I agree that we cant produce steel cheaper than say Japan, Korea, Tiawan or China at present IE: As per Bluescope.*
The key to us producing steel at a global competitive prices is to set up Special Economic Zones to overcome our
relative weaknesses which are:
(a) High Labour Costs
(b) Excessive red tape
(c) High tax
(d) Trade Unionism
SEZs overcome these weaknesses as follows:
Re (a) Use guest labour from jurisdictions cheaper than China (eg: Saudi Arabia overcomes high Saudi wages in the petrol-chemical industry SEZs
by employing guest labour from Pakistan, Indonesia & other low wage Muslim Countries.
Singapore employs guest labour from China & India in its hi-tech & oil refineries SEZs
We are closing down our refineries because we cant compete with Saudi Arabia (diesel) and Singapore (petrol) who have a competitive
advantage by using SEZs. In summary, even minimum Aussie wages, super etc would not apply in this model.
Re (b) By physically isolating the SEZ (as if it were a foreign country) , the Comm Government can legislate on what is allowed and what is
prohibited within the SEZ including exclusive Aussie ownership
Re (c) Legislated not tax/tariffs/excises within the SEZ or its Aussie inputs
Re (d) Ban Trade Unionism within the SEZ
Re: Enviromnental & Safety Conditions: Nominal Global standards to apply.
Now lets look at steel making in our 4 big prospective competitor countries: Japan Korea, Tiawan & China
-we supply the raw materials (Iron Ore & Met Coals) to all 4 already so they do not have a competitive advantage
-all 4 have wages higher than what our SEZ could have because we can undercut them by employing guest labour
from lower wage jurisdictions. (unlike our SEZ model, China's emphasise use of local Chinese labour with annually increasing wages
-capital & smelter/mill construction: as the latest starter we can design/acquire plant & equipment with the lowest possible
labour operating requirements (optimum automation) & the current lowest interest rates for capital .
As such we could have a competitive advantage.
-electricity required to operate the SEZ can be generated within the SEZ and exempt from (a) , (b), (c) & (d) above.
In summary, such SEzs would operate as if they were located overseas in the lowest cost input jurisdiction with the
benefit of no soverign risk and exclusively Aussie owned with the benefits distributed equally to all Aussie PAYE individual
tax payers in the form low or no PAYE income tax like Saudi Arabia.
I am quiate aware thatthe nay sayers will say no without justification or at least citing the past failures as evidence that
we cant manufacture steel without considering that the above SEZ plan is designed to overcome our traditional weaknesses
and provide a competitive advantage to the 4 major steel manufacturing countries cited above.
I am also aware that the average Aussie might object to guest workers working in SEzs on minimum wages, but we dont have objections to:
-using diesel imported from Saudi-Arabia (produced in SEZs)
-using petrol IT services imported from Singapore (eg: Microsoft invoices its Aussie customers from a Singaporean SEZ & avoids Aussie corporate
tax & GSY (if under $1000) as recealed at the Senate Finance Inquiry by Microsoft's vice president and approved by the ATO.
-outsourcing call centres & other services to the Phillipines, India etc.
-using huge amounts of consumer goods made in Chinese SEZs.
-we effectively have low paid guest workers ; backpackers & Islanders working on farms etc @ minimum wages (some might say less for cash!)
The beauty of the SEZ project is that it does not impact on the status quo, it adds to our trade surplus, allows us to be economically independant from China and the USA to a lesser extent, add to our GDP and if there is a profit that all PAYE Aussies benefit inthe form of low/no PAYE tax.
*Bluescope has improved profits because of its privileged access to US markets post Trump tariffs but this wont last, IMO.
Its economy of scale is too low because it produces about 3 million tons of steel products with too many varients (high milling costs)
http://www.bluescopesteel.com.au
Bluescope's business model is primarily designed designed for domestic supply/import replacement rather than for export global markets.
https://www.marketresearchfuture.com/reports/steel-market-5465
