Australia’s struggling steel sector is turning towards iron ore for salvation, with the nation's two biggest steelmakers both looking to increase their exposure to the commodity that was once little more than an ingredient in their steelmaking.

Move by OneSteel to purchase more iron ore assets and almost double its export rate of the booming commodity, came as BlueScope Steel revealed it may also make iron ore acquisitions in the future.

The company will also spend $200 million expanding its Whyalla port capacity from 7 million tonnes a year to 12 million tonnes a year, with the company planning to actually export about 10 million tonnes a year. An export rate of 10 million tonnes would make OneSteel one of Australia's biggest iron ore exporters.

Mr Geoff Plummer MD of OneSteel said “One of the challenges we have is many people's view of OneSteel is out of date. When OneSteel started it was a pure play, domestic, long product steel organization and that is now out of date. With 10 million tonnes we are certainly significant as a second tier player many people are aspiring to build iron ore businesses of that scale.”

BlueScope CEO Mr Paul O'Malley said his company would 'continue to look' for iron ore opportunities. He said “'The most important thing for us has been to turn around this business in Australia, we now have a plan and at some point in the future that may involve adding some iron ore capability. One would not want to make an iron ore investment unless the cost was competitive and the operating cost of the mine was also competitive through the cycle.”

(Sourced from watoday.com.au)