By Robb M. Stewart
MELBOURNE--Arrium Ltd.'s (ARI.AU) immediate priority is to slash
debt but the Australian company continues to prospect for new
mineral bodies and has its sights on adding copper and gold to a
business largely focused on steel and iron ore, new Chief Executive
Andrew Roberts said Thursday.
"We are starting to pay more attention to the copper and gold
opportunities," Mr. Roberts said. "It is something we'll progress
more appropriately this year."
Struggling with years of weakening demand for steel and a strong
Australian dollar that made it tough to compete against imports,
Arrium has increasingly focused on the production of iron ore and
last year changed its name from OneSteel to reflect the shift.
Exploration has until now been focused on ensuring the company will
be able to sell at least 12 million metric tons of iron ore a year
in the years ahead.
Arrium, which was spun out from BHP Billiton Ltd. (BHP.AU) in
2000, earlier this month said it would book 480 million Australian
dollars ($440 million) in asset impairment and restructuring
charges as it continued to reshape its struggling steel business.
It followed a A$474 million impairment charge to its steel arm in
February as the company continued to struggle with weaker demand
and a strong local currency.
"Our number one priority at Arrium at the moment is reducing
debt, which has increased because of recent growth investments in
mining and mining consumables," Mr. Roberts told a mining industry
luncheon in Melbourne.
He said debt would be reduced as the company further
restructures its steel division, integrating steelmaking and steel
distribution operations in a single unit, and seeks to sell some
steel assets. Arrium also will benefit as the mining business
expands and its mining products business remains strong, he said.
Net debt at the end of December stood at A$2.16 billion.
Arrium plans to remain in the steel industry and Mr. Roberts
said the business is leveraged to any modest improvement in demand
or fall in the Australian dollar against other currencies.
"We think the [Australian steel] market is at the bottom of the
cycle," he later told reporters, adding the company expects to hold
its share of the market against imports.
Arrium has estimated that each one cent fall in the Australian
dollar against the U.S. dollar has a benefit of between A$10
million and A$12 million in earnings before interest, tax,
depreciation and amortization through lowered costs.
Mr. Roberts officially stepped up to become CEO and managing
director at the start of the month, although he was named successor
to Geoff Plummer in February. A veteran of the company who
originally joined BHP's steel unit in 1989, he is credited by the
company with initiating and leading Arrium's expansion in
mining-industry products such as grinding materials in North
America, South America and Asia.
Mr. Roberts said demand for iron ore remains strong, supported
by continued strong growth in China.
South Korean steel producer Posco (005490.SE) and Hong
Kong-based commodities trader Noble Group Ltd. (N21.SG) last
October abandoned a proposed takeover of Arrium after the
Australian firm spurned a raised bid valued at almost A$1.2
billion. The companies had approached Arrium with a cash offer of
A$0.88 a share.
Arrium's shares ended Thursday up 5.4% at A$0.87.
Write to Robb M. Stewart at robb.stewart@wsj.com
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