18 Jun 2016

Real concern over quality of steel supplies - MBIE

9:34 am on 18 June 2016

The government's building watchdog has conceded there is real concern around steel supplies - but says that there is no actual evidence of problems with steel.

no caption

Photo: 123 RF

Concerns over the steel were raised earlier this month when it was revealed that 1600 tonnes of cheap steel imported by Steel and Tube for new bridges on the Huntly Bypass came with Chinese test certificates that proved worthless.

Some of the weak steel was already being installed as piles for bridges on the bypass before local test results came back.

The Ministry of Building, Innovation and Employment (MBIE) met yesterday with veteran Hong Kong steel trader Ian Jacob, who has warned that naive and wilfully blind steel suppliers and contractors were importing bad steel from substandard mills in Asia.

MBIE manager of engineering science and design Derek Baxter said the big message from the meeting was that suppliers had to buck up on genuine testing.

"We've got good reason to have some concerns about the level of faith that some of our New Zealand purchasers (are putting) in the system," Mr Baxter said.

"It's the old adage of: 'If it seems to be too good to be true it probably is'. And if you have some concerns, rather than just pocketing the profit, you have got to spend some of that money on due diligence."

The risks have been rocketing since China's economic slowdown forced its tier-two and tier-three mills to begin exporting, despite their quality being significantly lower than that of China's tier-one mills.

Mr Baxter said due diligence meant paying an internationally accredited lab to watch while steel samples are taken for testing, then tracing it to make sure the product tested was then the product used.

Workers lay down steel for the Huntly Bypass.

Workers lay down steel for the Huntly Bypass. Photo: Fletcher Construction

In the bridge piles failure at the Huntly Bypass, test certificates from China obtained by supplier Steel & Tube approved the steel, which then failed toughness testing in New Zealand.

Mr Baxter would not comment on the Huntly situation, as it was a New Zealand Transport Agency project.

But he did say the positive factor from the conversation with Mr Jacob and his team was that "we don't have any evidence of specific examples of problems".

"We do recognise the potential, and the big message there is people should be undertaking appropriate due diligence."

Steel problems

But Mr Jacob said he did tell Mr Baxter about his first-hand knowledge of a major NZ contractor on a big offshore project who procured steel from China, only to find more than 40 percent of it did not meet Australian or New Zealand standards and had to be scrapped.

He said he outlined to the Ministry how alarm bells were being rung by laboratory testers.

Problems with Chinese steel also plagued the Countdown supermarket which was built in Pukekohe in 2011. Engineering students have been told about how engineers had to revisit all the design calculations and drawings to accommodate the 227 tonnes of non-standard prefabricated steel.

RNZ News also has a firsthand account of a steel machine worth tens of millions of dollars which was ordered from Europe. When the New Zealand company found out it was actually being built in China, it hurried an inspector over who found the welding was so bad, that the company head - who was not a welder - said he himself could have done it better.

The country's top steel research body HERA and NZ lab testing authority IANZ have also both warned of growing numbers of wrong or faked steel test certificates from Asia.

RNZ News is currently investigating about a dozen current or recent projects which have been flagged by industry insiders.

Mr Jacob said the ministry was "well aware of the current issues with steel quality".

He said the meeting was constructive, and while the Ministry did not own the systems which were failing, they acknowledged they had a leadership role improving the current situation.

Mr Jacob said self regulation was not an answer.

But Mr Baxter said self certification was one of the options the Ministry was looking at to tighten things up around critical building products - while also looking at mandatory independent testing at the other end.

Convention centre steel to be independently checked

Meanwhile, Fletcher Construction is promising to source steel only from reputable overseas mills for the Sky City Convention Centre, and that its steel testing regime will be independently checked out.

Fletcher is importing 8500 tonnes of steel for the Convention Centre in a contract it awarded to Thai Herrick in Thailand and Culham Engineering in Whangarei. Both of these hold multiple high-level certifications.

Fletcher said 70 percent of the steel work would be done in New Zealand, although this was impossible to verify.

Thai Herrick was also fabricating 6500 tonnes of steel for Auckland's Downtown precinct and 6000 tonnes for Christchurch's Acute Services hospital building. It is sourcing from mills in South Korea, Thailand, Australia and Indonesia, but not China.

Another huge steel building - a 50-storey apartment tower - is being planned for Auckland by a Chinese developer.

Fletcher Construction division chief executive Graham Darlow would not be interviewed by RNZ News, but released a statement that said: "We verify standards and procedures at every stage and often our work is checked again by independent peer review. Of course, all our work is subject to a final quality inspection through the building consent process."

Engineers have told RNZ News that a passive approach to building consenting has been brought about by the gradual dismantling of in-house engineering expertise at councils.

* Complaints about building products can be lodged at products@mbie.govt.nz