SGH and BlueScope square off on gas amid fresh calls for east coast market reservation scheme

Industrial giant SGH has warned government intervention in the gas market would chill investment and put energy security at risk as manufacturers lobby for a reservation scheme on the east coast.

BlueScope boss Mark Vassella on Wednesday called for a third of the country’s gas to be saved for local users amid a review of the energy market by the Federal Government.

He threatened that Australia was at risk of “deindustrialising” unless gas prices could be pushed below $10 a gigajoule through intervention.

But ASX-listed industrialist SGH — which is a producer and consumer of gas — hit back, saying the move would be “short-sighted” and “counter-productive”.

“Policy uncertainty and price interventions discourage exploration and development,” the company, led by chief executive Ryan Stokes, said in a statement.

“This further exacerbates the risk of structural shortfalls in an already supply-constrained market.

“For manufacturers unwilling to put risk capital toward bringing gas to market . . . demanding price controls for gas to be sold below risk weighted returns is opportunistic.

“It is self-serving and short-sighed to demand other sectors subsidise their commercial interests.”

The company claimed east coast gas prices had been about 40 per cent below export parity since 2023 and were among the lowest in the developed world.

SGH is a major shareholder of Seven West Media, owner of West Australian Newspapers Limited, publisher of The Nightly.

The Federal Government launched a review of the east coast gas market in June amid warnings of shortfalls in the decade ahead.

Former opposition leader Peter Dutton also campaigned on reservation rules during the May Federal Election.

It came on the same day the Commonwealth Government tipped $600 million into a bailout for Glencore’s Mount Isa copper smelter as spending on the Future Made in Australia agenda revs up.

BlueScope’s Mr Vassella told the National Press Club in Canberra that manufacturing was “at a crossroads” and played down concerns that intervention would effectively mean gas companies were subsidising other industries.

“We’re facing into a serious sovereign risk when it comes to our manufacturing capacity,” he said. “There is no zero cost option and a cost is going to be incurred by someone.

“Our proposition is that the cost of deindustrialisation far outweighs the cost of reservation and a price mechanism.”

Yet even as the two ASX-listed giants squared off over intervention, both backed development of new gas fields.

Mr Vassella said switching energy sources at the Port Kembla steelworks to use gas would help lower climate pollution. BlueScope was also working with a consortium to develop greener iron production at Whyalla but would need gas for energy, he said.

State Government delays in approving exploration and development projects were a major factor slowing new gas supply, Mr Vassella said.