20 February 2006

Results for Announcement to the Market (under ASX listing rule 4.2A)

Half Year Earnings Report Six Months Ended 31 December 2005

Note: This report is based on accounts, including the restatement of the comparative corresponding period, prepared in accordance with the Australian equivalent to International

Financial Reporting Standards (AIFRS).

HEADLINES

• Net profit after tax NPAT of $312m, down 38%. • Earnings per share (EPS) of 44.0c vs 68.0c. • Annualised after tax return on equity of 18.9%. • Continued focus on rewarding shareholders, increasing interim

ordinary dividend by 11% to 20cps. • Gearing (net debt basis) 33.2% (vs 22.2% at 30 June 2005 when restated

to new AIFRS requirements). • First half result, subject to lower steel pricing, high raw material and

feed costs and more competitive market environment. • Hot strip mill, Western Port, back into full operation in November

following a 12 week outage due to the fire. • Our Asian growth initiatives are progressing very well, with the

Thailand metal coating expansion and the Vietnam coating facilities both commencing operations during the half.

• In addition, we announced the joint venture with Tata Steel in India and a second metal coating and paint line in Indonesia.

• Full FY2006 after tax earnings guidance to be in the range of $0.65 - $0.75 EPS (on an AIFRS basis).

• Second half to be adversely affected by lower prices and the full effect of higher iron ore costs. A number of initiatives taken to improve product mix and sales volumes, reduce costs, increase focus on capital spend and deliver on the current growth projects.

BLUESCOPE STEEL LIMITED A.B.N. 16 000 011 058 Level 11, 120 Collins Street Melbourne, Victoria 3001 Ph: +61 (03) 9666 4000 Fax: +61 (03) 9666 4111 Website: www.bluescopesteel.com ASX Code: BSL

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Group net profit after tax (“NPAT”) for the six months ended 31 December 2005 was $312m compared to $502m for the previous corresponding period (six months ended 31 December 2004), a decrease of 38%. Earnings per share (“EPS”) for the six months ended 31 December 2005 was 44 cents compared to 68 cents for the previous corresponding period, a decrease of 35%. Diluted earnings per share was 44 cents compared to 67 cents for the previous corresponding period. The result was affected by the following material items:

1. Higher USD iron ore and coking coal costs. 2. Lower spot export slab and hot rolled coil prices, offset by higher Australian domestic

prices. 3. Weaker demand conditions in Australia and Asia. 4. Lower margins and higher pre-production, business development and start-up costs in

Asia. 5. An electrical fire at the Western Port hot strip mill which stopped hot rolled coil

production for 12 weeks and cost the company $40m ($28m after tax) in additional costs and lost margins.

In maintaining its commitment to Total Shareholder Return, the Board has approved an interim ordinary dividend of 20cps (FY2004 18cps), which will be fully franked. The record date for the ordinary dividend is 6 March 2006 and the payment date 3 April 2006. During the six month period the company purchased 10.6m shares under its on-market buy-back program. The number of shares on issue as at 31 December 2005 was 701,750,040 down from 793 million at public listing in July 2002. All of the largely mid-stream related development growth initiatives in Australia, Thailand, Indonesia, India and China remain on schedule apart from a short delay (approx. 3 months) expected at the metal coating project in China. The business transformation of the downstream North American business is progressing well.

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6 MTHS TO 31 DEC VARIANCE 2005 2004 $m % Total Revenue(1) A$m 3,892 3,881 11 - Earnings before interest, tax, depreciation and amortisation (EBITDA)(2)

A$m

593

837

(244)

(29) EBIT(2) A$m 449 696 (247) (35) Net borrowing costs A$m (33) (21) (12) 57 NPAT attributable to BlueScope Steel shareholders

312

502

(190)

(38)

Earnings per share ¢/s 44.0 68.0 - (35) Diluted earnings per share ¢/s 43.5 67.0 - (35) Interim dividend ¢/s 20.0 18.0 - 11 Net cash flow from operating and investing activities

A$m

(159)

310

(469)

(151)

Return on invested capital(3) % 14.6 27.0

Return on equity(4) % 18.9 31.8

Gearing (net debt / net debt plus equity)

%

33.2

14.5

Net tangible assets per share $/s 4.30 4.06

(1) Includes revenue other than sales revenue of $10m ($9m in FY2005). (2) Includes 50% share of net profit from North Star BlueScope Steel of $62m in FY2006 ($104m in

FY2005). (3) Return on invested capital is defined as annualised net operating profit after tax over average monthly

capital employed. (4) Return on equity is defined as annualised net profit after tax attributable to members over average

monthly shareholders’ equity.

VARIANCE ANALYSIS • Total Revenue

The $11m (0%) increase principally reflects: • Higher domestic prices across most markets in all reporting segments. • Higher sales volumes from the Port Kembla Steelworks. These factors were largely offset by; • Lower spot export slab and hot rolled coil prices. • Lower Australian domestic demand in the pipe and tube, packaging,

manufacturing and distribution markets for hot rolled coil, galvanised and tinplate products.

• Lower coated product exports from Australia due to the fire at Western Port. • Higher average AUD/USD exchange rate of 0.75 compared to the previous

corresponding period of 0.73.

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• EBIT The $247m (35%) decrease principally reflects: Raw material costs ($172m unfavourable)

• Higher USD iron ore and coking coal purchase prices at the Port Kembla Steelworks mitigated partly by lower priced material in stock at the start of the period.

• Higher prices paid for hot rolled and cold rolled purchased steel feed by the downstream Asian coating and building operations.

• Higher zinc and aluminium coating metal costs. • Partly offset by lower purchased scrap costs at Port Kembla Steelworks.

Prices ($86m favourable)

• Higher domestic prices across most markets in all reporting segments. Partly offset by; • Lower spot slab and hot rolled coil prices attained in international markets.

Sales Volumes and Product Mix ($1m favourable)

• Higher export slab and hot rolled coil export sales from Port Kembla Steelworks arising from increased raw steel production.

Partly offset by; • Lower New Zealand domestic demand due to softer residential market

conditions, together with lower export volumes from New Zealand due to maintenance downtime.

• Unfavourable domestic/export mix as a result of lower Australian domestic demand in the packaging, manufacturing and distribution markets mainly for galvanised and tinplate products, together with the impact of the Western Port fire on export mix. This was offset by a favourable mix of Australian domestic value-added Zincalume® and Colorbond® painted product for the construction market.

North Star BlueScope Steel ($42m unfavourable)

• Lower earnings contribution from North Star BlueScope Steel due to hot rolled coil prices in North America declining more than reductions in the price of scrap feed. This decline in spread was partly offset by a 8% increase in despatch volumes and cost savings.

Exchange Rates ($3m unfavourable)

• As part of the transition to AIFRS the company’s foreign currency loans, including intercompany loans, do not meet the test for recognition of a hedge of net investment and therefore exchange gain and losses are now taken to EBIT. From 1 July 2005 the company is actively managing its foreign currency loan exposures to mitigate the earnings effect, however, there was a $15m favourable effect on earnings in the previous comparative period.

