8 Jun 2016

Trader asked to list suspect steel projects

6:19 pm on 8 June 2016

A steel trader who has claimed dangerously flawed steel is being used in New Zealand has been contacted by officials worried about public safety.

Workers lay down steel for the Huntly Bypass.

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

Mill-Pro Hong Kong managing director Ian Jacob - who has been sourcing steel from China for two decades - last week told RNZ that New Zealand companies often naively trusted test certificates.

Steel that was not compliant with specifications was being installed undetected, and there had been a litany of failures, he said.

Now, Mr Jacob said the Ministry of Business, Innovation and Employment had contacted him and asked for more information.

"They've emailed me to ask whether there's specific projects that I'm aware of that their steel certificates have been forged.

"Of course, I don't know that information. What I've suggested to them is that there are some projects that possibly should be investigated, because we have seen piles after they have been driven into the ground have had test samples cut out of them, and that doesn't happen unless there's something wrong."

The situation would deteriorate further unless mandatory random testing of all steel was introduced, Mr Jacob said.

The ministry confirmed it wanted to take up the offer to meet Mr Jacob, and to see his list of questionable projects.

Failures in quality control on the Huntly Bypass were revealed by RNZ last week to have left the New Zealand Transport Agency's contractors with 1600 tonnes of steel pile casings that were too weak to hold up bridges.

Fulton Hogan and HEB Construction chose a cheap bid by Steel & Tube for new bridges on the bypass, and ended up with Chinese test certificates that proved worthless.

The contractors had since asked Steel & Tube to get replacement steel tubes to hold up two of the four bridges that the steel was originally intended to be used for.

The other two bridges have used the steel, but with extra concrete reinforcement.

Australian steel makers priced out

Meanwhile, RNZ has in recent days also heard of two cases in New Zealand of imported fabricated steel being priced below the figure for which local firms could source the raw steel.

This experience was being repeated in Australia, where Simon Preston, the general manager of Sydney sheet steel maker Precision Oxycut, had just emerged from a punishing weekend where he was bidding for a job in Victoria, as he explained:

"Approximately 4pm on Friday, we were called ... by our customer, a crane manufacturer, and advised that they were up against a Chinese provider and they asked if we could seek 'mill support' for pricing so that they can compete against China."

"Mill support" means that Bluescope Steel, which owns both of New Zealand's only two steel makers, had agreed to make the steel at cost with no profit margin on the Victorian job.

"Bearing in mind that this is a project that was 92 percent specified as local content, and at 7.30am on Monday I had managed to get the mill representatives in my office and they had provided me with price support," Mr Preston said.

"At roughly 7.35am, I received an email saying, 'Don't bother, it's lost. The Victorian government has already placed the order with the Chinese provider'."

China and the United States are also in a spat over steel, with US Treasury Secretary Jacob Lew saying China's excess production capacity was having a "distorting and damaging effect on global markets".

Beijing retaliated, saying the overcapacity had been hyped up and it was instead cutting capacity, which had risen 10-fold in a decade to 800 million tonnes a year, though it had limited power to control private steel mills.

New Zealand's Heavy Engineering Research Association, the country's top researcher in the field, has published advice that says "inspection and documentation can only be achieved if highly experienced and trustworthy New Zealand QA (quality assurance) representatives are present in the overseas fabrication location, and are personally signing off the compliance documentation as meeting the NZ requirements".

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