and they're also inherently circular. We've heard earlier today about our Color steel products. We've got our COLORBOND products.

They're known for their durability, and they've also got that inherent recyclability as well. And the circularity can even be further enhanced at all phases of the cycle, and we have ongoing work to increase the reuse and remanufacture of steel as well via design principles. Our pathway to steelmaking decarbonization, it's still track. So we're continuing to make efficiency improvements across the steelmaking portfolio, looking at those lower carbon energy sources and making upgrades to the equipment, whilst at the same time, looking at those more step change technology processes to unlock more of the decarbonization potential. And you may have heard us speaking about the 5 enablers of decarbonization. So that's the technology and the raw materials to actually just crack the code on having new processes to move forward, combined with requiring the availability of firmed and affordable renewables, affordable natural gas as a transition to green hydrogen when it becomes commercially viable and all supported by policy settings. And we're here in New Zealand, our Glenbrook operations, which are a prime example of unlocking lower emission steelmaking. We've got well-established electric arc furnace technology. We've got the domestically available scrap, a large firmed renewable grid and the New Zealand government support with the [ 140 million ] co-funding for the electric arc furnace project. So it's a fantastic example of when the enablers enable us to be able to make those significant step changes in the decarbonization of our operations.

Our Glenbrook operations are contributing not just in terms of for themselves with the electric arc furnace, -- but with the electric smelting furnace technology that we have here, which is an inherent part of that Neo smelt project, where we're looking at adapting the technology that we use on the medium-grade iron sands here in New Zealand to the medium-grade Pilbara ores to find a pathway for lower emissions iron making from those Pilbara ores. And we've got a video here the addition of new partners in Mitsui selection of a location for the pilot plant at Kwinana in Western Australia and moving forward into the feasibility study phase as well. So we're very excited about the Neo smelt project. It is part of a solid pipeline that we've got of decarbonization projects across the organization. And so whether it's the large-scale projects such as the electric arc furnace, and Neo smelt project, but also across a number of different development stages. So we keep a robust pipeline coming through from those concept stages and always being prudent around pulling through the things that are the most prospective and most commercial as we move forward, particularly looking at aspects around blast furnace optimization. So we've trialed the use of biochar in the blast furnace, electrification of boilers, waste heat recovery, oven replacements such as our CPL2 down in Western Port and then furnace optimizations across the coated and painted business. Looking a bit more at some of those projects that we have underway.

And so I mentioned the NeoSmelt joint venture. Very excited about that project in terms of its potential to unlock a process for those medium-grade Pilbara iron ores to have a DRI pathway for a lower emissions iron making. And then here in New Zealand, we're also looking at DRI technology for our iron sands, partnership with the University of Victoria Wellington to see if we can find a process again for the iron sands through direct reduced iron. In steelmaking, we're continuing to optimize the blast furnace. So projects such as the 23 turbo alternator, which is utilizing the off gases for electricity generation and we're also trialing torpedo lids on the vessels that come out of the blast furnace to maintain the heat in the molten iron, which then will enable us to increase the proportion of scrap that we're using out of Port Kembla. We're already sitting at 25% scrap, and we're looking to increase that even further again. And then down into that midstream part of the business, again, a lot of projects around furnace optimization, oven replacements, utilizing regenerative thermal oxidizers, which we've installed at Middletown, looking at where else across the portfolio, we can implement those sorts of opportunities to continue to get that emissions intensity down across the portfolio. So focusing on the performance of our steelmaking emissions intensity. noting that over 90% of our Scope 1 and Scope 2 emissions are from steelmaking. And so we've got an asset level breakdown here of that emissions intensity profile. And you can see that across each of our assets, we have been reducing the emissions intensity, continued progress with Port Kembla and with North Star, which both sit well below the global averages for blast furnaces and electric arc furnaces, which really highlights the great work that our people are doing. And here at Glenbrook, it has been impacted by the transition to the electric arc furnace, but will decrease materially with the commissioning of that EAF in the short term. On our targets. So as a reminder, we've got 2030 Scope 1 and 2 targets of a 12% reduction in emissions intensity from our steelmaking, 30% reduction in our non-steelmaking emissions intensity together with a 2050 net zero goal. And so pleasingly, in FY '25, we actually achieved a 14% reduction in our steelmaking emissions intensity from a 2018 baseline, and that's something that we're really proud of.

That steelmaking outperformance has been driven by the ramp-up in our North Star electric arc furnace in the U.S., which is our lowest emissions intensity operation. And then we've also continued those energy efficiency projects across both the New Zealand and Australian operations as well. Importantly, our emissions intensity reduction progress is not going to be linear. It's going to be highly dependent on having the enablers and then being able to implement step changes in performance when we can switch over processes as we're doing here at Glenbrook. Based on the work that we've been undertaking with these projects coming through, we're now expecting to achieve a greater than 20% reduction in steelmaking emissions intensity by 2050 -- sorry, 2030. And so we're continuing to work on what targets might look like post 2030, noting that there is inherent uncertainty given the reliance on the enablers for us to be able to continue to make those step changes. And then on the non-steelmaking side, as I said, we've got a pipeline of projects that we're working on, noting that the intensity performance is impacted both by lower volumes compared to the baseline in 2018, but also we've been doing more value-added products, which increases the emissions for the same dispatch tonnes. Turning now to our products. So our product and site sustainability credentials are becoming increasingly important to our customers. This has been driven by demand for transparency and stewardship. And so we have the environmental product declarations, and we heard earlier today from Sus regarding the DCRB environmental product declaration, which is helping our customers to understand how the emissions intensity or embodied carbon of our future products will help them achieve their sustainability objectives such as green building credentials. We also have responsible steel certification, which is an independent verification across 3 of our sites that have been undertaking, certifying our performance at the Port Kembla Steelworks, Western Port and [indiscernible] in Vietnam on 13 different sustainability measures. And lastly, on our sustainability disclosures, this is really what encapsulates the hard work of our teams across the business globally.

And given our approach to transparent, robust sustainability disclosures, we're well placed for the mandatory climate reporting that's being adopted. In FY '26, you will see our annual reporting suite evolve as we move to having a new section in the annual report on those mandatory disclosures, and then we'll have certain voluntary sustainability and governance disclosures also being captured in an integrated annual report. So we'll continue to focus on telling our story, telling it in a clear and transparent manner. And with that, I'll pass across to Q&A.

Okay. So Q&A, raise your hand when you're ready to ask a question. I think the first one over here, Tom.

Just one for Michael on property. I'd love to hear a bit more about the time line for some of these potential recurring income projects. When should we see potentially a material income number come through from those assets? The time line -- so going to the scale of it, 1,250 hectares, as I led to, it's a lot of land, and it is a decades-type long process to be able to develop out all that land. The income -- the example in the best, once that's commissioned, that will actually be producing income and some of the other sites that we're looking at is some opportunities. When will the income be at a material basis, I'll probably look to David a little bit more to say when it will hit that threshold. But as far as the income generating, it will be in the near term.

Yes. So I think importantly, the objective for the next 12 months is to really lay the groundwork on those short-term initiatives, West Aappto sale, industrial lease at West Aappto and the leasing here in New Zealand. At that point in time, we'll be in a much better position to use that transactional information, our own analysis to finalize effectively the long-term property strategy for those adjacent sites. And the expectation is we come back and share that with you as we realistically finalize the balance of the FY '26 year.

Just, I guess, David or Michael, just your thoughts on the time line for -- used to provide an AI sort of valuation at CSL. Is there a strategy to sort of arrive at that point? And when could we see that?

So I never let precedent interrupt creativity. But I think to your point, the benefit of driving the projects across this 12-month period is it gives that tangible external market verification in addition to kind of what we would describe as a theoretical valuation at an is level. I think a component of that strategy needs to understand the as is opportunity that's there. So without committing the team to that direction, I think that's a likely component that will be incorporated within the strategy that we'll share with you. And then I guess the degree of how we do update that on an annual basis, I think, is a helpful part for us to show you how we're tracking towards the creation of that value. So not something that we'll sort of commit the team to today, but certainly something that we're considering as we move forward.

The other thing I might -- the only thing I might add to that is that, again, on the scale of these, the net absorption of these type of developments in these asset classes would need to be considered when you are looking at that type of number. It's a lot of land, and we're targeting assets that will be complementary and synergistic to the operational business. So we need to look at what is the realistic time line to be able to make sure you don't overflood the market with supply on this amount of land.

My question is for Deborah. In terms of the -- and congratulations on meeting your interim target and steelmaking. And my question relates to what are your thoughts around sort of a further interim target? Or does it go to your point around just the volatility, it's not going to be linear. And is that why you're sort of hesitant to set a further target?

It's a great question. And so the focus at the moment is around bringing the EAF online, getting the performance there and really just continuing to deliver on the emissions intensity reduction in the first instance rather than necessarily focusing on revised 2030 targets. I don't anticipate that we'd be putting out new 2030 targets. And then when you look beyond 2030, we are looking at what that might potentially be, but there is that inherent uncertainty around the timing of the enablers becoming available. And so we have to factor that in when we're looking at it.

Deborah, my question is kind of part from your presentation and part as a follow-up to Robin's. He mentioned right at the outset that the drivers for the EAF were carbon pricing pressure increasing. And what I'm getting to here is New Zealand versus Australia. So you've got carbon price pressure increasing, which you do with the safeguard mechanism in Australia. You have New Zealand government support, which was both financial and facilitating, which I would argue you don't in Australia. And then we heard from S that there was some moderate sales of green or low carbon steel that you're missing out on, which, to my knowledge, there's not a market in Australia for that yet. So with that, -- what are you missing from the Australian government in terms of being able to push forward more aggressively on decarbonizing Port Kembla?

Well, I think when you look at what we're doing with Port Kembla Steelworks to transition the blast furnace, again, it is about fundamentally changing the nature of the process. And so we consider to be the most prospective technology to be a direct reduced iron pathway. And so we're undertaking that work with Neo smelt to unlock that technology and demonstrate its viability with the Australian iron ore. Inherent in what's required for a direct reduced iron pathway is natural gas as the enabler through to ultimately when green hydrogen becomes commercially viable. For the Port Kembla Steelworks, we currently use approximately 1 PJ of gas on a direct reduced iron pathway, that's 40 PJ of gas. And so for us, what we need is to have that available and affordable natural gas for us to be able to continue on our decarboniz.

Owen from RBC. Just another question for Deborah. Just looking at those targets, you clearly made the steelmaking target through the assistance of North Star and their upgrade. But I'm just curious about the non-steelmaking targets. It's still fairly short of that and the profile of progress doesn't look like you're going to get there. Just wondering what projects there are in the pipeline to get you to that target? And are the projects that you're proposing at the moment enough to get you to that target? Or do you need further advancements elsewhere?