Partly offset by; • Favourable movement in the NZ:USD relative to the previous comparative

period.

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Costs ($110m unfavourable)

Cost improvement initiatives ($16m favourable) • Cost reductions primarily at Port Kembla Steelworks, New Zealand Steel and

Coated and Building Products Australia reflecting the effect on unit costs of initiatives to improve yield, labour productivity and other costs.

Cost escalation ($42m unfavourable) • Higher employment, utilities and other costs due to cost escalation.

One-off and discretionary costs ($82m unfavourable) • Higher unit costs at Western Port and Springhill due to lower production

volumes arising from the fire at Western Port which closed the Hot Strip Mill for 12 weeks and lower domestic demand for galvanised and tinplate product. These were partly offset by higher unit costs in the previous comparative period associated with an industrial dispute at Western Port.

• Higher New Zealand Steel costs to maintain iron and steel making assets at record production levels, together with higher unit costs arising from the associated lower production volumes.

• Higher pre-production, business development and start-up costs predominantly associated with the Buildings North America Jackson plant, Vietnam, India and China development projects.

Other costs ($2m unfavourable) • Higher freight costs primarily due to higher export volumes and destination

mix. • Partly offset by higher prices received for Vanadium slag, a by-product in the

New Zealand steelmaking process, which reduced steel making costs.

Other ($7m unfavourable) • Expensing of the general employee share plan award.

• Tax

The effective tax rate for the twelve months ended 31 December 2005 was 25.0% (25.7 % in the previous corresponding period). The tax rate differs from the Australian tax rate of 30% primarily due to the utilisation of unbooked tax losses in New Zealand, together with the utilisation of tax exemptions in our Thailand Coating operation. These were partly offset by North Star BlueScope Steel being taxed at approximately 40% (35% US tax rate plus state taxes). The full tax exemptions on the Thailand metal coating line (MCL1) expired in September 2005, however the company continues to benefit from a reduced (15%) tax rate on earnings from this line until 2010 and has full tax exemption on MCL2 earnings until 2013. New Zealand Steel has booked almost all outstanding tax losses and will commence expensing tax on its taxable earnings from January 2006.

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OPERATING CASH FLOWS AND VARIANCE ANALYSIS 6 MTHS TO 31 DEC VARIANCE 2005 2004 A$m A$m A$m % Net operating cash flow before borrowing costs and income tax - excluding Sale of Receivables (SOR) - SOR (to borrowings from July05) - Reported net operating cash flow

347 (140) 207

516 62 578

(169) (202) (371)

(33) (325) (64)

Net investing cash flows

(366)

(268)

(98)

(36)

Net cash from operating and investing activities

(159)

310

(267)

(108)

Variance The $169m decrease in operating cash flow (excluding sale of receivables) primarily reflects a decrease in operating cash profits (EBITDA adjusted for the share of net profits and dividends received from North Star BlueScope Steel) and a $28m increase in net working capital. The increase in net working capital primarily reflects:

• Inventory: a larger increase in inventory in the current period than the previous comparative period mainly reflecting higher inventory values in Australia due to higher coal and iron ore costs, together with a build-up in inventory in Coated and Building Products Australia for export in the second half of the year. This was partly offset by a reduction in inventory in Thailand, Malaysia and Indonesia during the period.

• Creditors: a larger decrease in creditors in the current period than the previous comparative period mainly reflecting lower steel feed purchased in Thailand, Malaysia and Indonesia

These were partly offset by: • Receivables: a larger decrease in receivables in the current period than the previous

comparative period mainly reflecting reduced domestic demand in Australia for galvanised and tinplate product.

• Revaluation of foreign currency denominated working capital items to AUD. The movement in sale of receivables (SOR) reflects a requirement under AIFRS, from July 2005 only, to disclose the company’s program as funding rather than a reduction to receivables. The movement in 2005 reflects the transfer of the 1 July 2005 balance from operating cash flow (offset by a corresponding increase in funding cash flow). The movement in the previous corresponding period reflects the increased use of the program in that period. The $98m increase in investing cashflow primarily reflects higher capital expenditure associated with the China coating and painting facility development, West Sydney Colorbond facility and Port Kembla Steelworks Hot Strip Mill upgrade. These were partly offset by lower expenditure on the Vietnam coating and painting facility and second Thailand coating line, together with Lysaght Australia acquisitions in the previous comparative period.

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GROUP REVIEW In commenting on the half year results, the Managing Director and Chief Executive Officer of BlueScope Steel, Mr Kirby Adams, said: “The results for this half year are acceptable given we have had to battle adverse conditions including lower steel pricing, high raw material and feed costs and a more competitive market environment. “The Company’s revenue at $3.9 billion was in line with the previous comparative period. Revenue was maintained through domestic price increases and higher sales volumes, not withstanding reductions in international steel prices and a strengthening of the Australian dollar. “Net profit after tax decreased by $190 million (38%) to $312 million. This reduction was due primarily to a $120 million increase in raw material costs mainly for iron ore and coal, together with steel feed to our downstream businesses in Asia and North America. In addition, a fire at the Western Port site (Coated and Building Products Australia) cost the Company $28 million in additional costs and lost margins. Earnings from North Star BlueScope Steel were down $25 million due to hot rolled coil prices declining more than the price of scrap feed, and there were $20 million higher pre-production, start-up and business development costs related to growth activities, principally in Asia. Across the Group, selling prices were $60 million higher than the previous period with a significant decrease in the price of export commodity products being more than offset by domestic price increases. “Earnings from Hot Rolled Products decreased as a result of: a substantial increase in the cost of coking coal and iron ore; lower hot rolled coil and spot slab pricing to export customers; and lower earnings from North Star BlueScope Steel due to hot rolled coil prices declining more than the price of scrap feed. These were partly offset by higher domestic and inter-segment prices to Coated and Building products Australia and additional sales volumes resulting from higher raw steel production. “Earnings contribution from New Zealand and Pacific Steel Products decreased as a result of declining export prices, the effect of higher maintenance downtime on production volumes and costs, together with higher coal and electricity costs. These were partly offset by higher domestic prices across the product range. “Coated and Building Products Australia incurred a loss in the half year, however, this reflected an improvement over the previous comparative period. The improvement reflected higher domestic selling prices for all products, partly offset by higher steel feed costs from Hot Rolled Products. The current half year was also negatively affected by a fire at the Western Port hot strip mill which closed the line for 12 weeks, reduced sales volumes and increased costs by $40 million (before tax) across the Group. “Coated and Building Products Asia earnings decreased to a small loss during the half year. Earnings in this segment were significantly affected by rapidly declining steel prices from their peak in the second half of FY2005. The price paid for purchased steel feed in inventory could not be fully passed on. In addition, Asian customers held back on orders in anticipation of further price reductions, and there were higher pre-production and start-up costs related to growth projects in Thailand, Vietnam, India and China.

