6 October 1999
Ref: 48/99



BHP ANNOUNCES STEEL STRATEGY


The Broken Hill Proprietary Company Limited (BHP) today announced a major step
in advancing its strategy to focus BHP as a world class natural resources company,
with a steel component.

Following a review of its steel portfolio, BHP Steel will become a simpler business,
focused on those areas in which BHP has ongoing operational and marketing
advantages, which are consistent with its strategic objectives, and which generate
sustainable shareholder value.

It is expected that, following changes to its portfolio, BHP Steel will deliver its cost of
capital on a sustainable basis through the business cycle within three years.

The new BHP Steel portfolio will concentrate on flat products in Australia, New
Zealand and Asia, based on the low cost supply of steel from Port Kembla Steelworks
and its leading position in coated steel.  It will serve primarily building and
construction markets using the successful marketing brands of ZINCALUME (R) steel
and COLORBOND (R) steel.

Announcing these initiatives today, President BHP Steel Bob Every said: "These
changes give effect to the strategic objective of building on the Company's strong
position in minerals while taking advantage of niche opportunities in steel.  They are
an essential part of BHP's evolution if it is to remain a global player."

BHP intends to divest those parts of its steel business that do not fit its long term
strategy.  The Company expects to realise appropriate value for what it believes will
be attractive businesses to other owners with different strategic objectives.

This divestment program is expected to generate significant cash proceeds for BHP.

"In the current operations, diversity of the product line and the range of geographical
locations created a very complex organisation that lacked focus and strategic
rationale" Dr Every said.

"At the same time, industry consolidation and increased competition in the global
steel markets necessitate slimmer, more tightly focused businesses in order to survive.

"These changes will increase the potential for BHP Steel to compete, while increasing
the potential for those businesses that will no longer be part of the portfolio to survive
and prosper in the new global steel market.

"I understand that these announcements may cause some anxiety for our employees,
customers and communities.  BHP will work with people affected to make sure they
are informed about the reasons the Company is seeking to divest these businesses and
the process that will follow.

"These changes are not about closing businesses.  They aim to focus BHP on
operations that are consistent with our portfolio objectives and to allow other
companies, with different objectives, to bid for those businesses that no longer fit the
BHP portfolio."

The new steel portfolio will include Port Kembla Steelworks; Coated Steel Australia
(Spring Hill, Western Port, Service Centres); Coated Steel Asia (Thailand, Malaysia,
Indonesia); BHP New Zealand Steel; BHP Building Products Australia; BHP Steel
Building Products Asia.

Businesses BHP is seeking to divest include Long Products, Tubemakers
Merchandising, Structural and Pipeline Products, Tin Mill Products, Steel Building
Products Pacific, Coated Steel Corporation USA, Steel Building Products USA and,
in consultation with our joint venture partner, North Star BHP Steel.


* * * * *

For information contact:

Media Relations:
Mandy Frostick
 
Manager Media Relations - Melbourne
 
Tel: +61 3 9609 4157 (bh)
 
       +61 419 546 245 (mobile)
 
Andrew Marjoribanks

 
Manager Business Relations, BHP Steel Melb
 
Tel: +61 3 9609 3973 (bh)
 
       +61 418 334 979 (mobile)




Investor Relations:
Dr Robert Porter
 
Vice President Investor Relations (elect) Melb
 
Tel: +61 3 9609 3540 (bh)
 
       +61 419 587 456 (mobile)


Overview

* As a key component of BHP's portfolio management activities designed to give effect
to the strategic objective of building on the Company's strong position in minerals
while taking advantage of niche opportunities in steel, BHP has undertaken a strategic
review of its portfolio of steelmaking and distribution businesses.

* The strategic recommendations of the review, approved by the Board of BHP, have
determined a simpler Steel business based on those areas in which BHP has ongoing
operational and marketing advantages.

* The retained Steel portfolio is designed to deliver significantly improved performance
to the Company, reflected in:

     - the retained portfolio achieving a return in excess of its
      weighted average cost of capital within three years,
      sustainable over the business cycle

     - the continued generation of significant cash flow from the Steel
      businesses

     - Steel self-funding its capital and growth requirements

* Divestment of non-core assets is expected to generate significant cash for the Corporation.