Thanks for the question. It's a large pipeline of projects given the number of coated and painted lines that we have across the business and the settings for each of them are quite different. And so if you look at something like our Western Port operations where CPL2 undertaking an upgrade there, that was a 60-year-old line. And so the energy efficiency that we'll get on the back of that. Over in Middletown, we put in a regenerative thermal oxidizer. We're looking at the ability to deploy that technology across other lines as well. And so really, it's a number of different projects to work away at it as opposed to where here we can bring on an electric arc furnace and 50% of the emissions profile shifts. So it is a big portfolio of projects there. I think the other thing to keep in mind is it's an emissions intensity target.

And actually, with the dispatch tonnes that we have been lower than what they were in the baseline year, that's actually impacting that. So whilst we are making those emissions reductions, it's the dispatch tonnes that are actually coming into play with the emissions intensity as well. And then it is that addition of the additional value added. So we've got our metal coating line number #7 coming on in Western Sydney, that's creating more of those value-added products. Same dispatch tonnes, but it does mean that there's been higher CO2 emissions associated with it. So we're continuing to work away on it. The other aspect is that the emissions intensity of the grid is an important factor there as well. And so having the grid come with us is going to be material.

You mentioned the role of the ETS in New Zealand earlier. What's -- do you have any sort of view on the long-term trajectory there of the prices, given the recent volatility again in the market and recent changes put forward? And how important is that?

Yes. As you observed, some recent kind of tweaks to the policy creates a level of uncertainty and a drop in carbon price. I think it has recovered. So I think it would -- I think your observation is right that it's somewhat quite sensitive to any kind of relatively small policy changes. I think the policy changes that were on foot were an attempt to simplify the regime and create clearer incentives for businesses like New Zealand Steel and others to actually decarbonize as well.

I think it is well intended, but certainly, it's kind of been volatile. We've seen the kind of climb of carbon price probably the $70 kind of a level and it's going to drop to $30, $40 back to maybe $50. So it's very sensitive to any kind of changes around forestry and those kind of policies. So I think it is vulnerable to any of those kind of small policy changes.

I think as you think about -- as we think about our New Zealand Steel business, the halving of the iron, the coal-based operation materially reduces our long-time exposure. So you can imagine we were exposed to 2 million tonnes of carbon previously. You use a figure of $60, $70, $80, $100 a tonne of carbon. And as the allocations, which are today, 84% of our emissions profile dropping by 1% and then 2% beyond that. That exposure becomes very material to this business.

So I think we've been able to kind of drop our exposure materially with the electric arc furnace. So we're less vulnerable to those kind of policy sort of shocks going forward. And with the electric arc fines now we have the ability to increase the scrap ratio move to 100% scrap and respond in a much better way to any of those kind of policy shots long term. But as you know, that I think current government is probably struggling with the financial obligation of what the shortfall in emissions reduction actually turns into and I'm sure that will become a political issue as it goes forward. But I think we've been able to make a very significant kind of step with what we're doing and not only change the emissions profile from a New Zealand point of view. I think our business now is far more resilient to any future shocks in that sense.

I just had one for you, Deborah. Just could you give an idea of what sort of natural gas price you'd require in Australia to produce a globally competitive product using DRI?

What we've been advocating for is a price sub-$10 per gigajoule.

So that doesn't require any sort of subsidy to be competitive there.

That's what we've been incorporating when we've been looking at what those DRI options are and where we think that you could potentially look at moving the client across from the blast furnace to a gas-based process.

And maybe just to add, that's obviously in relation to sort of domestic Australian production to the degree to which you need export to be a component of that green iron production or that lower-intensity product. That obviously puts more pressure on it being sort of globally more globally competitive price.

Maybe one for Deborah. Just you mentioned using about 25% scrap feed into the blast furnace at the moment. Where do you see that potentially getting to? At what point does that max out at the blast furnace?

Yes. It's already at a very high level on global standards. When you look across sort of blast furnace fleet in the world. So we're already doing incredibly well down at Port Kembla. It's going to come down to what sort of improvements we can get through opportunities such as torpedo lids to get the temperature up and then how that ends up playing out, but you do sort of hit a theoretical maximum just given the heat sink that you get by having the scrap in with the iron.

So it doesn't look we've got any questions online at the moment. But we do have Rob and David from an earlier session, too. I know we kind of cut some of the questions of in the first pass. So if you got any other questions as well, please feel free to ask.

Just a follow-up for Suzanne then. Can you just talk through the market share opportunity that still exists in New Zealand for COLORSTEEL? Perhaps how the market share compares to Australia for COLORBOND.

Some good thinking time on the way down.

I'm going to make him repeat the question now.

Would you like the question again? Sorry.

Yes.

Could you just talk through the market share opportunity that exists in New Zealand for COLORSTEEL and perhaps how the market share compares to Australia for COLORBOND?

How the market share compares to Australia? Quite different in terms of the fact that COLORBOND is the only painted -- prepainted supplier, and we're not here, although COLORSTEEL is definitely the market leader in the New Zealand market.

In terms of opportunity for market share, I think there is, right as the market returns. I'll go back a step. So one of the value propositions that we have with New Zealand Steel is our marketing like across the value chain. So we have a team BDMs who are engaging with our specifiers. So there's the opportunity in terms of continuing to have brand awareness selling our differentiation with that specifying market.

We have a team dedicated to our roofers as well in terms of making sure that our roofers understand our proposition and are loyal to us as well and then continuing our strong brand market share. I think it's also about architectural design, right? We're seeing kind of growth in desirability for pre-painted steel over other construction materials in New Zealand, but usually opportunity for market share growth through planning and New Zealand pre-painted steel has a small propensity in residential housing, and we're actually seeing that start to shift. So year-on-year, we're seeing growth of leading growth. So that's a great opportunity for COLORSTEEL as well.

Maybe just following on from that, the steel framing opportunity given it's sort of earlier stage. Can you give us a sense of the potential volume opportunity there?

Potential volume. I think if we were to look at the Australian market and kind of pro rata it back for population size, we certainly have significant tonne growth opportunity ahead of us in the range of at least 100 tonnes to be attained. We're starting off kind of a low base. I think I was talking to someone in the audience at morning tea talking about the differences between the Australian market with TRUECORE and New Zealand, like we don't have the bushfires. We don't have termites. We don't have the extreme heat, which does give us some differences between the 2 markets.

As a forestry nation as well, we're well entrenched in timber framing. So it is a much slower build but the opportunity lies with us kind of engaging with the group homebuilders, explaining to them kind of the weight ratios that your framing can give the time, the quickness of the build time. So there is a huge opportunity, but it is going to be a little bit of a slower build than perhaps what Australian team experience with TRUECORE.

Maybe a quick question for Robin. Just in terms of potential market turnaround and how you see is looking at some of the indicators that you're watching for any stabilization in green shoots you're seeing?

The word green shoots came up a bit. Look, I think we certainly watch the residential, nonresidential consent levels. The residential consent levels have improved in the last quarter. We've got the official cash rate dropping. And there's some signals from government that some an infrastructure spend is starting to kind of turn into strong inquiries and engineering activity in that sense. It's -- there are some short-term indicators in our order book. The things are moving a little bit.

But again, we've got used to a very modest kind of volume, as Suzanne described, the market has been very soft. So there's probably some small pickup in volume in recent months. I think that completion rate that Suzanne talked about getting those consents actually completed, that is a good indicator of not just consent sitting there for a period, actually people -- the rubber hitting the road.

So look, I think we've all become a little bit -- we would have expected in normal economic cycles for things have recovered by now. So you'd expected some form of rebound. And I think we've all become quite sort of conservative given the experience the last 12 months of predicting an improvement, and that's probably come from a place of optimism such that it must recover soon. And we've really not seen that yet. But there's some signs that there is an intention and an improved economic basis with borrowing rates and that sort of stuff that must start to turn into some economic activity.

And as we approach an election cycle, I'm sure there will be very strong signals of a commitment to infrastructure projects. And again, it's always a question of timing as when they actually turn into real projects. But there are projects like the Bledisloe Wharf project, for example, is reasonably substantial Dunedin Hospital, they're reasonably substantial structural steel, reinforcing type activity that is turning up into orders at the moment. So it's -- yes, that's probably early days, I think, is fair to say.

All right. So we've got no more questions online. Is there any more on the floor? Last call for questions.

This is a question for Michael with regards to the existing property portfolio. I'm assuming this land is just not sitting there dormant. You're not just mowing the lawn on this property. I'm assuming it's being rented out to farmers or so forth. Are you able to give us a sense of what the income is across the portfolio at the moment?

Thank you for the question. And you're correct. Some of it is actually under adjustment, so with farmers utilizing the land. Some of the land is brownfields. So an example of that is the Port Kembla site. That is the next operational site. So that has existing structures on it that are no longer utilized for steelmaking.

And some of those do have third-party tenants in there, utilizing the warehousing but we are looking at doing a further repurposing of those sites to be able to get a more intense economic use out of it. The exact number of what that third-party income probably can't really give it to you right now. But as probably something that will come.

And immaterial for operational purposes, right? So realistically, it's more for efficiency and management than for material commercial offset.

All right. It's looks like we've got no more questions. So David, I might hand back to you to finish up.

Look, well, thanks, Tim. Thanks, everyone, for the questions and the interest and to the team and particularly to the New Zealand lead team and members who are taking everyone around. Really want to thank everyone for their perseverance online. We'll finish the formal presentation here, and thank you very much for your interest today.

Well, good morning, ladies and gentlemen. My name is Jane McAloon, and I'm the Chair of your Board. On behalf of the Board, I welcome you today to BlueScope's 25th Annual General Meeting.

As a necessary quorum is present, I declare this Annual General Meeting of Shareholders open. I would now like to welcome Uncle Richard to the stage. He is a Dharawal Elder, who is the Chair of the Illawarra Aboriginal Corporation. Uncle Richard, who many of you know, is an important figure in the local community with whom we have a trusted relationship. He has helped us shape our thinking towards the land transformation master plan here at Port Kembla and its design with country principles.

Welcome, Uncle Richard.

Good morning, ladies and gentlemen. Yes. Look, it's not a very good morning this morning, but we'll go through it. We'll get there. First of all, I'd like to acknowledge BlueScope for wanting to welcome the country on behalf of the traditional owners of the land that we're meeting on.

I think we're moving forward. We're getting better. It's understanding that Aboriginal people are and will always be first people of this nation. Before I go, I'd just like to acknowledge the incident that happened yesterday. I'd like to pass my respects to the family that what happened yesterday, it's a sad occasion. I'm indirectly within the family or know the family. So it was a bit shocking to hear the news of the young bloke. So yes, it's not a very good day to day, but we're here. And as I said, I don't want to keep it too long because there's more important things to talk about. But just realize that we are on Aboriginal land, the Dharawal nation of the Wodi Wodi people. And if we can continue to work together and respect each other for where we are, where we come from, we are a multicultural society.