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“Coated and Building Products North America showed a modest improvement over the previous comparative period. Improved margins were largely offset by higher start-up costs at the Jackson, Tennessee plant, which are now behind us. “We continue to build on our track record of rewarding shareholders as we grow and have increased the ordinary dividend by 2 cents to 20 cents per share. Also during the period, approximately 10.6 million shares were repurchased and cancelled as part of the buy-back program announced in November 2005 to purchase up to 25 million shares. This program will continue and has provided us with an excellent opportunity to further deliver long-term value to shareholders by improving the earnings per share. Since public listing in July 2002, the Company has repurchased some 113 million shares or approximately 14% of the total shares issued. “A number of the previously announced growth initiatives are commencing operation and during the period, first production was started for our new metallic coating line in Vietnam ahead of schedule. Our second metal coating line in Thailand was commissioned in August 2005. The construction of our state-of-the-art metallic coating and painting facility in Suzhou, 80 kilometres west of Shanghai, is nearing completion and our first combined BUTLER® PEB-LYSAGHT facility is on schedule to be completed by mid-CY2006. “We are excited about our growth prospects in the Asian region. In this half, we announced: our joint venture in India with Tata Steel and the development of a metal coating and painting facility at Jamshedpur; a BUTLER® manufacturing facility and Design Centre in the Pune facility currently under construction; and in Indonesia, the development of a second metal coating and paint line at our Cilegon operations. We are building BlueScope Steel Asia into a unique and valuable franchise. “When it comes to safety, zero harm is our sole focus. Our employees have made great improvements, with injury levels remaining very low at world’s best standards. But this is not enough. Despite our improvements, during the half we had two fatal incidents one with a New Zealand Steel employee in July 2005, and another with a construction company contractor working at the Suzhou, China construction site. We all remain vigilant in pursuit of our goal of zero harm. We will not rest until everyone who enters one of our sites leaves that site in the same condition as they arrive. Outlook “We expect our FY2006 after tax earnings outlook to be in the range of $0.65 - $0.75 EPS. The main factors contributing to the expected weaker second half earnings are from lower global steel prices and the full effect of higher contract iron ore costs on earnings. A copy of the revised market update from 8 February 2006 is attached for reference. “Notwithstanding these short term challenges, our business strategy has not changed. If anything, current compressed upstream steel margins reinforce the need to position ourselves closer to the end customer.

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“In the Australian market, we have moved promptly to improve our market offer to customers to enable them to compete more aggressively against imports. However, these activities are not expected to significantly improve our earnings mix until the first half of FY2007. The Asian economies remain strong and the Company has taken a number of initiatives that should deliver improved margins, with a particular focus on further developing our markets. We continue to strongly support the view that China will implement the announced reform of its steel industry. This will be further supported by continued steel industry consolidation. “We take this opportunity to thank our customers for their continued business and support, the communities in which we operate for hosting us, and our employees, many of whom worked tirelessly to minimise disruption to customers following the Western Port fire. We thank you all.”

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BUSINESS SEGMENT REVIEW Summary of Results by Segment

Sales Revenue ($m) EBIT ($m) 6 Months to 31 December 2005 2004 2005 2004 Hot Rolled Products(2) 1,900(1) 1,864(1) 479 698 New Zealand and Pacific Steel Products(3) 359 392 66 93 Coated & Building Products Australia 1,429 1,509 (30) (84) Coated & Building Products Asia 485 520 (4) 45 Coated & Building Products North America 607 629 2 1

Corporate & Group(4) 189 176 (42) (17) Inter-segment(5) (1,088) (1,217) (22) (41) Total BLUESCOPE STEEL 3,882(1) 3,872(1) 449 696

(1) Excludes the company’s 50% share of North Star BlueScope Steel’s revenue being US$243m (US$294m

in FY2005). (2) As previously advised, the company’s offshore trading activities were aligned to their geographical

customer base in Asia and North America. Commissions on export sales previously attributed back to the production site are now earned by the Asia and Hot Rolled Products (North American exports) reporting segments. Comparative periods have been restated. As exports to North America are sold to the trading company, who in turn on sells to the customer, Hot Rolled Product sales revenue (and cost of sales) includes $88m ($123m in FY2005) of trading revenue previously included in Corporate and Group. Export sales to Asia are on commission basis and therefore sales revenue is not materially affected.

(3) As previously advised, we have now aligned Lysaght Pacific with New Zealand Steel rather than Coated and Building Products Asia. The New Zealand Steel segment has been renamed New Zealand and Pacific Steel Products and the comparative period has been restated.

(4) Corporate and Group reflects Logistics and corporate office activities. (5) Inter-segment revenue reflects the elimination of internal sales between reporting segments. Inter-

segment EBIT reflects an entry to eliminate profit-in-stock associated with inter-segment sales. Hot Rolled Products This segment comprises: • Port Kembla Steelworks, NSW, Australia (coke, iron, slab, plate and hot rolled coil

production); • BlueScope Steel’s 50% interest in North Star BlueScope Steel, USA (hot rolled coil

production); • BlueScope Steel’s 47.5% interest in Castrip LLC, USA (thin strip casting technology),

in joint venture with Nucor and Ishikawajima-Harima Heavy Industries; and • North American export trading activities.

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(i) Financial Performance

6 MTHS TO 31 DEC VARIANCE 2005 2004 $m $m $m % Sales Revenue(1) 1,900 1,864 36 2 EBITDA(2) 543 763 (220) (29) EBIT(2) 479 698 (219) (32) Capital and Investment Expenditure(3) 75 45 30 67 Net Operating Assets (pre tax)(4) 2,215 1,992 223 11 Return on Net Assets (pre tax)(5) 44% 71%

(1) Excludes the company’s 50% share of North Star BlueScope Steel’s revenue being US$243m

(US$294m in FY2005). (2) Includes 50% share of net profit from North Star BlueScope Steel of $62m ($104m in FY2005). (3) Increased capital expenditure reflects expenditure on the Hot Strip Mill upgrade at PKSW. (4) Increase in net operating assets primarily reflects an increase in net working capital mainly due to

significantly higher raw material costs. (5) Return on Net Assets is defined as annualised EBIT / average monthly Net Operating Assets. The $36m increase in sales revenue is primarily due to an increase in sales volumes, primarily for export slab, and higher prices attained in domestic and intersegment markets being partly offset by lower prices in the export market. The $219m EBIT decrease was largely due to: • Lower slab and hot rolled coil prices attained in international markets. • Higher USD coking coal and iron ore purchase prices at Port Kembla

Steelworks, mitigated partly by the consumption of lower priced material in stock at the start of the period.

• Lower earnings contribution from North Star BlueScope Steel with hot rolled coil prices in North America declining more than reductions in the price of scrap feed. This decline in spread was partly offset by a 8% increase in despatch volumes and cost savings.

