Story: Pulp and paper, aluminium and steel industries

Page 4. Steel

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Steel is made by combining iron and carbon. It has been fundamental to construction and engineering since the late 19th century, when it replaced iron as the preferred material. Bridges, railway stations, office blocks, hospitals, factory machinery, trains, railway tracks, farming and mining equipment, stoves, household fire grates, kitchen benches and gas fittings all use steel.

Despite New Zealanders’ enthusiastic attempts to smelt and mill steel, there were practical reasons why smelting did not occur before the mid-20th century, and why milling was not always successful.

Steel smelting

Iron was present in New Zealand in two forms: ironsand and limonite. Smelting is the process of extracting iron from a source ore. In the 19th century and first half of the 20th century there were repeated attempts to smelt both ironsand and limonite.

Despite occasional, apparent successes, iron could not be reliably extracted from ironsand. Although limonite could be successfully smelted, the deposits were too small to support a mill.

Iron hero

Euphoria erupted in Te Hēnui, Taranaki, in 1876, when Edward Metcalf Smith and the New Zealand Titanic Steel and Iron Company produced pig iron from the local ironsand. The company’s shares, which had been worthless, rocketed to more than £40. The district held a celebratory dinner for Metcalf Smith, which ended with a band playing ‘See the conquering hero comes’. Unfortunately, no more iron was produced; it was over 80 years before the ironsand puzzle was solved.

Steel milling

Milling is the process of making iron or steel into rods, bars or slabs, which can be easily transported and used by manufacturers. Before the Second World War New Zealand steel millers faced high labour costs, limited technology and a small market. There was also competition from imported steel, which was often of better quality.

Moderately successful from 1886, the Otago Iron Rolling Mills Company (OIRM) was for many years New Zealand’s only steel mill. OIRM used locally sourced iron and steel scrap, and imported steel and pig iron (semi-processed iron ore). During the Second World War OIRM was a strategic industry, providing steel made from scrap when importing was difficult. After the war, the company was dependent on the government for survival. It closed down in 1953.

A local steel industry

The post-war government was committed to the successful development of a steel industry based on New Zealand’s ironsand. It provided technical expertise and funding from the 1940s on, and in the 1950s and early 1960s the problems of using ironsand were resolved.

Private-sector steel milling

In 1959 the government also approved the building of a private-sector ‘merchant bar mill’ which would recycle scrap for subsequent manufacture. Pacific Steel’s mill at Ōtāhuhu, Auckland (a joint venture between Fletchers and Industrial Metals), was up and running by 1963.

By the early 1970s, the Pacific Steel mill was profitably producing almost 100,000 tonnes of steel a year. The mill became New Zealand’s largest metal recycler, using over 280,000 tonnes of scrap annually by the 2000s. It made most of the reinforcing steel and fencing wire used in New Zealand.

Arranged marriage

Fletchers and Industrial Metals were the main contenders for government approval of a merchant mill proposal. Their merger, which formed Pacific Steel, is said to have been suggested by a senior public servant as he did the dishes after a Sunday lunch with senior Fletchers executive George Fraser. Fraser was told that the government would give the go-ahead once the two companies joined forces.

New Zealand Steel

In 1965, with the viability of ironsand processing established, the government set up New Zealand Steel. The company was to develop an ironsand-based steel industry. The government owned 25% of shares in the new company, and the remaining 75% were available for sale.

New Zealand Steel’s Glenbrook mill, costing over $40 million, was built near Waiuku in the Waikato in 1967–69. In late 1969 the mill began using New Zealand ironsand to produce steel.

Government involvement

In the 1980s a major expansion and upgrade of the Glenbrook mill took place. Eventually, and controversially, funded by the government, the work cost $1,959 million. As a result, the government shareholding in New Zealand Steel increased to 89%. That shareholding was sold to private interests for $300 million in 1987. The company is now owned by BlueScope Steel (formerly BHP Australia).

In 2008 the Glenbrook steel mill produced steel used in the building, agricultural and automotive industries. Half of its annual output of 620,000 tonnes was exported, contributing over $2 billion a year to the New Zealand economy. With 1,500 workers, Glenbrook was the largest single employment site in New Zealand.

Environmental impact

The Glenbrook and Pacific Steel mills have been among the largest emitters of air pollution in New Zealand. They produce hundreds of thousands of tonnes of solid waste each year, and use over a million tonnes of water each day.

How to cite this page:

Megan Cook, 'Pulp and paper, aluminium and steel industries - Steel', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/pulp-and-paper-aluminium-and-steel-industries/page-4 (accessed 12 December 2018)

Story by Megan Cook, published 11 Mar 2010