As we can see, we're here for a short time. We could be even a shorter time. So while we're here, let's respect work together, make our society, make our community, make Australia, make the world a better place. You just got to look overseas what's going on. It's not great. So life is very precious. Communication, respect goes a long way.

So let's continue to do that, and I think we'll make our society and Australia and hopefully the world a better place. So welcome you today on behalf of the Wodi Wodi people, and I hope that BlueScope keeps moving forward and supporting communities and working within Australia and around the world and providing jobs. Thank you very much.

Thank you, Uncle Richard, for your welcome to country. I would also like to pay my respects to the traditional owners of all the lands where people are watching from today to elders past, present and emerging and to all First Nations people here today.

It's a privilege to be back in Wollongong. Thank you for joining us.

As Uncle Richard has just mentioned and as many of you already know, a young man lost his life while working at our Port Kembla Steelworks yesterday. This is a tragedy for everyone impacted, particularly his family, friends and colleagues. It is an utterly heartbreaking experience. The Board and management team extend our deepest condolences to the family and friends.

At BlueScope, nothing is more important than ensuring everyone returns home safely. The loss of this young man's life is a devastating reminder of why safety must remain our absolute focus, every minute of every shift at every site.

Mark and Tania, our CEO and CEO elect, will also make some comments. I'd like us now to observe a minute's silence. Thank you.

We will now turn to the business of the meeting, and I will pass to Michael Reay, our MC, to cover procedural matters.

Thank you, Jane, and good morning all. My name is Michael Reay, BlueScope's Head of Corporate Affairs for Australia. And it's my pleasure to be your host for today.

I'll now briefly cover some housekeeping matters. For those present in the room today, you would have received a card when you registered this morning. Yellow cards are for shareholders and proxyholders who may speak and vote. The blue cards are for shareholders who may speak but not vote. And the red cards are for those visitors who are welcome to observe, but cannot speak or vote.

Please retain these cards as you will need to present them if you wish to ask a question or reenter the meeting room.

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Lastly, in the unlikely event of a technical issue during the meeting, we may need to take a short break. If possible, we will communicate this to online shareholders either verbally or via an on-screen message. If there is a significant technical issue at the discretion of the Chair, we will adjourn the meeting to another time or date. If this occurs, please check your e-mail inbox and our website for updates. We'll also lodge details with the ASX.

With those housekeeping matters covered, I'll now hand back to your Chair, Jane.

Thank you, Michael. Before we start the formal business of the meeting, let me introduce you to my fellow Directors and the Company Secretary. From my far right, we have Alistair Field, Kathleen Conlon, Zhi-Qiang Zhang, Rebecca Dee-Bradbury, the Chair of the Remuneration and Organizational Committee; and Virginia Porter, Chief Legal Officer and Company Secretary.

And then from my far left, we have Jennifer Lambert, Chair of the Audit Committee; Cheri Phyfer; K'Lynne Johnson, Chair of the Health, Safety, Environment and Communities Committee; Ewen Crouch, Chair of the Risk and Sustainability Committee, and this will be his last meeting today as he retires from the Board; and Mark Vassella, our Chief Executive.

We also have Peter Alexander joining us online from the United States. As previously announced, Ewen and Peter will retire at the end of today's AGM, K'Lynne and Zhi-Qiang Zhang stand for reelection and Cheri and John Nowlan, who many of you in this room will know, stands for election.

We also have members of our management team with us today. In the front row, we have Tania Archibald, current Chief Executive of the Australian Steel Products business and our incoming Chief Executive from February next year; David Fallu, our Chief Financial Officer; Peter Renkin, our Chief People Officer; Divia Thadani, Chief Strategy and Transformation Officer; Deborah Cordele, Chief Climate Change and Sustainability Officer; Sam Charmand, Chief Digital and Information Officer; Michael Yiend, Head of Property Development.

And they will all be around afterwards if you have any particular questions you want to follow up with them. Finally, our external auditors from Ernst & Young, Matt Honey and Julian Tai, are here with us today. Matt and Julian are available to answer any questions you may have for the auditors at the appropriate time.

The Notice of Meeting was distributed earlier, setting out the business and resolutions to be considered today. We will take those as read. There are a number of items of business on today's agenda, all of which are shown on the screen now. Voting on items 2 to 5 will be carried out by way of a poll. MUFG Corporate Markets is the returning officer.

I now formally open the poll on items 2 to 5. Voting will close 5 minutes after the end of the meeting. And the results of the poll will be available later today on the ASX and our website.

Following my remarks, Mark will provide you with some further detail about BlueScope's performance, Tania will then say a few words and finally, Rebecca will make a few comments on our remuneration approach. I will then move to the formal business of the meeting.

So now to my remarks. In 2025, despite global macroeconomic volatility, BlueScope demonstrated resilience, strategic clarity and commitment to sustainable growth. We reported an underlying EBIT of $738 million and delivered a $0.60 per share dividend in the context of very challenging external operating conditions. Asian steel prices were suppressed due to record steel exports from China. These have been running around 120 million tonnes per annum, which is more than the total annual consumption in the United States and towards our total production of around 3 million tonnes per annum. And in the U.S., ongoing tariff and trade developments created significant volatility in markets and on global supply chains.

Through all of this, we continued to demonstrate that BlueScope's business model and financial framework delivers quality shareholder returns. Our Transform Grow Deliver strategy continues to drive growth, enhance profitability and build resilience. Earlier this year, we shared our approach to delivering earnings growth to 2030. This is comprised of $200 million in cost and productivity improvements and $500 million in growth initiatives, underpinned by the $2.3 billion investment pipeline that we will complete in the next 2 years.

Providing upside to this is the opportunity to unlock value from our 1,200 hectares of nonoperational land in Australia and New Zealand, including the potential for development of large-scale assets such as energy storage, automated logistics and data centers. Disappointingly, there has been a delay in achieving our expectations of the North American BlueScope Coated Products business since it was acquired in 2022.

An impairment of $439 million was recorded in August. We're confident that we're turning the business around with improvements in operating reliability, asset performance and customer engagement. I was last there in July and was able to witness those improvements myself.

As we pursue our strategic initiatives, of course, we remain focused on our 2030 emissions reduction targets and our 2050 net zero goal. To this end, we're working with partners on innovative technologies, including the NeoSmelt joint venture in Western Australia and options for Direct Reduced Iron in South Australia. While these are not the full solution to iron-making decarbonization, they are critical to investigate alongside engagement with governments on the necessary policy and energy settings.

This issue has been highlighted in a recent Manufacturing Australia campaign advocating for fairer gas prices. The Board fully supports this position. Affordable gas is essential to underpin a future made in Australia, including enabling low emissions ironmaking.

Turning now to Board and governance. The Board continues its focus on governance and renewal. We welcomed U.S.-based Director, Cheri Phyfer, who brings deep commercial experience [indiscernible] welcoming recently retired BlueScope Executive, John Nowlan, as a Non-Independent Director. With 5 decades of steel manufacturing expertise, including leadership across all our regions, John will be a valuable addition to the BlueScope Board.

We acknowledge the contributions of retiring Directors, Ewen Crouch and Peter Alexander. Their stewardship has been instrumental in shaping BlueScope's success. Ewen, who joined the Board in 2013 during a pivotal time in our strategic reset, has made an exceptional contribution, including as Chair of the Risk and Sustainability Committee.

Peter brought deep building and construction experience across the United States market and also made an important contribution during his term. We thank both Ewen and Peter and wish them well.

Well, the most important job of any Board is to appoint the Chief Executive. Two weeks ago, the Board announced the appointment of Tania Archibald as our next Chief Executive. Many of you here know her. She is a highly capable leader as demonstrated across her 30-year career at BlueScope, including her current role as Chief Executive of Australian Steel Products and previously as Chief Financial Officer.

Tania brings a deep understanding of our business, is passionate about uplifting safety performance and the well-being of our people and is committed to delivering for our customers. Her proven ability in driving sustainability, financial resilience and operational excellence gives the Board great confidence in her leadership. Congratulations, Tania.

We all look forward to working with you to continue delivering value for our shareholders, our people and all BlueScope stakeholders. Of course, this means our highly respected Chief Executive and our friend, Mark Vassella, will step down from the role early next year. Mark has led BlueScope through unprecedented challenges with clarity, conviction and courage. He started with BHP Steel and subsequently joined BlueScope with the acquisition of Smorgon Distribution. He went on to lead the U.S. businesses and then led Australia and New Zealand before he became Chief Executive in 2018. Under his leadership, BlueScope has become a structurally resilient business deeply connected to communities and respectful of all stakeholders.

Just about everywhere you go in BlueScope, you see firsthand that thousands of our people have a friendship with Mark. His legacy will be felt for years to come. On behalf of the Board, management and shareholders, I extend our gratitude and best wishes to Mark. The Board, Mark and Tania are now working closely to ensure a seamless leadership transition.

I want to thank our shareholders and members of the communities in which we operate for your trust and support, our people for their dedication and so lovely to see so many of you here and our customers and partners for your enduring confidence in BlueScope.

Supported by a strong financial framework, a clear strategy and the commitment of our people across 15 countries, we are well positioned to deliver sustainable growth and long-term value.

I'll now invite Mark to update you on BlueScope's performance.

Thank you, Jane. I'm going to start with health and safety. So health, safety and well-being remain fundamental to everything we do. And as Jane has said, the loss of young man's life at Port Kembla Steelworks yesterday is a tragedy that's affecting all of us.

We're focused on supporting his family, friends, colleagues and the broader community through this terrible time. The impact on them has been significant. Our global safety refocus program continues to drive cultural and operational improvements across the business. Our commitment to our people is core to how we operate.

Now we're not satisfied with our performance at all. And as Chief Executive, I can assure you, nothing is more important to me and to the management team.

I'll now cover off BlueScope's performance and progress in FY '25. Cyclically, soft conditions impacted our earnings, but despite this, we ended the year well positioned in our key markets and having progressed initiatives to drive sustainable earnings and growth. Key financial highlights were: an underlying EBIT of $738 million, operating cash flow after CapEx of $180 million, a robust balance sheet with $28 million of net debt and $293 million in shareholder returns.

This performance was supported by the delivery of $130 million in net cost savings compared to our FY '24 cost base. Now this result was achieved in the face of ongoing cost escalation, most notably in electricity prices in Australia. As Jane noted, in August, we recognized an impairment on the goodwill and intangible assets of the North American BlueScope Coated Products business. This is clearly a disappointment, reflecting the near-term underperformance of the business and the time frame taken to integrate the assets and deliver on our expectations.