These were partly offset by: • Higher domestic and intersegment prices to Coated and Buildings Products

Australia. • Increased sales volumes, arising from increased raw steel production.

(ii) Operations Report Port Kembla Steelworks (“PKSW”)

Iron & Slab

• Record half-year ironmaking production of 2.623 million tonnes (vs. 2.408mt in Dec 2004 half), largely due to good levels of blast furnace availability (low unplanned interruptions) and improved blast furnace operating stability.

• Record half year slab production of 2.689 million tonnes (vs. 2.557mt in the Dec 2004 half). This was achieved due to record hot metal (iron) production and

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improvements in process sequencing, which resulted in reduced losses (lower dumping of hot metal).

• Number 5 blast furnace achieved a campaign to date production of 35.24 million tonnes (5,319 days). Previous campaign was 25.19 million tonnes (4,452 days). There has been no material change to the reline report provided in the FY2005 Earnings Release.

• Record half-year export slab despatches of 0.800mt (vs. 0.695mt in the June 05 half and 0.364mt in the Dec 2004 half), largely due to the sale of slab that was originally destined for the company’s Western Port operations but diverted to external markets due to the hot strip mill electrical fire in late August 2005.

Hot Strip Mill • Produced 1.320mt vs. 1.352mt in the Dec 2004 half. • Work on the hot strip mill expansion is on schedule for completion in the first

quarter of FY2007, with the furnace walking beam mechanism having been installed and refractory installation underway.

• Supplied hot rolled coil to Western Port plant for a period of 16 weeks following the electrical fire. There were some short-term operational difficulties due to changes in the order book, but ultimately the mill was able to cover both the internal requirements and over 90% of the external order book during the period.

• Delivery performance was 97% during the half. Plate Mill • New tighter delivery performance measures were introduced and delivery

reliability increased to over 90% during the period. • Plate production was 182,505t, down 0.4% on Dec 2004 half and affected by feed

shortages as a result of more slab being converted to HRC to cover the changed Western Port requirements.

North Star BlueScope Steel • Achieved record half-year marketable steel production of 942,063 tonnes (100%

share), vs. 871,635mt in Dec 2004 half, and record half year despatches of 932,313 tonnes (100% share). These records were largely due to the slab caster consistently operating at its new optimal thickness of 100mm following the initial ramp-up period.

• Paid US$50m in dividends (100% share). • Again voted No. 1 flat rolled steel supplier in North America in the latest

Jacobsen Survey of steel customers. • Achieved cost savings of US$12m (100%) primarily due to a change in alloy

mix. Castrip LLC • BlueScope Steel's US based partner in Castrip LLC, Nucor, has continued to

make progress with the revolutionary strip casting technology developed by BlueScope Steel. Strip quality has improved and the product is showing some unique properties which may result in it being superior to conventionally produced strip in some applications. Nucor has announced its intention to build a second Castrip facility at its plant in Blythsville, AK.

• Castrip LLC, a joint venture between BlueScope Steel (47.5%) and Nucor (47.5%) and Ishikawajima Harima Heavy Industries (5%), owns the Castrip intellectual property.

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New Zealand and Pacific Steel Products This segment comprises: • New Zealand Steel; and • Lysaght Pacific. (i) Financial Performance

6 MTHS TO 31 DEC VARIANCE 2005 2004 $m $m $m % Sales Revenue 359 392 (33) (8) EBITDA 80 107 (27) (25) EBIT 66 93 (27) (29) Capital and Investment Expenditure 10 9 1 11 Net Operating Assets (pre tax)(1) 354 317 37 12 Return on Net Assets (pre tax)(2) 42% 55%

(1) Increase in net operating assets primarily reflects a decrease in defined benefit pension liabilities

and higher inventories, partly offset by lower creditors. (2) Return on Net Assets is defined as annualised EBIT / average monthly Net Operating Assets. The $33m decrease in sales revenue is primarily due to lower New Zealand domestic demand resulting mainly from softer residential market conditions and lower export volumes following a bi-annual hot mill shut down in August 2005 and steel making repairs and maintenance. The $27m EBIT decrease was largely due to: • Higher maintenance costs to maintain iron and steel making assets at record

production levels, together with higher unit costs associated with lower production volumes.

• Lower domestic demand due to softer residential market conditions, together with lower export volumes.

• Lower hot rolled coil prices attained in international markets. • Higher coal and electricity costs. The coal cost increase was mainly due to the

purchase of coal at spot prices arising from industrial action at the suppliers’ plant, and the electricity increase due to higher spot prices arising from prolonged dry periods in the second quarter.

These were partly offset by: • Higher domestic prices across all products. • Favourable movement in the NZ:USD relative to the previous comparative

period. • Favourable contribution from vanadium slag sales due to higher average prices.

(ii) Operations Report

• Slab production was down 31,000t, below the record 336,000t in the Dec 2004 half, largely due to scheduled melter maintenance and an extended kiln shut.

• Process computer upgrade was successfully completed in the hot strip mill.

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• Metal coating line production was down 7% at 102,000t vs. 110,000t in the Dec 2004 half due to mechanical and electrical reliability issues ramping up to full production after completion of the February 2005 upgrade. These issues have largely been resolved with changes to operating procedures.

• Paint line production was 27,000t (26,000t in the Dec 2004 half) realising the benefits of the FY05 upgrade.

• New Zealand Steel successfully completed implementation of SAP R/3. Coated and Building Products Australia This segment comprises: • Illawarra Coated Products at Port Kembla, NSW (comprising the former Springhill

Coated Products and Packaging Products); • Western Port at Hastings, Victoria; • Service Centres, with 7 sites throughout Australia; • BlueScope Lysaght, with 34 operating sites throughout Australia; • BlueScope Water; and • Western Sydney Colorbond® Steel Centre development. (i) Financial Performance

6 MTHS TO 31 DEC VARIANCE 2005 2004 $m $m $m % Sales Revenue 1,429 1,509 (80) (5) EBITDA 9 (44) 53 120 EBIT (30) (84) 54 64 Capital and Investment Expenditure(1) 90 91 (1) (1) Net Operating Assets (pre tax)(2) 1,371 1,199 172 14 Return on Net Assets (pre tax)(3) (5)% (14)%

(1) Capital and investment expenditure increase is primarily due to the West Sydney Colorbond

development. (2) Increase in net operating assets reflects the Lysaght and BlueScope Water acquisitions, together

with an increase in net working capital as a result of higher inventory due to higher steel feed costs and a build up of inventory for export in the second half of the year.

(3) Return on Net Assets is defined as annualised EBIT / average monthly Net Operating Assets. The $80m decrease in sales revenue is primarily due to lower domestic demand in the packaging, manufacturing and distribution markets for galvanised and tinplate products and lower export volumes due to the impact on production volumes of the fire at Western Port. These were partly offset by higher domestic prices across all products.

The $54m EBIT increase was largely due to: • Higher domestic prices across all products. • Favourable mix of domestic value-added zincalume and painted product. • Full period earnings contribution from acquired Lysaght and BlueScope Water

businesses. These were only partly offset by: • Higher steel feed costs from Hot Rolled Products.