* The continuing link between BHP Steel and the BHP Steelmaking Raw Materials and Energy
businesses will be an ongoing source of competitive advantage for the Company.  BHP Steel is
also an important source of market knowledge into the steel industry and source of technological
skills transfer within the Company.

Portfolio Configuration
BHP Steel had net assets of A$6.6 billion as at 31 May 1999.  The book value of the core steel
businesses to be retained constitutes a little over half of the total net assets.

The new BHP Steel strategy will focus on flat products in Australia and Asia based on the low cost
supply of steel from Port Kembla Steelworks and its leading position in coated steel for building
and construction markets.

The following businesses have been determined as core and non-core.  Although they are sound
businesses in their own right, BHP will seek to divest the non-core businesses.


  

    
Retained Steel Portfolio
    
Businesses to be divested
  
  

    
Port Kembla steelworks
    
Long Products
  
  

    
Coated Steel Australa and Asia
    
Tubemakers Merchandising
  
  

    
Steel Building Products Australia
    
Structural and Pipelines Products 
  
  

    
New Zealand Steel
    
Tin Mill Products
  
  

    
Steel Building Products Asia
    
Coated Steel corporation USA
  
  

    
Steel Building Products USA/Pacific
  
  

    
North Star BHP Steel
  
  

    
Approximate Employee Numbers: 13,500
    
9000
  



Basis for the Strategic Review

The strategic review of BHP's Steel portfolio forms an important component of refocussing
the overall BHP portfolio to give effect to the Company's goal to create shareholder value,
through the discovery, development and conversion of natural resources.

Apart from better integrating the Steel businesses into the natural resources framework going
forward, the review was also motivated by the following factors:

* In its currently constituted form, the Steel portfolio has not produced consistent returns
in excess of the cost of capital.

* The diversity and complexity of the portfolio, encompassing the flat and long products value
chains and market presence in Australia, New Zealand, Asia and North America, has made it
difficult for BHP to focus on  businesses and markets where the Company can most effectively
enhance competitive advantages.

* The globalisation of the steel industry is likely to lead to industry consolidation and
necessitate a greater level of portfolio focus for value to be delivered.

In undertaking the strategic review, the following factors were assessed as of key importance
to value extraction in any retained Steel portfolio:

* BHP's Australasian and Asian activities are strategically connected and represent a synergistic
portfolio benefit, through the sale of feed from Port Kembla to the Asian coating lines and transfer
of technical competencies

* Port Kembla Steelworks is a world class, low cost producer of slab and hot rolled coil

* BHP's specific competencies in steel coating and building products represent a key competitive
advantage

* The Australian market represents a unique and sustainable opportunity to create value

* The retained Steel businesses are well positioned in Asia to capture growth and value in an economic
upturn

BHP Portfolio Fit
The review determined a portfolio configuration which will deliver the Company's strategic and
value delivery criteria, including achievement of returns in excess of the weighted average cost
of capital and the continued generation of significant excess cash flow to the Company. In addition,
the new portfolio will provide:

* An ability for management expertise to be utilised to reshape the cost base and complexity of the
retained core business, thereby extracting greater value than available in the current portfolio
structure

* Continued synergistic benefits associated with the supply of raw materials, market expertise and
technological capabilities between Minerals and a niche Steel business

* Leverage to upside in prices and market conditions (particularly in Asia)

* An ability for the non-core businesses to be presented to the market as an attractive investment
proposition to existing industry participants and the market in general.


Financial Information
The following table provides financial data on the current BHP Steel portfolio for the financial
year ended 31 May 1999 (restated full year figures issued August 1999 to exclude the effect of
internal currency hedging).  The following categories do not provide an exact match for the
financial characteristics of the retained and to be divested assets, due to the categorisation
of some assets to be divested (eg North Star BHP Steel and Coated Steel Corporation USA) with
assets to be retained. The notes to the table are, however, designed to provide investors with
some guide as to the relative magnitude of the financial data associated with the retained business
and those businesses to be divested. In overall terms, in financial year 1999, the core steel
business represented around 60% of EBITDA; 60% of total depreciation and amortisation and 40% of
capital expenditures.  It should be noted that the businesses to be divested were either undergoing
major restructuring or were in the process of ramping up production in the 1999 financial year.