We are, however, confident in the medium- and longer-term future of this business. We have the right team in place and the necessary capabilities to capitalize on a growing U.S. coated products market.

In Australia, while steel spreads were depressed in the year on elevated exports from China, COLORBOND steel remained at historically high levels, reflecting our focus on premium branded products. Our key growth projects remain on track.

In New Zealand, the electric arc furnace will be commissioned early next year. Once operational, it's expected to halve the site's emissions and enhance performance in low cycle conditions. This is an exciting project, which is thanks to the dedication of our New Zealand team and a unique collaboration with the New Zealand government.

And moving now to India. As announced last week, we have agreed to sell our 50% interest in Tata BlueScope joint venture with our partner, Tata Steel. This transition recognizes the value created over 2 decades. It delivers a strong financial outcome for BlueScope and strengthens our focus on growth investments and initiatives across our portfolio. Net proceeds of $179 million is expected on completion in the second half of FY '26.

Touching now on earnings guidance for the first half of FY '26. In our trading update just released to the ASX, we've confirmed the guidance that we provided at our full year results on August 18. We did note, however, that underlying EBIT for the half is expected to be at the bottom end of the $550 million to $620 million range.

While current conditions remain mixed, there are positive signs in Australian construction markets and spreads have improved in the U.S. Our focus remains on the levers that we can control: cost, capital and capability, as we position the business for longer-term growth.

Providing an upside to our longer-term growth initiatives is our 1,200 hectare portfolio of nonoperating land in Australia and New Zealand, an incredible asset. At our steelworks just down the road, opportunities for reimagining 200 hectares of land are being explored. There will be a range of initiatives and related announcements to unlock the potential of this land over the next 12 months.

Our focus on sustainability continues. We made further progress in reducing steelmaking emissions intensity this year, driven by higher volumes at North Star and efficiencies at Glenbrook and Port Kembla. And we're tracking ahead of our 2030 steelmaking target. Progress was made in project NeoSmelt, where we're leading resources, energy and manufacturing companies to develop an electric smelting furnace pilot plant using Pilbara ores. That's not easy to say. The project added two new partners this year, selected a location for a pilot plant and moved to feasibility stage. The progress we've made brings us closer to realizing our purpose to create and inspire smart solutions in steel to strengthen our communities for the future.

Now I'd like to just take a moment and talk about Australian energy costs. Australian manufacturing is at a tipping point. Energy costs are 3 to 4x higher than they are in the U.S. and what was once our competitive advantage has gone. BlueScope backs our Prime Minister's Future Made in Australia vision. But without urgent action on East Coast gas availability and pricing, that future won't happen. Last month, Manufacturing Australia launched a fair gas prices campaign, calling on the federal government to support fair prices through a package of reforms. The campaign is calling for domestic gas reservation and a pricing mechanism that will deliver a future made in Australia. If we want that, we must act now.

Moving to the executive leadership team. Earlier in the year, Michael Yiend joined us as Head of Property Development. We also appointed Virginia Porter as our Chief Legal Officer and Company Secretary; and Deborah Cordle, our new Chief Executive of Climate Change and Sustainability. These guys have been a fantastic addition to the ELT. As the Chair noted, after retiring from the ELT, John Nowlan is standing for election today as a Non-independent Director. And we, the management team, are delighted that we'll keep his knowledge and experience inside BlueScope.

So in closing, BlueScope's performance and progress in FY '25 demonstrated our ability to deliver in the near term whilst building for the future. Supported by a robust balance sheet, a resilient business model and the commitment of our 16,500 strong team, we're confident about our future. It's been a privilege to lead BlueScope and work with such a talented group of people. I've had a very long career in the steel industry, starting at BHP many years ago. And I'm proud of what this fantastic manufacturing business has achieved, and I'm confident in its future. For me, the highlight has been working with so many great people. Now is the right time to hand over. The Board has chosen an outstanding successor. Tania and I have worked together for many years, and I know she's going to be a brilliant Chief Executive. So thank you to the Board for their support as well as BlueScope's shareholders, customers and partners, but most importantly, the people. I'll be watching on closely. Thank you.

Thank you, Mark. Thank you. And Mark's last address to you at his last AGM. I'm going to ask Tania if she'd like to say a few words, please.

Thank you, Jane and Mark, hard act to follow. Stepping into this role is an honor and a privilege, and I'd like to thank the Board for placing their trust and confidence in me. But above all, the safety and well-being of our people is my highest priority as I step into the CEO role. The tragic loss of a young man's life yesterday deepened my commitment. I extend my sincere condolences to his family and loved ones, to our people, including our contractor partners and to all impacted by this devastating loss. Uplifting our safety performance is my foremost priority as I take on the CEO role.

During my 30-year career at BlueScope, I've seen the business navigate highly complex challenges. BlueScope is the success story it is today due to the extraordinary efforts every day from our people, the trust of our customers and the support of our shareholders. Looking ahead, we'll continue to advance our growth ambitions with a relentless focus on our customers and constantly evolving our products and services. With the Board and management team, I'm proud to lead our talented people into the next era. I'd like to thank Mark for his tremendous leadership in building this remarkable organization that we have today and being an inspiration to all of us at BlueScope. I'm committed to working hard for our people, our customers, our shareholders and the communities we serve as we build on BlueScope's long history and strong foundations to shape the future together. Thank you.

Well, that's one of these historical moments in time, worth remembering that we were all here for that. So thank you, Mark and Tania. Ladies and gentlemen, I would now like to ask Rebecca Dee-Bradbury to speak to you about BlueScope's remuneration approach and outcomes in FY '25.

Good morning. I'm Rebecca Dee-Bradbury, Chair of the Remuneration and Organization Committee. Like my colleagues, I was just so deeply saddened to learn of the tragic fatality yesterday at Port Kembla and offer my deepest sincere sympathies to all of those impacted by this terribly sad event. Before I step through the highlights of the remuneration report, I'd like to thank our shareholders for their ongoing constructive engagement and alignment in terms of what we are going to put in place to both reward executives and achieve our strategic priorities. Our remuneration framework is designed to take account the cyclical nature of BlueScope's business and industry. It aims to attract, retain and motivate key talent through the cycle.

Importantly, incentive awards also depend on not just what was delivered, but how our people delivered it in line with our bond and our code of conduct. Now let me turn to the CEO's remuneration. Mark's fixed pay was not changed in FY '25, and it will not change in FY '26 as he concludes his role as CEO and supports Tania's transition into the role.

In August, the Board exercised its discretion to reduce Mark's FY '25 STI award by 20%. Mark would otherwise have received an award of 77.9% of his target opportunity based on performance against these STI outcomes. The quantum of the reduction of Mark's STI payout was carefully deliberated on by the Board. Ultimately, the Board determined that this discussion was appropriately balanced in terms of his performance in FY '25 as well as the impact of the impairment.

On the long-term incentive. The FY '22 LTI alignment rights, which were granted in December 2021 vested in full in September 2024 based on rigorous conduct assessments and against our bond and also performance testing. This outcome was based on a 3-year average ROIC of 22.7%, which was well above the 10% threshold. The 3-year average net debt-to-EBITDA ratio of negative 0.2x was well below the target of 1.3x.

The ROIC threshold, set under BlueScope's LTI, represents the minimum acceptable level of performance that will generate value for shareholders through the industry cycle. It is in line with our peer performance and broadly aligns to BlueScope's weighted average cost of capital over the longer term. The FY '23 LTI alignment rights award was tested on the 30th of June 2025, and performance hurdles were met. Details will be provided in the FY '26 remuneration report.

Key management personnel, or KMP, remuneration outcomes for FY '25 are detailed in the remuneration report. STI awards for KMP ranged from 57% to 93% of their target opportunities. For FY '26, the executive leadership team will not receive a fixed remuneration increase and the impairment has been factored into the ROIC targets.

Turning to Director remuneration. From July 1, 2024, fees for overseas-based directors were set in U.S. dollars to reduce the impact of foreign exchange volatility. There were no increases to nonexecutive director fees in FY '25 with the last adjustment being in October 2023.

Now looking ahead, there are no changes planned for the remuneration framework in FY '26. The committee believes the framework is sound and continues to operate as it is intended for our business and the industry in which we operate. We will continue to test it against the market developments, regulatory changes and evolving workforce expectations to ensure we remain both competitive and aligned to what our shareholders expect.

As we have heard, in February next year, Tania will succeed Mark as BlueScope's CEO. For more details regarding remuneration arrangements, please refer to the recent ASX announcement and BlueScope's FY '26 Remuneration Report. In conclusion, while there was good progress in many areas this year, there are also challenges that needed to reflect on remuneration outcome. That is exactly what our design framework is set in place to do. These outcomes are fair and responsible, recognizing company performance and individual accountability.

Thank you. I will now hand back to the Chair.

Thank you, Rebecca. I will now turn to the formal business of the meeting. To facilitate discussion and voting, I will formally put the meeting -- to the meeting each item of business is set out in the notice. As shareholders are aware, no formal vote is required on Item 1. The proxy position on each relevant item will be displayed after the specific discussion on that item. There will be adequate time after the discussion to complete and submit your part.

As indicated in the Notice of Meeting, I intend to vote valid undirected proxy votes given to the Chair in favor of items 2 to 5. Ahead of the AGM, we received a number of questions and feedback from shareholders, and I have read all of those questions. We very much appreciate the engagement, and I will address those now.

First, several questions were received relating to executive pay. As Rebecca outlined in detail, the Board is very comfortable with the approach we take to reviewing and setting executive pay. Shareholders have also been very supportive. And if you'd like to know more, you can find further details in our remuneration report.

Secondly, we received a number of questions on shareholder returns on dividends, and buybacks, et cetera. As a reminder, our policy on shareholder returns is to distribute at least 50% of free cash flow via a stable dividend with additional returns made via on-market buybacks. Related to this point, a number of you asked where the BlueScope would be recommencing its dividend reinvestment plan.

We are not planning to do so given there is no need for extra capital at this point in our cycle. On dividends, we received a question on the level of future franking. As you know, franking credits are generated by taxable earnings, and these are particularly in the Australian business, our franking credit balance follows the cyclical earnings profile of our Australian business, and our approach is to pass them on as they are generated.

We also received several questions regarding BlueScope's strategy and investments, including realizing value from our land portfolio. This was covered by Mark. And if you'd like to know more, Michael Yiend is available to talk afterwards. As you would expect, several questions were received on the approach to sustainability, including climate change in the environment.

Mark also covered this earlier, and we set out our approach and performance in our extensive sustainability reporting suite, which is available on our website and includes our second Climate Action Report.

