BlueScope Steel has set a bold target of reducing its carbon intensity by -1% per annum by 2030, UBS notes. To achieve this, every site has a plan and the majority of the reduction will be led by Port Kembla. Port Kembla is expected to use cleaner coal and higher-grade iron ore.
The negative aspect, the broker points out, is that these inputs typically cost more. In addition, Port Kembla will use more scrap.
The broker believes BlueScope Steel will need to work hard to meet lower emissions intensity targets while keeping costs down. Sell rating maintained. Target is reduced to $12.28 from $12.40.
Target price is $12.28.Current Price is $14.70. Difference: ($2.42) – (brackets indicate current price is over target). If BSL meets the UBS target it will return approximately -20% (excluding dividends, fees and charges – negative figures indicate an expected loss).