Infrastructure Australia (IA), the nation’s advisory body for infrastructure, has raised concerns about the increasing dependence on imported steel, which could affect the stability of infrastructure projects such as rail networks, wind farms, and telecommunications towers. The 2023 market capacity report highlighted a 20% rise in steel imports during fiscal 2021 and 2022 compared to the average imports over the previous two decades.
Adam Copp, the chief executive of IA, emphasized the necessity for the government to assess the steel market and ensure sufficient domestic production capacity for essential construction materials, including cement. The report, marking its third annual review, also flagged acute shortages in locally quarried building materials like sand, cement and plaster products.
Worrying shortfall of infrastructure workers
A worrying shortfall of 229,000 full-time infrastructure workers, particularly in engineering and science fields, compounds the issue. IA pointed out the lack of agreed productivity measures in the construction industry, contributing to stagnant productivity levels.
Jon Davies, the CEO of the Australian Constructors Association, called for a comprehensive overhaul of the industry. He proposed a national construction strategy focusing on consistent procurement principles and unified construction data collection to enhance labour skills.
Despite the post-COVID-19 drop in shipping prices and improved reliability in imported goods delivery, IA warns against the risks associated with excessive reliance on imported steel. These risks encompass uncertainties in pricing, quality, and carbon emissions. David Buchanan, CEO of the Australian Steel Association, attributed the rise in imports to local producers like BlueScope Steel (ASX:BSL) and Liberty Primary Steel being unable to meet the demand during the pandemic. However, a decrease in imports is anticipated due to moderated local demand influenced by increasing living costs and interest rates.
Expediting approvals to ensure steady supply
IA suggests adopting approaches similar to the Victorian government’s quarry approvals coordination unit to expedite new quarry approvals and ensure steady material supply. The report also notes that it can take 5 to 10 years to start extraction from newly approved quarries. With only five cement plants operational in Australia, a rise in imports of cement and clinker is expected due to local production shortages.
Infrastructure costs have also escalated, with the public infrastructure pipeline experiencing a $9 billion increase to $230 billion. This rise is attributed to factors like transportation cost hikes and unforeseen geotechnical issues in large projects like NSW's Snowy 2.0 hydropower scheme. The report covers significant projects in various Australian states and territories, highlighting the need for strategic planning and resource management in the infrastructure sector.