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• Higher unit costs due to lower production volumes arising from the fire at Western Port, which closed the Hot Strip Mill for 12 weeks and lower production due to lower domestic demand. These were partly offset by higher unit costs in the previous comparative period due to industrial action at Western Port.

• Higher zinc and aluminium coating metal costs. • Lower domestic demand in the packaging, manufacturing and distribution markets for

galvanised and tinplate products, together with lower export volumes arising from the fire at Western Port.

(ii) Operations Report

Illawarra Coated Products (formerly Springhill Coated Products and Packaging Products) • Coated

- Springhill paint line production was up 21% to 89,200 tonnes largely due to the oven extension and painted coil packing projects.

- Completion of No. 1 metal coating line furnace upgrade in Aug 05 increased the annual Zincalume production capacity by 20,000 tonnes to 260,000 tonnes.

• Packaging - Largely exited the export market and restructuring of the operations is

ahead of schedule. - A new half-year production record was achieved on the No 3 electro

tinning line, namely 89,800 tonnes (previous record of 69,700t in the June 2005 half), through a number of small step process improvements.

- No. 2 electro tinning line was closed in November following the improved performance from the No. 3 line, as noted above.

Western Port • The hot strip mill was declared fully operational in November following the

electrical fire that was extinguished on 23 August. • An opportunity was taken to bring forward a major scheduled shutdown on the

hot strip mill to coincide with the fire repair work. This shutdown was successfully completed in October.

• Trials were successfully completed on the No. 4 metal coating line, increasing the line speed to 200 metres per minute (from 175 metres per minute). This will increase capacity by 30,000 tonnes to 280,000tpa.

BlueScope Lysaght • Lysaght further strengthened its manufacturing, sales and distribution

capabilities through a number of initiatives, including: - Acquisition of Trustek, a steel truss business in Western Australia, enabling

the capability to offer a full downstream solution in that State; and - Opening of a new site on the Gold Coast to take advantage of growing

Queensland market. • All of the acquisitions undertaken during CY 2005, including Ranbuild, have

been fully integrated, meeting our expectations and making a net positive earnings contribution.

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Service Centres

• The new Western Australian (WA) Service Centre, located in Forrestfield, Perth, was officially opened on 24 November and brings together the former Myaree Service Centre and WA Logistics operation as a single business.

• The West Sydney Colorbond® Centre development is on schedule. Construction of the buildings and delivery of process line equipment has now commenced.

BlueScope Water

• Pioneer Water Tanks, acquired in May 2005, has been successfully integrated

into BlueScope Water and continues to perform strongly. • Urban Water sales have continued to expand across New South Wales,

Queensland and Victoria. Coated and Building Products Asia This segment comprises: • Thailand, Indonesia, Malaysia and Vietnam metal coating and paint line operations; • China BlueScope Butler and Lysaght facilities; • Lysaght operations in 9 Asian countries; • Asian export trading activities; • China, Indonesia and India metal coating and paint line capital projects; and • India PEB and Lysaght capital projects. (i) Financial Performance

6 MTHS TO 31 DEC VARIANCE 2005 2004 $m $m $m % Sales Revenue (1) 485 520 (35) (7) EBITDA 11 57 (46) (81) EBIT (1) (4) 45 (49) (109) Capital and Investment Expenditure(2) 142 131 11 8 Net Operating Assets (pre tax)(3)

1,081 686 395 58 Return on Net Assets (pre tax)(4) (1)% 14%

(1) Includes BlueScope Butler China sales revenue of A$117m (FY2005 A$137m) and EBIT of

A$5m (FY2005 A$9m). (2) Capital expenditure increase largely reflects higher expenditure in China and India offset by

lower expenditure in Vietnam and Thailand. (3) The increase in net operating assets was largely due to higher capital expenditure and the foreign

exchange effect on net working capital (4) Return on Net Assets is defined as annualised EBIT/average monthly Net Operating Assets.

17

The $35m decrease in sales revenue is primarily due to lower sales in Malaysia, Indonesia and China, and unfavourable foreign exchange movements partly offset by increased sales in Vietnam and higher coated product prices.

The $49m EBIT decrease is largely due to: • Significantly higher steel feed costs, including steel feed in inventory at June 2005,

could not be matched by higher coated product prices across the Asia reporting segment.

• As a consequence of declining prices from the peak in the second half of FY2005 domestic customers held back on orders for a period as they reduced inventory.

• A $10m increase in pre-production and business development costs predominantly associated with the Thailand, Vietnam, India and China projects.

• Unfavourable foreign exchange movements. (ii) Operations Report

• Thailand o The second metal coating line, was commissioned in August/September.

The production ramp-up is in line with expectations. o Total domestic despatches were up 15% over the December 2004 half with

strong demand in premium product segments (Zincalume® steel and painted products) whilst galvanized sales fell due to strong import competition. However, margins were squeezed as a result of the dramatic reduction in hot rolled coil prices leading selling prices lower coupled with stock of higher-priced feed on hand or under contract.

o Export volumes were down 25% on the December 2004 half as a result of the higher price feed making the business non-competitive. This feed has been fully utilised.

o The domestic construction market remains relatively strong despite volatility in hot rolled coil prices and strong import competition.

o Price volatility resulted in some customers delaying projects.

• Vietnam o Commissioning of the metal coating and paint lines occurred ahead of

schedule in late November 2005. o In-line painting, a first in BlueScope Steel which involves the production

of single-coat painted products on a metal coating line thereby improving product costs and capacity utilisation, was also commissioned 18 months ahead of schedule.

o Market uncertainty during the half due to price volatility, resulted in some de-stocking by customers and reduced sales prior to commissioning.

o Margins in the Lysaght components business were squeezed by higher feed and increased competition.

• Indonesia

o Continued demand from the residential segment, particularly in the Aceh reconstruction, has seen orders for approximately 7,000 houses achieved. This equals to approximately 6,000t.

o Domestic volumes were down 10% on the December 2004 half, largely due to a softening in demand in July/August driven by dramatic price reduction in hot rolled coil and resultant buyer reluctance to commit.

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Volumes also impacted by postponed projects delays were also caused by the prolonged local government election process.

• Malaysia

o Operations recommenced on the paint line in August following the cessation of activities on 3 July as a result of a fire, as previously reported. The cost of the replacement of the equipment and lost business was covered by insurance.

o Domestic despatches were down 30% on the December six months due to increased competition, weaker construction activity, and the paint line fire. Margin squeeze was exacerbated during the half due to having higher-priced feed on hand or under contract and at the same time seeing sales prices tracking the dramatic HRC price reduction.

• China

o The BlueScope Buildings pre-engineered buildings order book is currently at record levels, however, tighter credit conditions in China have resulted in a slow rate of conversion of orders into despatches.

o The BlueScope Buildings business has been awarded the Football Stadium project in Tianjin for the Beijing Olympics and is also bidding for a number of other projects associated with the Olympics.

o During the half a number of management changes were made, principally the appointment of a new country President and manager for the coating line capital project.