Finally, we received specific questions on BlueScope's operations. One relates to the impacts from the rail upgrade works on the train line into our Western port facility in Victoria. What I can say is, yes, in order to avoid disruption, we are working closely with the Victorian government to plan around rail outages and we'll continue to do that with our customers uppermost in mind.

Another question relates to the impacts of U.S. tariffs on BlueScope. Overall, North Star, our mini mill in the United States. Its significantly larger volumes more than offset the impact to the Australian business, given its limited volumes of exports to the U.S. Thank you to everyone who asked questions. We really do appreciate it.

So let's now turn our attention to Item 1, which is to receive and consider the annual report, financial statements and the reports of the Directors and the auditor for FY '25. For your information, we have not received any questions for the auditor prior to the meeting.

I'll now take questions. I invite any shareholders present who have a question to move to a microphone in one of the aisles. If you are unable to reach a microphone, please raise your hand so we can assist you. For those of you not here in person, as Michael outlined earlier, please submit your questions through the online portal or press *1 on your phone keypad.

If you are asking a question as a representative of a shareholder organizational group, please state that at the start of your question. To avoid duplication, if we receive multiple questions on the same topic, we'll aggregate them and address the key issues raised.

So let me open to the floor. Any questions?

Chair, I'd like to introduce to you, Philip Laird.

Thank you, Mr. Laird. I think I met you last year.

You did indeed.

Lovely to see you again.

Thank you. Thank you again for coming to Wollongong and holding your AGM here. Two questions, if I may. Firstly, in the lead up to the 100th anniversary of the establishment of the steelworks at Port Kembla and could it include a little bit of recognition of the contribution of the Hoskins family, please.

Of the, sorry, I missed what that was.

Of the Hoskins family.

Oh, my goodness. Oh my goodness, of course. So for those of you who don't know 2028 is the 100th celebration of this great facility, Australia's largest manufacturing site, Port Kembla. It is the heartbeat of our organization and the Hoskins family were the original founders of this. They were in Lithgow first, I think, and then they moved to this site here.

Unbelievable entrepreneurs and great, great Australian contributors. So absolutely, absolutely. Thank you for drawing that to the attention of everybody here in the meeting. We are only here because of those former leaders whose courage, conviction, determination and I was going to say bloody mindedness this, I mean that in the best possible way, led us to where we are. So thank you.

And I think we could also add the decision of the Board in 2015 to keep going.

Totally. Absolutely. For those of you who remember back to 2011, the closure of the blast furnace 6, which is, of course, currently being realigned, that was another existential moment and then in 2015, as you know, Mark was leading the Australian business, many people here, John Nowlan, Tania, Peter Renkin, people in the room, Dave Scott, Brett Tarrant, Mike Hussey, so many of you contributed to our decision that the Board took to keep Port Kembla open and to acquire 50% of the remaining ownership of the North Star mini mill.

That was a really significant moment in this company's history. Ewen and Mark and Rebecca are the only Board members now who remember that. So with Ewen's retirement and Mark's retirement, we welcome Tania, who brings that deep experience, and we bring John. And I mean it probably reveals my upbringing by two teachers whom I love enormously, who made me pay attention to history, my dad was an historian.

And so when I became before -- actually, when I became Chair, I went back and read every single document that this company released publicly from the beginning of its time. And I too feel deeply the courage and contribution and the responsibility on the shoulders of the Board and as Chair of the Board to always remember that.

May I ask another question? And that was, you mentioned one of the previous questions was on rail in and out of Western Port. I think getting the product from here to Western port, we have to traverse the Sydney, Melbourne railway littered with temporary speed restrictions and permanent speed restrictions and weight restrictions.

Here we are 30 years after the productivity initiatives and the microeconomic reform, the Keating government, and we still settle for 25-tonne axle loads between our two major cities. So my question is, what can we as a company do to induce the federal government to start investing to allow our product to move between Sydney and Wollongong in Port Kembla and Western Port in a more cost-effective way that will reduce emissions?

Yes. I think you raised this question last year specifically because it's...

Something similar to it.

Yes, that's exactly right. No, absolutely. Tania and I were talking about that only just yesterday as we were on site looking at a number of our operations. It is absolutely right that we use rail to transport a significant amount of product down to Western Port and that we share that rail with many freight companies and many other manufacturers shipping product.

It is absolutely more effective -- cost effective and more effective in terms of safety and emissions to get product via rail down to Western port. So that is our priority. Every now and then, we do ship product around to Western port, that's a more expensive option, and that is something that we do, but we obviously favored trains.

I think that question you raised would be a good one to talk to some of our key people, Tania and others around the kinds of things we do. Clearly, the efficiency of logistics is fundamental to a productive enterprise in this country, and rail is one of those fundamental enablers.

And whilst we are at it, we could get rid of that gauge change at dine-in.

All right. I'll see what I can do on that one, Mr. Laird.

125 years after federation, it's amazing.

I'll be down there soon to fix. Thanks, Mr. Laird. I very much appreciate your continued support and really appreciate your questions. Thank you. We know you care deeply about the company.

Any other questions on the floor, please?

Michael, can we turn to any online questions, please, or on the phone.

Yes, we've got a couple of online questions, Jane. A question from Peter [indiscernible]. I hope you're well, Peter. I know you're listening online today. Is this speak-up policy audited against experience of use on a regular basis? And are there visible leadership messages to support the speak-up policy?

Thanks, Peter. And you also make a very valuable contribution to our company, and we welcome that always. We were going to meet with you last night, but that was obviously unable to happen given yesterday's events, but we will follow up with you, and I know that Tania and Michael enjoy their time with you.

Absolutely, speak-up is all about the culture of our organization. I always say that BlueScope is a special steel company. That doesn't mean that we get everything right, but it does mean that a culture of openness and transparency is fundamental to, first of all, a safe culture and then a culture where people feel respected and able to offer diverse views and feel listened to and in fact, are listen to.

There are many ways that we do that. We ask people what they think through pulse surveys, but we have reporting online. We have engagement with management. We have external audits, and we absolutely receive all of these reports at the Board through the Remuneration and Organization Committee, and in fact, talked about that just last week.

You can't fix things and you can't make a culture strong and vibrant and safe unless we're constantly are vigilant about how people feel and they feel safe to speak up. So I can assure you, Mr. [indiscernible], it is the highest priority, and we continue to make progress, and we appreciate your question. Thank you.

We have another question from Kevin Daly. Is there any sign that U.S. tariffs are leading to a resurgence in U.S. steel production? I think you might have touched on this one before, but...

Yes. Mr. Daly, absolutely. Earlier this year, tariffs were 25% and then 50% on imported steel into the United States. And as I mentioned, our Australian business has been affected by that. Nonetheless, we make 3 million tonnes of steel, equivalent of the amount of -- in the United States, the equivalent of the amount of steel we make in Australia. And all of that still is made in a single product and sold within about a 300-mile radius. It is, in fact, a great place to do business. We have a wonderful steel mill there with 3 electric arc furnaces, and we are the lowest cost and highest customer satisfaction steelmaking site in North America. That is a big responsibility for us. We don't take any of that for granted. And we do everything every day to keep that up and to keep satisfying our customers and stakeholders.

So we believe that, yes, there is volatility. And yes, there was a slight pullback with uncertainty in the market. You would expect that as people, manufacturers, distributors, builders, et cetera, we're assessing what their own cost base would be. But we find now that despite that volatility, their tariffs have always been a broader part of policy for the United States. And we can see pockets of growth, and we are optimistic about the United States. You're not in the steelmaking business and downstream products business unless you have confidence about the future, and we absolutely have that in the United States. Thanks, Michael. Any other questions online?

Yes. Just one follow-up question from Peter [indiscernible]. BlueScope cannot escape the impact of the discussion of manufacturing productivity. How is BlueScope handling productivity improvement and BlueScope's efforts to improve productivity?

I could talk to that, but I do wonder that whether it would be more appropriate to hear from Mark, he leads the business, and he leads our efforts in terms of improving productivity.

Thanks, Jane. Look, what I'd say, Peter, is, as you're aware, part of the DNA of steelmaking is getting out of bed every day and making things faster with less -- with a smaller footprint. We have fabulous programs inside BlueScope, a manufacturing excellence program. I see Donnie sitting up the back there, who runs that.

And that's a program that we run across our business, across all of our metal coating lines, our paint lines, our steelmaking processes. Productivity is really the ticket to the game in our industry, and I think BlueScope is an outstanding example of that.

Thanks, Mr. [indiscernible]. And Michael, any questions on phone?

There's no further questions online, and there's no phone questions at the moment.

So thanks, Michael, back to the floor.

Chair, I would like to introduce to you [ Basil Simmons ].

Welcome, Mr. [ Simmons ]. Nice to see you.

Firstly, acknowledgment of a tough day, Mark, across the business. As ex employee, I understand the impact of that. And also congratulations to both you and Tania in your roles.

So I'm here as a community member this morning. The BlueScope Climate Action report of September 2024 sets clear aspirations and objectives in relation to the reduction of greenhouse gases. I have some understanding of the use of gas, the properties it brings the volumes required as well as its role in the transition to a lower carbon footprint. Mark, your address to the press club in October called for expanded gas extraction.

I note that you didn't mention that in your earlier address. Opening new gas fields will have an impact on communities and environments. I'm uncertain as to how that fits with our bond. Given the 20% reduction in domestic gas demand in the last decade, and the massive volume extraction increase that has taken place in that period. My question is, is this extraction a clear departure from the aspirations and objectives outlined in the Climate Action report?

It's a very good question. You're obviously committed to the success of the company and follow it closely. So Climate Action report was produced last year, and we updated our emissions performance in the sustainability report this year, which I'm sure you will have read as well. I think we need to stand back and think about the long-term decarbonized future of this country.

We have not resolved for 1 second from our commitment to decarbonized future. For some period of time, we talked about the enablers to that decarbonization, one of which was what we thought would be renewable hydrogen. There has been a lot of money spent on renewable hydrogen, and I also have a background in the energy industry and have an awareness about what it takes to decarbonize the grid. And that is an enormous task, one of the most post wall reconstruction task equivalent that we've faced in this country. So we have been very reflective about do we continue to bank only on renewable hydrogen? Or do we take a pivot, slight pivot and think about how do we get decarbonization?

Now we know and Chris Page is here, who's leading NeoSmelt, Anna Matysek is here who leads Climate Change and Energy, is here, Deb Caudle is here, all of those are deeply immersed in this. And we have thought very deeply about talking about gas as a transition fuel. It's the same as the government's position. It's the same as the Australian energy market operators position. It is impossible to decarbonize without using gas as a transition fuel.

