Australian Iron & Steel
| Company type | Public company (1928–1935), Subsidiary (post-1935) |
|---|---|
| Industry | Iron and steel manufacturing |
| Founded | 1928 |
| Founder | Hoskins family, Dorman Long, Baldwins Ltd, Howard Smith Limited |
| Fate | Acquired by Broken Hill Proprietary Co. Limited (BHP) in 1935 |
| Headquarters | Port Kembla , Australia |
Key people | Cecil Hoskins (chairman), Arthur Sidney Hoskins (board member), Harold Darling (chairman post-merger) |
| Products | Iron pipes, rails, bars, plates, steel products |
| Parent | Broken Hill Proprietary Co. Limited (BHP) (post-1935) |
Australian Iron & Steel was a manufacturer of iron and steel based in Australia.
Public company era (1928-1935)
Founded in 1928, Australian Iron & Steel (AI&S) was created to assume control of Hoskins Iron & Steel, which had started replacing its two blast furnaces at Lithgow with a new furnace located at Port Kembla. The enterprise required further capital to transfer its steelmaking and rolling operations to the coastal area of Port Kembla.
Ownership of the new company’s ordinary shares was divided among the Hoskins family, British companies Dorman Long and Baldwins Ltd, and the Australian coal and shipping firm Howard Smith Limited. Preference shareholders were issued shares with a 7.5% dividend rate. While Howard Smith and preference shareholders purchased their shares with cash, the Hoskins family and Dorman Long contributed assets in exchange. Baldwins partly accepted shares as compensation for obsolete rolling mill machinery relocated from their Margam facility to Port Kembla. Additionally, Howard Smith acted as the shipping agent for AI&S.
The Hoskins family retained majority ownership, with Cecil Hoskins serving as chairman and his brother Arthur Sidney (Sid) Hoskins holding a board position. In 1929, AI&S issued additional ordinary shares and expanded investments into subsidiaries such as Southern Portland Cement Ltd. and Southern Blue Metal Quarries.
By 1932, the Port Kembla plant was producing iron pipes, rails, bars, and plates. Expansion plans included installing a sheet mill, a galvanising plant, and upgrading the bar mill—all incorporated into the site’s overall development strategy. Nevertheless, operational difficulties impeded growth, culminating in AI&S merging with Broken Hill Proprietary Co. Limited (BHP) in 1935.
Acquisition by BHP
In October 1935, BHP obtained all ordinary shares of AI&S by exchanging 750,000 BHP shares, thereby making AI&S a fully owned subsidiary. This acquisition did not include AI&S preference shares.
Developments following the merger
Following the takeover, AI&S’s board underwent restructuring under BHP’s control, appointing Harold Darling as chairman. In 1936, the company experienced a 33% decline in half-year profits followed by a subsequent half-year loss. Although preference shareholders received some deferred dividends, their future remained uncertain due to the high dividend obligations that posed ongoing financial challenges for BHP.
Howard Smith Ltd retained its BHP shareholding after the merger, profiting from this investment while continuing its partnership in Southern Portland Cement Ltd until 1974.
The troublesome AI&S sheet mill was transferred to John Lysaght in April 1936, resulting in approximately a 20% increase in Lysaght’s galvanised sheet output. Lysaght quickly restored efficient production at the facility.
During Port Kembla’s early operational years amid the Great Depression, union activity was limited until a major strike erupted in 1936 involving over 3,000 workers demanding improved conditions and opposing compulsory overtime after a dismissal incident. The industrial action persisted through March 1936.
By 1937, global shortages of steel prompted BHP to enhance Port Kembla’s production capabilities by adding a second merchant mill along with extra blast furnaces and steelmaking facilities; later developments included installing a billet mill—effectively doubling the output capacity compared to pre-merger levels.
World War II
The timing of the expansion was crucial, as the Port Kembla steelworks became an essential asset for Australia throughout World War II. Due to shipping limitations and threats from enemy forces, Hoskins' ore quarry at Cadia and its associated branch railway, along with other quarries in New South Wales such as Hoskins' site at Breadalbane, were reactivated during the war to supply the two blast furnaces at Port Kembla. Additionally, the Port Kembla facility manufactured components for wartime weaponry, including parts used in 25-pounder guns.
After World War II
AI&S preference shares continued trading until 1959, when BHP's takeover bid was accepted, leading to their conversion into ordinary BHP shares. Operating as a subsidiary, AI&S managed the integrated steelworks at Port Kembla (currently BlueScope) and oversaw a blast furnace located in Kwinana, Western Australia, from 1968 until 1982.