• Growth Projects

Major growth initiatives approved by the Board are progressing on schedule and within budget:

- Indonesia o Second metal coating and paint lines at Cilegon (A$145m)

> Initial equipment contract being let > Operational early CY2008

- China

1. Metal Coating and Paint Lines (A$280m) > Paint line commissioning in February 2006 ahead of schedule. > Construction for start-up of metal coating line now delayed from

“mid CY2006” to first quarter FY2007. This delay relates partly to the investigation and plant safety improvements undertaken as a result of a fatality at the site in December.

> Major equipment buildings nearing completion > Administration buildings completed

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2. Guangzhou PEB and Lysaght facilities (A$35m)

> Project is on schedule for completion by mid-CY2006 > Buildings currently under construction > Equipment ordered > Operational procedures currently being implemented

- India

The joint venture with Tata Steel (50:50) was formalised on 23 November 2005, subject to certain conditions precedent, which the company expects to be met in quarter 3 FY2006, and initially includes the following developments:

1. Metal Coating and Paint Lines (A$265m) (100%) (BSL’s share

$132.5m) > Sublease of the land and environmental approval underway > Equipment suppliers being selected > Operational mid CY2008 > Site preparation now underway.

2. Lysaght and PEB facilities (A$100m) (BSL’s share A$45m)

> Projects remain on schedule: o Pune –Lysaght plant and Butler PEB and Design Centre

(scheduled for start up second half CY2006). Construction of plant buildings and equipment deliveries continue.

o Chennai and New Delhi (scheduled for start up in mid CY2007) – Lysaght rollforming facilities. Site works progressing to schedule.

- Thailand

> Pre-engineered building manufacturing facility (A$18m) o Building and grounds work progressing and fabrication of

structural steel largely complete. o Operational second half CY2006.

Note: The abovementioned capital costs reflect foreign currency costs converted to AUD at the forecast exchange rate current at the time of project approval.

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Coated and Building Products North America This segment comprises the North American businesses of Butler Manufacturing Company acquired on 27 April 2004: • Butler Buildings; and • Vistawall architectural products. (i) Financial Performance

6 MTHS TO 31 Dec VARIANCE 2005 2004 $m $m $m % Sales Revenue 607 629 (22) (4) EBITDA 11 11 0 0 EBIT 2 1 1 100 Capital and Investment Expenditure 14 18 (4) (22) Net Operating Assets (pre tax) 234 240 (6) (3) Return on Net Assets (pre tax)(1) 1% 1%

(1) Return on Net Assets is defined as annualised EBIT / average monthly Net Operating Assets. The $22m decrease in sales revenue is primarily due to lower volumes partly offset by higher prices. The $1m EBIT improvement was largely due to: • Improved Buildings division margins. • Profit on sale of Galesburg site. • One-off integration costs in the previous comparative period. Partly offsetting these were: • Higher operating costs due to Jackson start-up issues and higher freight costs

due to the increases in fuel costs. • Higher aluminium and energy costs in the Vistawall business unit.

(ii) Operations Report

• Butler Buildings - Completed commissioning of the Jackson Tennessee plant with full

production achieved September. The backlog of orders was eliminated and costs are now being reduced.

- Despatches were down 7.5% to 96,950 tonnes, vs. Dec 2004 half, largely due to the delayed start-up of Jackson Tennessee plant and hurricane affected areas in the Southeast. Industry despatches as reported by the MBMA, declined 3% over the same comparative period.

- The Galesburg Illinois facility was sold in December 2005. The sale of this facility completes the strategy of exiting high cost manufacturing sites and reducing associated costs.

- North American non-residential construction market improved during the first half with good order bookings leading to a strong backlog for the second half.

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- Introduced a new acrylic galvanized secondary product sourced from the NorthStar BlueScope Steel joint venture in Delta Ohio. This product will be used in building purlins and girts.

• Vistawall

- The Tennessee extrusion plant expansion was completed on time and on budget in late November and will result in a doubling of capacity, to 44 million lbs. This will allow Vistawall to provide high levels of customer service and excellent lead times to the market, whilst also lowering production costs.

- Aluminium despatches were down 1%, to 24.2 million lbs, vs. the Dec 2004 half.

- Weekly order intake ($ terms) was up 21%, revenues were up 4%, and order backlogs up 21% compared to the same period last year. A significant order of $9.1 million was awarded to Vistawall for the Gaylord National Resort in Washington DC during H1 2006.

- A new Service Centre was opened in Charlotte, North Carolina expanding our geographic coverage in the Southeast US.

- The new product, Terra Swing terrace door was successfully introduced and has allowed strong penetration into the residential high-rise market.

OTHER INFORMATION Capital Management Facilities In October, BlueScope Steel signed a A$300m 364 day working capital facility. In December, the company completed the refinancing of its syndicated Loan Note Facility. The company’s A$600m facility was refinanced and increased to A$1,200m, which consists of a A$100m 364 day tranche, a A$550m three year tranche and a A$550m five year tranche. There was no change to the pricing or the general terms and conditions. Share buy-back On 11 November 2005, the company announced an on-market share buy-back program. As at 31 December 2005, 10.6m shares had been purchased at an average cost before brokerage and GST of $6.98 per share. Net debt During the period, the company’s borrowing increased by A$833m to A$1,709m resulting in a gearing ratio of 33% (net debt / net debt plus equity). Of this movement, A$140m relates to an adjustment under AIFRS to recognise the opening balance of the company’s sale of receivables program. The balance of the movement in borrowings (A$693m), together with the operating cash flow of A$347m (before income taxes paid) were primarily applied to funding capital expenditure and investments (A$366m), dividends (A$313m), tax payments (A$240m) and the share buy-back (A$74m). BlueScope Steel has received A$249m in cash for trade receivables sold under its receivables securitisation program. This represents a A$109m increase from 30 June 2005.

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Safety, Environment & Health

• Safety - Regrettably BlueScope Steel had two fatal incidents during the half, a New Zealand

Steel employee in July 2005 and in December 2005 a construction company contractor working on the China, Suzhou, construction site.

- The company’s injury levels remain at world best standards with the Lost Time Injury Frequency Rate remaining below 1.0 LTIFR and medial treated injuries continuing to improve.

- Some of the noteworthy safety achievements in the period included: > North America Butler Buildings sites at Annville & San Marcos achieved 1 year

lost time injury free and Vistawall’s Terrell site achieved 1 million hours lost time injury free. Annville, San Marcos and new Jackson Butler Building sites also won Metal Building Manufacturers Association Plant Safety Awards.