So that is the logic. It's very simple. And what I do know as well is that if we don't manage transition thoughtfully and carefully, we will close industry down. That is not a sensible thing to do. Now not everybody has the same view about the pace of transition. That is good. Everybody has a vested interest in this and everybody should express their views. I completely agree, and the Board and Mark completely agree.

But we have to be realistic. And our view is that unless there is gas available, domestic gas in this country at a fair price, manufacturing will close. It just can't operate otherwise. We would encourage you to continue to engage with us. The more you talk with us, the more we deeply think about things and the more we hold ourselves accountable, I think we have a very transparent approach in our sustainability reporting suite. We get a lot of feedback from investors that, that is the case, and they support that. It is a very significant topic. And our view is if it matters, we should have the courage of our conviction to stand up and explain our position. So that's what we're doing.

Great. Let's say 70% of the gas extracted being exported, there's a problem there, obviously. There's some structural things and I know that there's been a lot of great efforts with the federal government. I'm just wondering what else BlueScope can do to lead manufacturing in this space? I understand the need from a transition point of view. What can we do to actually do something different to really take a lead in this area?

Well, I think I might ask Mark.

Thanks, Jane. [ Basil ], I think you saw that with the Press Club. We were speaking on behalf of manufacturing in Australia. And we speak up when it matters, and I think this is a critical issue for Australia's future. One of the things that we have the potential for it in our organization is up to a 60% reduction in our emissions if we were producing -- be producing our steel with natural gas-based DRI.

And that's a remarkable achievement. So we are proud and happy to represent the broader -- the manufacturing Australia as part of the broader manufacturing industry in Australia. And I'm afraid there's only one environment and the thought of decarbonizing or manufacturing disappearing in Australia only for that to happen offshore less efficiently and for product to be shipped back to Australia makes no sense at all.

There's only one atmosphere. So I think our progress, particularly in terms of reductions we're making in real time across our footprint, another 50% emissions reduction in New Zealand, I think, hold us in very good stead in terms of negotiating the discussions with governments around policy, and it's an important space that BlueScope needs to maintain.

I warned him about that. Thanks, Mr. [ Simmons ]. Really appreciate it. And please, please keep talking to us.

I think I heard that we might have another question online or on the phone, Michael.

Not for this item. I'm just checking on -- I can't see any questions on the phone. But if there is any online just dial 1. We've got 1 on the floor.

Thanks, Michael. Sorry, I beg your pardon. Number two.

Chair, may I introduce Maddie [indiscernible] from Wollongong.

Yes, my name is Maddie. As being said, I've grown up in Wollongong. I live less than 10 minutes from Port Kembla Steelworks. Yes, and I know that BlueScope is a really important institution for our local community, including for members of my family who work here. And this value is really clear in BlueScope's bond in principle of our local communities are our homes, which also notes the importance of caring for our environment. The Manufacturing Australia's fair gas campaign has been mentioned a few times this morning. And yes, I support the push to maintain domestic gas in Australia and have fair prices for Australian manufacturers.

But my question is why are you also advocating for the opening up of new gas projects, when as we've already noted here today, there is enough gas already extracted in Australia and much of it is being exported? As a young person, my stake in the climate and the environment is pertinent in projects like the Beetaloo Basin and the Narrabri Gas Project, which are being advocated for in this campaign would have extremely damaging climate impacts. How can you justify advocacy on new gas fields and suggest BlueScope is serious about climate action?

Thanks, Maddie. I think we probably addressed a large amount of your question. Mark, did you want to add anything else?

No, just again, that, Maddie, this is a transition discussion. And for gas to be in a position to reduce our emissions by 60%, and that goes for other blast furnace steelmakers as well, clearly, that's a step in the right direction in terms of reducing emissions from existing production facilities. We have also advocated with the government that part of our part of our suggestion for a solution on the East Coast is a reservation of noncontracted gas that's currently being exported. So a redirection of that gas from export markets to domestic markets, we think there's a combination of factors that have to come into play here, too, for allow us to maintain a manufacturing industry, a vitally important manufacturing industry and continue to decarbonize.

Yes. I guess my question is still why is your position about expanding on current gas exploration and extraction when -- yes, as we've already acknowledged there is already enough. And so the position really should be about maintaining gas in -- domestically in Australia.

So Maddie, again, if we were to move from a coal-based steelmaking process to a gas-fired steelmaking process would reduce our emissions by 60% that needs gas that's currently not available in the Australian market. So one part of the solution is more gas to allow the transition from much less efficient manufacturing processes.

Maddie, you raised questions about where future gas will come from. Our view on that is where future gas is required. Those decisions are not ours. We advocate for what we think is important for manufacturing. Our priority is ensuring a manufacturing base in this country, it is essential and steel is a life cycle low emissions product. particularly when we can decarbonize our ironmaking.

So that is what we are doing, and we think that's absolutely imperative for us to keep doing that. If there is new gas fields or if new gas fields are developed, we also advocate for domestic reservation, as Mark was saying. So I think the debate you're raising is a very important debate. It's been considered broadly by oil and gas producers, by the Australian energy market operator, by the industry minister and I encourage you to keep asking us these questions and also keep raising them in a broader forum because they are important.

Ultimately, we are all Australians in this room here or country here, and we all have the same interests at heart and your views are really significantly important, and please keep asking them.

Yes. I understand that. I guess what I'm asking about is specifically the Narrabri gas expansion, for example, by Santos' own estimation, it would have downstream emissions of 94.25 million tonnes over 25 years. And this is Pilliga forest...

Maddie, we are not Santos. We are not Santos, so I'm not going to answer any of those questions. It's not appropriate. We are BlueScope, we'll talk about things from BlueScope's perspective. I encourage you to attend the Santos AGM and talk with them.

Maddie, I think that we probably covered everything. Thank you.

Is there -- are there any questions on the phone?

There is one question from the ASA, I believe. Can we go to the phone lines?

Michael Muntisov has asked a phone question. Please go ahead.

My name is Mike Muntisov. I'm from the Australian Shareholders Association. Today, I hold proxies from 119 shareholders, and I'd like to thank all those shareholders who appointed ASA as their proxy.

I wanted to start by saying that the ASA is very supportive of BlueScope's use of the hybrid physical online meeting format that we're having today. So thank you for that. BlueScope used to have a track record of rotating the physical location of the AGM between Melbourne, Sydney, Brisbane and Wollongong. You've now held the last 4 AGMs in Wollongong. Are you planning to hold next year's meeting in one of the largest cities to give more shareholders the opportunity to meet in person, the Directors and Executives of their company?

Thanks, Mike. Well, as you would expect, Mike and the company and myself have met a couple of times over the past 2 years, and Mike has raised this every time we have met, including a month ago-or-so when we met. And he says today to you what he has said to us.

What we've said to Mike, is that Port Kembla is the heartbeat of this organization. We've had overwhelming shareholder feedback that they support an AGM held in Wollongong. We heard from Mr. Laird before. And with the 2028 centenary of Port Kembla coming up, we intend to continue holding the meeting here.

If something changes where we think we should have a different view on things. we would do that. But for now, as I've said to you, Mike, we will continue to hold the meeting here. It is important. It's a hybrid AGM. So you can hear from Mike, you can hear from the ASA, Mike is based in Melbourne, and it's very difficult for him to get here. There are many shareholders that do travel from Sydney down here. And -- yes, so Mike, we haven't changed our view since we last spoke that this is, in fact, the right location for BlueScope's AGM.

Okay. Thank you. On another matter, we're pleased to read that BlueScope says it will stick with strict financial hurdles in its bidding for the Whyalla Steelworks. Can you outline to shareholders why the Whyalla Steelworks would be an attractive asset for BlueScope?

Well, I think I'll ask Mark to talk to the detail of that. But we are -- Whyalla is not just steelworks. There's mine, there's structural rail, there's a whole bunch of things. So it is the Whyalla operations. It's been in administration of -- the South Australian government put it into administration because the company was not paying any of its creditors for a period of time.

We were engaged by the administrators as technical advisers, and we sent some of our absolutely very, very best people down there to advise the administrators. The administrators have said that the site has been kept operating through the technical guidance and assistance of our people. You as shareholders would expect nothing less of our fellow steelmakers to go and work with Whyalla.

The administrator is running a process. South Australian government is intimately involved in that including the steel restructuring task force. We have formed a consortium of some of the most outstanding steelmakers around the world with deep, deep experience. And we have put forward a number of ideas to the administrator where we think there could be a future for Whyalla.

And that process is still underway. We don't expect an early resolution to that. There will be other people who are interested in the future of Whyalla. What I can assure you is that we won't do anything that is outside the interests of BlueScope. We have a financial framework that we have had for a very long time coming out of the 2015 -- the darkest times in 2013 to '15 that Tania and Mark were among others, with the architect of.

That says that unless investments meet a return on invested capital, then we don't do it. And that is a really important tenant for us because as we've talked before, when we're bottom of the cycle, cash flow is at the highest priority. So that is an absolute commitment. Mark, did you want to make any other comments about it?

I think you've answered the question perfectly.

Thank you.

If I could. I mean, the question was what's the attractive element of Whyalla to BlueScope.

So Michael, I think, as Jane pointed out, there's more than the steel works at Whyalla. There's an ore resource that's potentially interesting in terms of future decarbonization opportunities at Port Kembla and/or at Whyalla. There's a long way to go on this. We will absolutely adhere to our financial framework and we have the right resources and a fantastic consortium looking at it, but there's a long way to go.

Thanks, Mike.

If I could, one more.

One more. I mean we are restricted to 2, but I think everybody here is happy to hear a third.

Okay. This is a little bit speculative because it's impossible for ordinary shareholders and even Directors to predict when an opportunity might arise causing a company to do a capital raising. But in any event that BlueScope at some point does a capital raise, ASA advocates for pro rata announced for entitlement offers such as [indiscernible], which is the fairest method for existing shareholders. Can you make any comments on the Board's view on the different options for capital raising?

Yes. And as you would imagine, Mike, and we had a chance to discuss this a month ago as well. And the ASA has been strong in every AGM that I've ever been involved in advocating for that position, which we completely understand.

From BlueScope's perspective, I talked about our financial framework. Part of that is running a very, very conservative balance sheet. We need to do that because of the bottom of the cycle conditions that we find ourselves in again. We do not intend raising capital at this point in time. And if we ever got to that point in our decision-making, we would take the ASA's position into account, but I'm not going to indicate any position, otherwise. It is just too premature and speculative. All I can say is we have no intention of raising equity at the moment.

Thank you. Thanks, Mike.

Well, I think that concludes the discussion. Oh, no, sorry, I beg your pardon. Oh my goodness. Sorry, sorry, I beg your pardon, Item 1.

Chair, I would like to introduce to you, Helen [indiscernible].

