OREANDA-NEWS. Australia's only flat products steelmaker Bluescope Steel has reached a three-year pay freeze deal with its employees. This will also see 500 staff losses, as the company looks to cut costs amid lower domestic steel demand, prices and cheaper imports.

The agreement will largely meet Bluescope's A$200mn ($145mn) cost reduction target to allow the company to compete with low-cost imports that largely come from China.

The new three-year enterprise employment agreement includes a three-year wage freeze and new streamlined provisions for the introduction of workplace restructuring, Bluescope chief executive Paul O'Malley said. About 300 manufacturing jobs will be removed in restructuring reforms agreed under the mediation of the Australia's national workplace relations tribunal, the Fair Work Commission, O'Malley said. A further 200 support and service positions will be eliminated.

"This is a major step towards achieving the A$200mn cost saving target," O'Malley said. "But we still have a lot of work to do in the coming weeks, as steel prices remain under pressure from the global steel glut."

Bluescope put its 2.5mn t/yr Port Kembla steelworks in southern New South Wales, Australia and its 500,000 t/yr New Zealand Glenbrook steelworks on notice of closure unless unions agreed to a major restructuring.

Port Kembla receives its iron ore from UK-Australian firm BHP Billiton's Pilbara iron ore mines in Western Australia and its coking coal from South32's Illawarra mines, which are close to the Port Kembla plant.