> Indonesia achieved 4 years lost time injury free; > Port Kembla slabmaking achieved 2 years / 3 million hours lost time injury free > Australian Logistics operations achieved 1 million hours lost time injury free; > BlueScope Steel Vietnam achieved over 6 million hours lost time injury free;

• Environment - BlueScope Steel’s environmental compliance system is being enhanced. The new

system defines each operation’s environmental compliance obligations in terms of specific actions required. Line management signs off on their defined obligations on a monthly basis.

- Second party environmental reviews continue to be conducted across the group. The reviews are a formal assessment of net environmental performance. As of 30 December 2005, 47 operational reviews have been undertaken.

- The internal environmental reporting system was revised and commissioned in June 2005. Explicit routine reporting requirements were incorporated to facilitate further refinement of internal and external environmental reporting.

- A Greenhouse Gas and Energy Policy focusing on greenhouse gas reduction and improved energy efficiency is being implemented at the Port Kembla and New Zealand Steelworks.

- On 4 August 2005, the New Zealand Government and New Zealand Steel announced they would enter discussions for a Negotiated Greenhouse Agreement (NGA). An NGA will provide New Zealand Steel with a stable base for future operations and growth.

Management The following senior management appointments were announced: • Mr Paul O'Malley was appointed to the role of Chief Financial Officer on 20 December

2005. • Mr. Andrew Baker was appointed to the role of Chief Information Officer on 20 January

2006. • Subsequent to 31 December 2005, the company announced that Kathryn Fagg, President

Australian Building Logistics Solutions, has been appointed President, Asian Building and Manufacturing Markets, effective 1 March, following Mike Courtnall’s planned retirement on 28 February 2006.

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Transition to Australian International Financial Reporting Standards BlueScope Steel has transitioned its accounting and financial reporting to the Australian equivalent to International Financial Reporting Standards (AIFRS) from 1 July 2005, including the restatement of the comparative reporting period.

In relation to corresponding comparative period in this Earning Report (i.e the half-year ended 31 December 2004), there was a $17m (4%) increase in reported Net Profit to $502m. This was primarily due to the recognition of a $9m ($15m EBIT) exchange gain on net foreign currency denominated debt, including intercompany debt.

Attachment 2 provides a reconciliation of changes made to the FY2005 full year earnings by reporting segment, together with changes to the 30 June 2005 balance sheet. A full discussion of the AIFRS transition issues and the restated comparative period profit and loss statements (for the half year ended 31 December 2004 and full year ended 30 June 2005), and balance sheets (as at 1 July 2004, 31 December 2004 and 30 June 2005) can be found in Note 9 of the 31 December 2005 Interim Financial Report. Employee Share Plan Between August and December 2005, the Company offered approximately 15,300 eligible employees the opportunity to participate in a share plan. In Australia, New Zealand and the United States approximately 12,300 employees were offered a “3 for the price of 1” arrangement whereby they could choose to invest up to A$500 and for each share acquired the company funded two additional shares. In other countries approximately 3,000 employees were offered a grant of 60 shares or an equivalent cash plan. 91% (approximately 14,000) of employees accepted the offer to participate in the plan. Interim Dividend Schedule • Record date – 6 March 2006 • Payment date – 3 April 2006 For further information:

• Media - Sandi Harwood, Manager - External Affairs Tel: +61 3 9666 4039 +61 (0)411 027 006

• Investor Relations - John Knowles, Vice President Investor Relations Tel: +61 3 9666 4150 +61 (0)419 893 491

ATTACHMENT 1

PRODUCTION AND DESPATCH REPORT

6 MTHS ENDED 6 MTHS ENDED DEC 000 Tonnes June 2005 2005 2004 VARIANCE

AUSTRALIA Raw Steel Production(1) 2,566 2,689 2,557 5% External Despatches Hot Rolled Products - Domestic 512 410 538 (24%) - Export 848 1,070 529 102% Sub-total 1,360 1,480 1,067 39% Coated & Building Products Australia - Domestic - Export Sub total Total Australian Despatches - Domestic - Export

934 278

1,212

1,446 1,126 2,572

766 148 914

1,176 1,218 2,394

981 199

1,180

1,519 728

2,247

(22%) (26%) (23%)

(23%) 67% 7%

NEW ZEALAND / Pacific(2)

Raw Steel Production 274 305 336 (9%) External Despatches - Domestic 147 134 168 (20%) - Export 122 146 154 (5%) Total 269 280 322 (13%) ASIA (Coated & Building Products)

Raw Steel Production(3) - - - - External Despatches - Domestic(4) 288 271 312 (13%) - Export(5) 32 37 42 (12%) Total 320 308 354 (13%) NORTH AMERICA Raw Steel Production(6) 465 482 447 8% External Despatches North Star BlueScope Steel (6) -

- Domestic - Export Coated & Building Products North America - Domestic - Export Total

453 6

76 7

542

466 -

91 6 97

430 -

101 3

104

8% -

(10%) 100% (7%)

25

6 MTHS ENDED 6 MTHS ENDED DEC 000 Tonnes

June 2004 2005 2004 VARIANCEGROUP Raw Steel Production External Despatches - Domestic - Export Total

3,305

2,410 1,293

3,703

3,476

2,138 1,407

3,545

3,340

2,530 927

3,457

4%

(15%) 52%

3%

Notes:

(1) Port Kembla Steelworks. (2) Includes New Zealand Steel and Pacific Island operations (3) BlueScope Steel does not make steel in Asia. The Asian businesses typically source steel

from local suppliers, many of whom source slab or HRC from BlueScope Steel’s Port Kembla or New Zealand operations.

(4) First half FY2006 includes 74,000 tonnes of despatches from BlueScope Butler China’s operations versus 86,000 tonnes in first half FY2005.

(5) Reflects despatches from the Asian country of production to external customers in other countries within Asia and the Pacific Islands.

(6) Reflects BlueScope Steel’s 50% share from North Star BlueScope Steel.

ATTACHMENT 2

AUSTRALIAN FINANCIAL REPORTING STANDARDS

1. Restatement of FY05 Earnings

EBIT NPAT

Hot Rolled Products

NZS C&BP Australia

C&BP Asia

C&BP North

America

Other

Reported AGAAP 1,338 183 (116) 82 (20) (79) 1,007

(1) Impairment of Assets - - (77) - - - (54)

(2) Defined Benefit Super 6 7 6 - - 1 16

(3) Foreign Currency translation

- - - - - 22 16

(4) Other 7 (1) 4 1 2 (8) (3)

Reported AIFRS 1,351 189 (183) 83 (18) (64) 982 (1) Impairment write-down of Packaging Products. The operational assets are fully written down at 30

June 2005 under AIFRS. This reduces ongoing depreciation by approximately $10mpa. (2) Lower superannuation expense as the unfunded liability is now fully recognised on the balance sheet.

This reduces ongoing superannuation expense. (3) Exchange losses on loans that do not qualify as a hedge of a net foreign investment under AIFRS.

The company has taken steps from 1 July 2005 to mitigate this exposure. (4) “Other” mainly comprises expensing the fair value of share based payments, offset by ceasing to

amortise goodwill.

