Unusual Alchemy Gives Birth to a Steel Industry

Australia's steel industry has its origins in an unusual reversal of the ancient art of alchemy. Its founders made their fortunes not in the pursuit of gold and silver, as they all in some way hoped they might, but in the making of iron and steel.

The industry has its genesis in the 19th century, in the days when gold mining and great landholdings were the main hope for wealth in Australia. Just where the story begins is a matter of personal perspective. For some, it begins with John Lysaght in England, for others with Charles Rasp at Broken Hill, and for yet others with the Hoskins family in Port Kembla or even Lithgow.

All of these sought wealth from gold or silver along the way to founding the Australian steel industry, and their ultimate success is now embodied in the company that has become BlueScope Steel Limited. Over the years the three main threads of this story - Lysaght, BHP and Hoskins - have been interwoven in countless ways. The result is a fascinating and complex tale of endeavour in the best Australian traditions.

Founding fathers

A little chronology helps set the scene. Lysaght is the oldest part of the story, dating back to 1857, when a young John Lysaght set up a small galvanising business in Bristol, England. His company would ultimately form a very large part of the BlueScope Steel business, although it did not begin local production until 1921 when it set up a rolling and galvanising plant in Newcastle. For John Lysaght, the impetus to seek lucrative markets in Australia came from the gold rushes which began in the 1850s. Like many others, Lysaght made his Australian fortune not from the gold itself but from supplying the needs of those who searched for gold.

However, at the dawn of the 21st century, it is not the Lysaght name that stands foremost above the door. That honour belongs to the name of BHP, which traces its origins back to 1885, when boundary rider Charles Rasp discovered silver at Broken Hill, and the BHP Big Mine was established. The mine produced fabulous wealth over the ensuing 45 years, but the enduring strength of the company was not built on silver: it was built on the iron ore leases which BHP secured at Iron Monarch and Iron Knob in 1899, and on the steelmaking operations it began in Newcastle in 1915.

Completing the roll call of early contributors is the Hoskins family - founders of the Port Kembla steelworks which endures to this day. Charles and George Hoskins were barely toddlers in 1853, when their father brought his family out from England to Victoria in an ultimately fruitless quest to make his fortune in the goldfields. But half a century later, in 1907, the Hoskins brothers branched out from their successful iron foundry business when they bought an ailing steelworks at Lithgow, complete with blast furnace and steelmaking facilities. This led to their establishment of Australian Iron & Steel at Port Kembla in 1928, which cemented their place in Australian steel industry legend.

Making steel

All three ventures had come a long way by the time they were part of the Australian steel industry as we know it. For the beginnings of that industry, we must look to 1915. While the Anzac legend was being forged on the battlefields, at home the Governor-General, Sir Ronald Ferguson, was officially opening BHP's first steelmaking plant at Newcastle. This plant was to become one of the stalwarts of the nation's steel industry for much of the 20th century.

True, the Hoskins brothers had already been making steel at Lithgow since 1907, but this was not their landmark contribution to our story. When they took over the failed Eskbank steelworks at Lithgow, it was to some degree out of practical necessity. Somebody had to keep up steel production in this era of expanding railways and industry, and the Hoskins were the right people at the right time. Their later achievements in Port Kembla, however, relegated their first two decades of iron and steel making to the minor pages of history.

Meanwhile, John Lysaght entered the Australian scene - and in doing so began the intertwining of the three threads of our story. The year was 1921 and it was an exciting time for the Australian iron and steel industry.

The war was over and the country was building a bright future as a modern industrial nation. BHP was encouraging satellite industries in Newcastle, and Lysaght was one of those satellites. John Lysaght (Australia) Ltd was set up as a wholly owned subsidiary of John Lysaght Ltd of England, and began rolling and galvanising steel sheet at Newcastle. The feedstock was from the adjacent BHP plant, establishing an enduring link which would ultimately see the two companies become one.

As it happens, 1921 was quite a year for the steel industry. In this same year, Charles and Cecil Hoskins bought 162 hectares of industrial land at Port Kembla from the family of pioneer explorer and politician William Charles Wentworth. Although not as grand as Wentworth's 1813 crossing of the Blue Mountains, his descendants were playing their part in Australia's development as vendors of the site that would become the Port Kembla steelworks.

One other event of 1921 has an incidental resonance with W.C. Wentworth. This was the year that Essington Lewis became the first Australian-born general manager of BHP - just as Wentworth had become one of the first ever locally born Australians. Migration no longer produced the top BHP managers, but it would play a vital role a few decades later. The mutual endeavours of migrant and locally born Australians would become the backbone of Port Kembla when European migrants provided a workforce for the expansion that began in the 1950s.

Needless to say, the Hoskins' 1921 land acquisition was a crucial step towards the family's great contribution to the industry. But perhaps not the first step. As early as 1916 the family had acquired the rights to coal deposits at Wongawilli, 14 kilometres south of the present steelworks. At the same time and place they built the first of many coke ovens they would develop there. In 1920 they created a corporate basis for the Port Kembla steel venture when Charles Hoskins' sons, Cecil and Sydney, incorporated Hoskins Iron & Steel Company Limited. This company would later make way for Australian Iron & Steel.

Joining forces

With the benefit of hindsight, it may seem inevitable that the three threads of this story would one day be woven together, but it was a long time coming. The first of the mergers took place in 1935, when BHP bought AIS through an exchange of scrip. Some 28 years after Charles Hoskins took over the steelmaking reins at Lithgow, it was the end of the Hoskins era. Still, it would be many years before the Lysaght thread was added to the BHP weave, even though there had been merger discussions as early as 1925, just four years after Lysaght set up in Newcastle.

Numerous factors contributed to the takeover of AIS by BHP, but the Hoskins family was not seen to have failed. The Hoskins name continued to be held in high esteem, and indeed the official name of the plant under BHP remained the "Hoskins Kembla Works". But the Port Kembla venture had not fared well in its fledgling years, having struggled to meet huge capital costs and then being hit by the Wall Street Crash of 1929 and the subsequent Great Depression.

By contrast, BHP's Newcastle steelworks was able to ride out the crisis better than many, and the Depression had far less impact than might be expected on the overall health of the company. Even though BHP closed its original Big Mine in Broken Hill in 1930, the company was still doing well. By 1935, while the world was still climbing out of the depths of the Great Depression, BHP announced its best profits for 40 years. It had produced well over half a million tons of steel and had 10,000 employees and a similar number of shareholders. At a time when Australian unemployment still ran at more than 16 per cent, it was a remarkable achievement.

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