Firstly, I'd just like to express my condolences to the family of the young man that passed away yesterday. I can't imagine what his family must be going through, but we're just all thinking of him.

I'd also like to say how proud I am to be a part of this almost 100-year-old Australian company. And I hope we make it to 100. I just wanted to just ask you, Mark to expand on your -- the talks with the Prime Minister, the government in regard to using the gas to reduce the emissions. I just wonder if there are other companies involved that you're working together with? And do we have any leverage? I mean is there any hope is what I would like to know.

Look, there is hope. There is a current gas -- I'll take the question. There's a current gas market review going on that the federal government is undertaking and that is the policy opportunity for manufacturing to put its views forward. We are advocating hard. We don't talk about our discussions with government, we don't think that's appropriate, but please be assured that we are talking with all of the right people and across all levels of government.

That is what we should do, that is what we must do. We're confident we're getting a very fair hearing. There are others with different views, but people do, I think, at a policy an economic level, understand the fundamental contribution of manufacturing to this country. So yes, we're going to go for another 100 years.

There is, I think, another question. Please go to the microphone, yes. I don't have my glasses on, so I can't see long distance. But anyway, it doesn't matter. So stick your hands up.

Chair, I'd like to introduce to you [indiscernible].

I'm [ Cloda ]. I'm from Wollongong. And I strongly agree that it was great to have the AGM here so local people can participate in talking about an industry that's so important to the area.

I was recently reading a report from the Institute of Energy Economics and Financial Analysis, IEEFA, and they were talking about a new generation of direct reduced iron facilities. It's been developed in Oman, which allow the use of hydrogen from the outset. This is something that you were talking about a little bit before, Jane.

And this is despite Oman having way cheaper gas than Australia. The reason they're doing that is because it's what the international market demands. And also because gas-based iron and steelmaking is very emissions intensive with carbon capture and storage being unable to mitigate those emissions as well as being quite costly.

I'm really excited to hear that BlueScope is looking into this as an option for South Australia. But I'd be interested to understand what your clear transition pathway of polluting gas would be for Port Kembla?

Yes, [ Cloda ], thank you. We've answered quite a bit of that. What I can say is that in South Australia, the South Australian government closed down their hydrogen plans and they've reallocated those funds to the Whyalla future. And that is because -- well, I can't speak for the government, but I think generally speaking, when you look at the hydrogen plants that have been abandoned in Australia, it's because it just can't be -- it can't be done on a commercial basis. That's the question that we need to address and that is fundamental and there is an enormous level of research and development going into that.

In terms of our own operations, given that hydrogen is not an option for us, but we do recognize DRI by hydrogen is, in fact, a very good option for decarbonized iron making. We absolutely get that. We do think that there are a number of things that we can do which are very prospective. Chris Page, who's sitting almost next to you, just there, is running the NeoSmelt joint venture or leading NeoSmelt joint venture. And that is a project over in Kwinana in Western Australia where we're looking at can we decarbonize Pilbara iron ore?

If we can do that, and make direct reduced iron out of that, that would be a game changer in terms of decarbonizing iron making. So rather than just pin our hopes on hydrogen, we have to think laterally. And so we're looking at the whole range of things. And that consortium over in Western Australia is joined by BHP, by Rio, by Woodside, Mitsui, and there's room for other partners if they want to come on board.

So we -- and interestingly, the technology, which we think is the most prospective there. The huge value-add contributor to the decarbonization of ironmaking is, in fact, operated in our New Zealand business. It's the only one in the world. So like it's just amazing that BlueScope down in New Zealand has a key to this process of continuing to use the basic oxygen furnace for steelmaking. It is something we are putting our money where our mouth is. We're putting a huge amount of investment. And I encourage you to speak to Chris.

I just want to make sure that I fully understand. My understanding from what you said you're not considering as a part of your potential interest into Whyalla operations, not just the steel, a pathway that enables hydrogen from the start. Could you share a little bit more about why you don't consider hydrogen as a possible avenue for BlueScope?

Mark has already talked about what's happening in Whyalla. It's not for us to determine the future of Whyalla. There is a process being run by the government and the administrator. And we are going to indicate some interest in it, but those are bigger, bigger questions. And we may not, in the end, if somebody wants to buy the entire operations, that is something that the administrator will consider. So I think it's a highly prospective to ask those questions because we're not in a position to answer them. Thank you, [ Cloda ]. Great questions. Thank you.

We do have 1 more online question here, if that's okay.

Of course.

From Stephen Mayne. Welcome, Steven. I support ongoing BlueScope AGMs being held in Wollongong, so do we, Stephen. As long as you continue to offer the hybrid format, us capital city types as choice, but too often don't turn up in Sydney, Melbourne or Perth, in particular. Adelaide does get big numbers when companies visit, but not much happens in Adelaide. Stephen, [indiscernible].

Stop that. Michael, we don't read out offensive comments.

We don't. I should have preread that one, sorry. However, to prove there is demand in Wollongong, please disclose the headcount data in the poll results so we can see how many shareholders voted by proxy and how many voted in person today, will you do this?

Michael -- sorry, Stephen, you asked that question last year, and my response was we did it the year before. So this will now be our third year of doing just that. Thank you.

Okay. Now not that I'm anxious to get on to Item 2. But I think as I look around the room and Michael, there are no more questions, I am going to conclude the discussion on Item 1. And I do thank everybody who stood up and asked questions, much appreciated. Happy to talk afterwards as well.

As there is no vote on item 1, we'll now move to item 2. So Item 2 has 4 components: Item 2A relates to the proposed election of K'Lynne Johnson as a Director. K'Lynne was appointed to the Board in January 2022 and in accordance with the company's constitution, offers herself for reelection.

I confirm that the Board considers K'Lynne independent and that she makes a very valuable contribution as the Chair of the HSEC Committee and on the Board. She is always available and has led improvements in safety, governance and oversight. The Board, excluding K'Lynne, recommends to shareholders her reelection.

I invite K'Lynne to address shareholders.

Good morning, ladies and gentlemen. As Chair of BlueScope's Health, Safety, Environment and Community Committee and as a parent and as a fellow human being, I was also deeply saddened to hear of the loss of a young man's life. And I also offer my personal condolences. It's a really hard thing to experience as an employee and as a person to work in a community and to have that happen.

I bring over 30 years of strategic and operational experience across global chemicals and energy markets with a track record of leading transformation and complex capital-intensive businesses. As Executive Chair and CEO of Elevance Renewable Sciences, I led the commercialization of a novel chemistry platform. We built a large-scale manufacturing in Indonesia and negotiated joint ventures across Asia, Europe and the U.S. Prior to that, I held executive roles in Amoco and BP, including leading a $4 billion global chemicals business.

I've been proud to contribute to BlueScope's Board since 2022. And within our HSEC Committee, I've been able to bring my experience in driving safety performance and environmental leadership across many different industrial businesses and I also serve on the Remuneration and Nomination Committees.

In addition to BlueScope, I currently serve as Chair of Trinseo and DMC Biotechnologies and as Director of FMC Corporation and JM Huber. These roles span U.S. listed and private companies of differing scales across chemicals, industrial materials and biotech. Each of these directorships have distinct scope and cadence.

This diversity, combined with my extensive executive experience, help strengthen my contribution to BlueScope and helps me manage my time effectively. I continue to prioritize the demands of my BlueScope directorship and committee work, and I remain fully committed to supporting the company's growth and governance. It's been a privilege to serve on this board, and I respectfully ask for your support for my reelection. Thank you.

Thank you, K'Lynne. Thank you very much. I now invite any questions from the floor.

Thank you. Michael, have we received any questions online or on the phone?

Not with this one, no.

Do we have a question on the phone?

Yes, there is a phone question from Mike Muntisov.

Yes. Just for Ms. Johnson, thanks for your presentation there. And as you've mentioned, you're on the Board of 4 American companies, two of which are listed on the New York Stock Exchange and two of which you're Chair of. One of our concerns, and we have a -- within ASA, we have guidelines we look at in terms of workload.

And one of our concerns with an experience with Chairs, in particular, is workload can be managed when things are going well. But when problems arise often a big load comes on to the Chair and being a Chair of two companies, I think one of which is listed company, what assurance can you provide us that you can provide adequate quality time to BlueScope? And could you perhaps expand on what you think or what your future plans are for your Director portfolio so we can get a gauge of your future workload.

Thanks, Mike. I'll take that question, most appropriate that I answer on behalf of the Board. We absolutely note the ASA's guidelines, and we know proxy adviser guidelines as well. We have -- I can guarantee you that a lot of difficult things happen all the time in BlueScope and in the companies that K'Lynne is involved with. On every single occasion, K'Lynne has shown up and made an outstanding contribution.

She has a deep background and has a wonderful approach to how she engages with management and how she engages on the board on the most difficult questions. We have unreservedly put K'Lynne forward for reelection and unanimously endorsed her. So we are comfortable that K'Lynne is an outstanding director. We would lose considerable value if she was not to be reelected, and I -- we have strong support from shareholders for her reelection.

Well, and I hope that satisfies you that all the things that we should be doing, we are doing and K'Lynne is an outstanding director. Thank you.

Are there any other questions in relation to Item 2A? Someone at the back?

Chair, this is [ Norma ].

Norma, I think we've met before.

Yes, we have. In the presence of all these learned people, I have to say we are in good hands. There's no question about that. You just listen to each and every one of them and you go home and you're smiling. Good on you, BlueScope.

On you, [ Norma ]. So not that I take any of this personally, but did you notice how big a round of applause [ Norma ] got and I got one. Okay. All right. So that concludes Item 2A. Details of the proxy votes are displayed on the screen.

K'Lynne has almost 99% vote in favor of her reelection. Congratulations, K'Lynne.

Okay. Item 2B relates to the proposed reelection of Zhi-Qiang Zhang. He also joined the Board with K'Lynne in January 2022 and offers himself for reelection. The Board considers Zhi-Qiang Zhang to be independent, and he makes an outstanding strong and valuable contribution, bringing a perspective on China that nobody else can bring to our Board. The Board, excluding Zhi-Qiang Zhang, recommends his reelection. I invite him to speak to this. Thank you.

Ladies and gentlemen, my fellow shareholders, as a member of health and safety committee members, I wish also to express my sincere condolences. It is a terrible tragedy. My name is Zhi-Qiang Zhang. I was born and grown up in Beijing, China. I earned a degree in computer science in Beijing and later completed an MBA degree from Queen's University in Canada. In 1987, I returned to China and have since held different leadership roles across multiple functions, including service as President of four multinational companies in China with responsibilities spanning across China and Asia Pacific region. I continue to live and work in China today. Three years ago, I stood before you and was honored to be elected as a Director for this wonderful company.