AUSTRALIAN FINANCIAL REPORTING STANDARDS

2. Restatement of June 2005 Balance Sheet AGAAP Asset

Imp(1) Software(2) NZ tax(3) DB

Super(4) EFA(5) Leave

Prov(6) Other AIFRS

Current assets 2,329 2,329

PP&E 3,629 (180) (75) 3,374

Intangibles 112 75 13 200

Other non-current 393 86 3 482

Current liability 1,358 167 1,525

Non-current liability 730 (54) 194 (167) 22 725

Debt (current & NC) 875 875

Net Assets 3,500 (126) - 86 (194) - - (6) 3,260

Retained profits 1,841 (126) 86 (194) (78) 6 1,535

Reserves (131) 78 (12) (65)

Other equity 1,790 1,790

Total Equity 3,500 (126) - 86 (194) - - (6) 3,260 (1) Impairment of Packaging Products CGU. (2) Reclassification of IT software. (3) Recognition of additional tax assets due to change in recognition test from “virtually certain” to

probable. Note: NZS will commence recognise tax expenses on earnings from January 2006. (4) Recognition of constructive obligation for funding shortfalls on defined benefit pension plans. (5) Transfer of 1 July 2004 Exchange Fluctuation Reserve. (6) Reclassification of annual leave and long service leave from non current to current. Note: In addition, the Group’s sale of receivables program does not meet the recognition requirements and

ceased to be recognised from 1 July 2005. It was not a requirement under the AIFRS to restate the FY2005 balance sheet but if this change were made the June 2005 balance sheet would reflect a $140m increase in receivables and current interest bearing liabilities (debt).

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ATTACHMENT 3

ASX Release

Release Time: IMMEDIATE Date: 8 February 2006

FY2006 REVISED MARKET UPDATE BlueScope Steel today revises its earnings guidance for FY2006. The Company now expects its FY2006 after tax earnings outlook to be in the range of $0.65 - $0.75 EPS on an AIFRS basis. Since the November guidance, steel markets, particularly in BlueScope Steel’s main operating footprint, have deteriorated further than expected due to continued excess steel production in China and the consequent increase in exports into Pacific Rim markets. The Company is finalising its half year accounts, business reviews and outlook, and it is now clear that the November guidance is no longer current. On a consolidated basis we expect the first half FY2006 result will be broadly in line with market expectations despite changes in our domestic product and export mix. Hot Rolled Products and New Zealand business segments will report good results given the market conditions, offset by BlueScope Steel Asia reporting a loss for the first half. The regional market deterioration referenced above is expected to result in significant shifts in margins between the first half results to the second half. Margin compression in the second half at Port Kembla Steel Works and New Zealand Steel is only partly offset by margin improvements in all midstream and downstream businesses in Australia, Asia and North America. The Chairman, Graham Kraehe, said: “The more challenging market environment currently being experienced is occurring at a time when the Company’s major downstream investment strategy is not yet complete. The Board is confident that the strategy will deliver long-term value for BlueScope Steel shareholders. Furthermore, I reaffirm that the Board intends to maintain its emphasis on shareholder returns with the ability to at least maintain the 42-cents per share, fully franked ordinary dividend as previously stated.” Kirby Adams, Managing Director and CEO said: “The oversupply from regional steel production has pushed down commodity steel prices and put unwarranted demand tension into raw materials markets which is hurting most global steel makers. These pressures have flowed through Asia and into our domestic markets. This is not a global steel demand issue; it is a regional over-production and steel supply issue.” The main factors contributing to the weaker second half margins and consequently updated FY 2006 outlook include:

1. Prices - Global oversupply, largely driven by the unbridled increase in steel production in China, has led to larger than expected price declines in export markets for slab and hot rolled coil and some commodity coated steels. BlueScope Steel’s third quarter pricing and export bookings, which are now finalised, indicate prices have fallen 15-20% relative to the Company’s first half. BlueScope Steel believes that this weaker pricing environment could continue into the fourth quarter of its financial year. As consistently stated, BlueScope Steel’s EBIT is highly leveraged to the Hot Rolled Coil price realisation movements.

2. Australian Market – Demand from the broader Australian construction market remains encouraging,

although the residential market continues to be soft in the Eastern states. Lower domestic demand in manufacturing, pipe and tube, packaging and distribution sectors reported last November has continued into the second half and now includes automotive. These trends have been exacerbated by a strong Australian dollar and the influx of low priced imports of both steel and in particular finished goods, which are hurting the nation’s manufacturers. These smaller Australian markets have reduced demand for domestic galvanized, tinplate and hot rolled coil products.

29

BlueScope Steel has moved promptly to improve its market offer to customers to enable them to compete aggressively against imports. However, these activities are not expected to improve our earnings mix until the first half of FY2007.

3. Asian Markets – Most of the Company’s Asian markets are continuing to experience heightened

import competition. In addition, customers continue to hold high levels of inventory through the region. In China, we are still seeing a number of large projects being delayed due to the more controlled credit environment. These factors have led to lower domestic Asian despatches and subsequently delayed the ability of the Company’s Asian operations to work through the inventory overhang and run new plant capacity to plan.

Other local producers are, as a consequence of the oversupply situation, competing harder for the available domestic tonnes placing pressure on margins. Due to these factors and the previously advised increased level of commissioning and business development costs (relative to last year), the Asian segment was not profitable in the first half of FY2006. However, the Asian economies remain strong and the Company has taken a number of initiatives that should deliver improved margins, with a particular focus on developing our markets. All of our major growth projects remain within budget and on schedule. However, there was a construction delay at the Suzhou site as a result of a contractor fatality in December.

4. Raw Materials – In the first half we carried forward, from FY2005, our normal iron ore inventory plus additional ore purchased at FY2005 prices (noting the majority of the Company’s iron ore is re-priced from July 1 each year as opposed to the Japanese fiscal year). In the second half therefore, we will see the full effect of the 71% iron ore price increase imposed by our suppliers. Iron ore which is fixed price for 12 month terms is unlinked to steel prices. In stark contrast, iron units from steel scrap are more reflective of steel industry pricing. Steel scrap costs have fallen enabling our USA group operations to continue with strong margin spreads. The Company anticipates a benefit in the second half from lower cost steel feed for its downstream businesses offset by higher zinc, aluminium, paint and other prices.

“Notwithstanding these immediate challenges, BlueScope Steel continues to strongly support the view that China will implement the announced reform of its steel industry and progress the country’s industrialisation, leading to a stronger and more stable global steel industry. This will be further supported by continued steel industry rationalisation. “Importantly, our business strategy has not changed. If anything, current compressed steel making margins reinforce the need to position ourselves closer to the end customer. In the meantime, we are absolutely focused on profitably growing our businesses in Australia, Asia, New Zealand and North America.” BlueScope Steel will provide the market with further information and increased detail about our business and the FY2006 outlook on 20 February at which time the Company is scheduled to announce its half year results.

-ends-