  

    
A$ Million
    
Sales Revenue
    
EBITDA
    
Depreciation& Amortisation
    
Operating profits before Abnormal Items & Income
    Tax
    
Net Assets
    
Capital and Investment Expenditure
    
Free Cash Flow
  
  

    
Flat Products (1)
    
2 285
    
240
    
157
    
83
    
1 983
    
163
    
382
  
  

    
Coated Products(2)
    
3 279
    
354
    
153
    
201
    
2 218
    
57
    
279
  
  

    
Long Products (3)
    
1 925
    
151
    
109
    
42
    
1 346
    
124
    
21
  
  

    
Building and Industrial Products (4)
    
2 467
    
182
    
68
    
114
    
1 143
    
47
    
360
  
  

    
Intradivisional Adjustments
    
(2 236)
    
23
    
-
    
23
    
(59)
    
-
    
-
  
  

    
Divisional Activities
    
-
    
(61)
    
1
    
(62)
    
(8)
    
1
    
(32)
  
  

    
TOTAL
    
7 720
    
889
    
488
    
401
    
6 623
    
392
    
1 010(5)
  




(1) Flat Products includes North Star BHP Steel LLC, which BHP will seek to divest.
Indicatively, this business constitutes less than 10%  of the net assets shown in the
Flat Products category and made no profit contribution in financial year 1999.

(2) Coated Products includes Coated Steel Corporation USA, which BHP will seek to
divest. Indicatively, this business constitutes around one quarter of the net assets for
the Coated Products category.  The core businesses to be retained in this category
contributed over 90% of EBITDA in financial year 1999 in this category.

(3) This category of businesses is expected to be divested.

(4) Building & Industrial Products includes Steel Building Products USA, which BHP will
seek to divest. Three quarters of the net assets in this category are non-core businesses.
The businesses to be divested represented around 90% of EBITDA  in this category in
financial year 1999.

(5) Includes proceeds from asset sales.

The following table provides historical information regarding earnings, depreciation,
capital expenditure and net assets of the entire Steel portfolio:



  

    
A$Million
    
Sales Revenue
    
EBITDA
    
Depreciation & Amortisation
    
Operating Profit before abnormal items & Income
    Tax
    
Net Assets
    
Capital and Investment Expenditure
  
  

    
1999
1998
    
1997
    
1996
    
1995
    
7 720
8 259
    
8 108
    
7 434
    
7 077
    
889
1 231
    
939
    
868
    
1 311
    
488
488
    
475
    
453
    
422
    
401
743
    
464
    
415
    
889
    
6 623
7 562
    
7 819
    
7 651
    
6 109
    
392
499
    
900
    
1 854
    
837
  





Results exclude the effect of internal currency hedging.

Divestment Process
The divestment process for the Steel assets is being managed within BHP Corporate with
external advisers to be appointed for the Australian businesses and Salomon Smith Barney
having been selected for the US businesses.  Appropriate arrangements for divestment of
assets - either individually or in product/business lines - will be determined.  The portfolio
of businesses to be divested represents a unique grouping of market-leading Australian steel
assets.  BHP is evaluating options for either trade sales or (in the case of the Australian
businesses) trade sales or an IPO.  Long Products is a leading market player; Tubemakers
Merchandising is number one in metals distribution with a 30% share; and Structural and
Pipeline Products is number one in pipe tube and structural products with a strong market
share.  There are strong interrelationships between each of the businesses.

It is the strong strategic commitment of BHP to divest the non-core assets, subject to
ensuring that appropriate shareholder value is delivered.  Subject to Board approval, proceeds
from asset sales will be used to fund appropriate higher value growth opportunities, retire debt
or will be turned back to shareholders, as appropriate.


Prepared by Investor Relations, The Broken Hill Proprietary Company Limited,
600 Bourke Street, Melbourne, Victoria 3000, Australia.



	For information contact:
	Dr Robert Porter
	Vice President - Investor Relations (Elect)
	Tel: +61 3 9609 3540
	      +61 419 587 456 (mobile)
	Email: [email protected]

	Pierre Hirsch
	Manager Investor Relations, North America
	Tel:   +1 415 774 2030
	Email: [email protected]