Since then, I have taken my responsibility seriously serving on the Board, HSEC Committee and Risk and Sustainability Committee. As the world faces tightened geopolitic challenges, particularly between U.S. and China, it is more important than ever for BlueScope and the Board to have the deep underground knowledge to China and other Asian markets. This part of the world represents a significant opportunity for steel products and ongoing challenges for BlueScope.

My background also includes extensive experiences in blue chip manufacturing and product development including industrial digitalization, automation and robotics. I'm standing here today again asking for your support for my nomination as a member of the Board of BlueScope. It will be my privilege to serve you for another 3 years. Thank you.

Thank you, Zhi-Qiang Zhang, and I -- on show there was the incredible contribution that Zhi-Qiang Zhang brings. Are there any questions from the floor on Item 2B? Any questions on line, Michael?

Not on this item.

Any questions on the phone? Okay. Thanks, Michael. I think that concludes the discussion for Item 2B. Details of the proxy votes are displayed on the screen. As you can see, huge support for Zhi-Qiang Zhang. Congratulations Zhi-Qiang Zhang on your reelection.

Moving to Item 2C. That relates to the proposed election of Cheri Phyfer. Cheri joined the Board in October, just last month, and offers herself for election. The Board considers Cheri to be independent. Since she joined the Board just 6 weeks ago, Cheri has brought insights into downstream branded product markets in the United States.

The Board, excluding Cheri, recommends her election to shareholders. I invite Cheri to say a few words.

Thank you, Jane. Good morning, fellow board members and shareholders. I want to join my colleagues and offer my profound sympathies for the life that was lost yesterday. And I will tell you, as the newbie to the organization, it was extremely meaningful to hear the comments from the shareholders, the community members today and to see the BlueScope family really rally around each other at such a horrible time.

I'm honored to stand here for election to the Board of BlueScope. I have spent 30 years in the building and construction industry with more than 20 of those years as a global executive and leadership roles. Throughout my career, I have had the privilege of leading teams driving growth and navigating complex markets across the coatings and building products industry, areas that align with BlueScope's business and future opportunities.

Since 2018, I have also served as a dedicated and engaged Board member across several organizations, bringing a balanced perspective, a focus on governance and a deep commitment to sustainable growth. I currently serve on the Board of O-I Glass, a Board that is heavy manufacturing and high capital deployment, which I believe will help me in the onboarding to BlueScope and adding value to the operational opportunities in front of the company. BlueScope's continued expansion in North America presents an exciting opportunity. The company's focus on coated and building products closely matches my experience and understanding of the customers, the operational excellence and the value creation we can make. Thank you for your time and your consideration. I would be honored to contribute to BlueScope's ongoing success and to support the company's vision for sustainable growth and innovation.

Thank you, Cheri. Are there any questions from the floor? Michael, any questions online?

No questions online or on the phone.

Okay. Thank you. All right. That concludes the discussion. Details of the proxy votes are displayed on the screen. Cheri, it's pretty unusual to get such a high vote. we're all very jealous of that. So welcome, welcome, and thank you for -- to shareholders for supporting Cheri's reelection.

Now Item 2D, for those of you who have been waiting for this, it is my privilege to talk about 2D, and that's the proposed election of John Nowlan. As I mentioned earlier, the Board believes John brings a blend of commercial steel industry and steelmaking experience that will be of enormous value to the Board. We have undertaken a thorough review of his qualifications, which are first class. His experience, which is first class, and his contribution to BlueScope over, in fact, 47 years, I think. And we unanimously support his nomination for election and he is supported by the management team as well.

I invite John to speak to his election.

Thank you, Jane. Good morning, ladies and gentlemen, fellow shareholders. Having led the global safety function for BlueScope and worked across BlueScope and at Port Kembla for many years, I can only imagine the terrible impact of the loss of this young man's life yesterday. So I have a terrible impact on his family, his friends, his colleagues at work, the Illawarra community, and I extend my deepest condolences. It's a privilege to stand as a candidate for the Board, and I appreciate the Board's support for my nomination. And thank you for considering my candidacy.

After nearly 50 years with BlueScope and BHP, I bring experience in steel manufacturing, large-scale capital-intensive projects, building products markets across Australia, New Zealand and the United States. I believe this will enable me to support BlueScope to respond and adapt to the change and opportunities in what are dynamic and volatile markets. Through leading teams focused on customer service, manufacturing excellence, process improvement and carbon reduction, health, safety and environment and product innovation, areas which continue to be key to BlueScope's evolving business and future opportunities. I have developed a deep appreciation for the strength that comes from our people and the resilience and adaptability of BlueScope's businesses.

I recognize that if elected, I will serve as a Non-independent director. I assure you that I will work in the best interest of BlueScope, work collaboratively with my fellow directors, who will continue to form a majority of independent members to uphold the principles of transparency, accountability, stewardship that define BlueScope's governance. I'm excited by this opportunity to contribute to BlueScope's future and respectfully seek your support for my election. Thank you.

Thank you, John. Are there any questions from the floor in relation to John's election? Any questions online or on the phone?

There is one question online from Stephen Mayne. I think he rates John first class as well, Jane. I love the way you argue for John Nowlan's appointment, even though he won't be independent. If the governance rules tolerated having one Non-independent director because they add so much value overall, this would be a good development. Well done for blazing the trail with John, which I'm going to use as a precedent to encourage other companies to follow suit, provided there is always a strong majority of genuinely independent Non-executive directors, including the Chair. Did any of the governance box tickers recommend against John's election?

I don't think they're box tickers. I think the proxy advisers play a very valuable role. So I wouldn't obviously nor would the Board call them that. We engage with the proxy advisers at least twice a year. I go and see them. Rebecca, as Chair of the Rem Committee goes and sees them as well. As Stephen, you know this really well, the proxy adviser reports are their property. If they choose to release them, that's up to them. What I can say in this instance, not a single proxy adviser recommended against John. In fact, they recommended for John. So thanks, Stephen.

No more questions online or on the phone on this item.

Thank you. What I can say is that I've also spent a long time talking with investors about John. We first talked about John as a possible member of the Board with investors about 9 months ago, I think, now. And we had resounding support from our largest institutional investors, some of whom own up to 20% of our shares. Very strong support. So that concludes the discussion for Item 2D. Details of the proxy votes are displayed on the screen. Wow, welcome to the Board, John. Fantastic. You'll be up here next year.

I now move to the remaining items on today's agenda, which relate to the adoption of our Rem Report and grant of rights under the company's short-term and long-term incentive plans to Mark Vassella. Rebecca talked about those extensively before. Each of these items will be voted on separately. However, given Rebecca's comments and the commonality between the items, we'll deal with the discussion on all items together. Item 3 involves a nonbinding resolution to adopt the company's Rem Report. Each director recommends that shareholders vote in favor of the resolution under this item. Directors other than Mark recommend that shareholders vote in favor of items 4 and 5. So I now invite questions from the floor on 3 to 5.

Michael, thank you. Any questions online or on the phone?

We do have one question on item 3 from Stephen Mayne. Why didn't you disclose the proxy position early to the ASX along with the formal addresses to allow more time for investors to prepare for today's AGM debate. Many other companies do this. Did any of the proxy advisers recommend against the remuneration report? And if so, what concerns did this raise?

Thanks, Stephen. We have always disclosed proxy votes after we've heard questions from the floor. You can see proxy votes have been overwhelmingly in support of what we do, and I understand Stephen's point. And there are companies that do disclose proxy votes before discussion. We just don't like to stifle debate. We don't want to discourage people from coming forward because they think their vote won't make a difference. That's not the point of an AGM. The point of an AGM is to listen to people here in the hybrid meeting and on the floor here who've made the effort to come here. And so we are not going to change our position and disclose proxy votes before we've heard that discussion. Do understand his view. And I can assure you that we have had strong and long support for our Rem Report and the company's remuneration practices, LTI and STI, and you can only imagine what the proxy advisers' views are. So I think that answers that question. Any other questions?

No more online questions, but I believe we do have one question from Mike Muntisov from the ASA on the phones. Can we go to the phone lines?

Yes. In answer to Stephen Mayne's question, the ASA supported all the remuneration resolutions and also supported John Nowlan, just to clear that up. And we also support your approach of not releasing the proxies until after the debate. I think that does otherwise could stifle debate. So we support that. I did have a question on remuneration and it relates to the calculation of the return on invested capital performance measure, which is used for the purposes of working out the long-term incentive payment to management. Now last year, BlueScope wrote off an investment of $439 million due to the impairment of the coated steel business in the U.S.A. The question is, will you ensure that the $439 million amount will continue to be counted when calculating management's return on invested capital over the next 2 years of the long-term incentive plan. After all, the $439 million was actual money invested and shouldn't be ignored because it's been removed from the balance sheet for accounting purposes.

Thanks, Mike. So Mike, Chris Gibbs, our Head of Investor Relations, and I had a lot of discussion about this point with Mike, and we exchanged lots of calculations as well. And we thank you for your interest in this. Absolutely, we have no integrity if we have a REM structure that either unfairly favors management or unfairly disadvantages them. We think we have the balance right. Mike raises the very point that we have talked about in terms of both STI and LTI. We will, with the STI, adjust for the impact of the North American Coated Products write-down. That is absolutely appropriate. We're looking at the long-term incentive plan. What I can absolutely assure everyone of that we will land on the right outcome. We will be transparent and we will be fair about it, and we'll be reporting on that in the 2026 rem report. Thanks, Mike.

Are there any other questions online, on the floor, on the phone?

No more questions online or on the phone.

Thanks, Michael. That concludes the discussion on these items. And thanks, Mike, also for confirming the ASA's support for displaying proxy votes at the end of discussion. So the rem report is displayed, and you can see 98.93% for discretionary [indiscernible]. Turning to the grant of short-term incentive rights and grant of long-term incentive alignment rights, you can see overwhelmingly 99% support for those resolutions. So I think you can see that we've got it pretty right at the moment and the challenge that Mike raises will take absolutely fairly and squarely on board.

Well, would you believe that concludes the formal business of the meeting today. I'm going to ask you to complete your voting paper or vote online. And for those here, please place those voting papers in the poll collection boxes at the back of the room, which will remain open for a further 5 minutes. As I mentioned earlier, the results of the poll will be available later today.

Now before you all go and normally, people are racing to leave because there's really nice refreshments out there. This is Mark Vasella's last Annual General Meeting as Chief Executive. We've talked before about the contribution and leadership of Mark, and I would like shareholders to recognize that. Okay. No tears. Thank you for your attendance and your continued support of BlueScope. I invite those here to join us for refreshments, which I've said before, are really nice. I now declare the meeting closed, subject to finalization of the poll. Thank you so, so much. All the best.