A Vision Unfulfilled: The Iron and Steel Industry in New Zealand 1842 to 1975.

Abstract

This thesis explains why it took almost one hundred and forty years lor New Zealand to establish a viable iron and steel industry based on indigenous materials, and indicates some of the economic consequences of such a lengthy gestation. The period covered extends from 1840 until the late 1970s, just prior to the advent of the Muldoon government's Think Big programme. The study considers firstly, the vision of the early settlers and the efforts of their successors to establish a Britain of the South, an industrial economy for which a local ironmaking capability was a prerequisite. It reasons that the main obstacle to early success was the problem associated with the high titanium content of the Taranaki ironsands. The reaction of the first settlers on discovering the manifest abundance of the West Coast ironsands was lo imagine 'a carpet of wealth spread beneath our feet'. But although the ironsands proved to be the colony's only mineral resource of commercial significance, releasing their bounty involved a struggle of truly epic proportions. It would take over a century to break the technological deadlock inherent in the ironsands' chemistry, seriously impairing New Zealand's industrial development. There is little doubt that given suitable materials the colonists could have established a viable iron and steel industry much earlier. When formed in 1886 the Otago lron Rolling Mills Company Limited operated a Bessemer duplex steelmaking plant based on imported pig iron and a wrought iron unit reliant on local and imported scrap. Both primary units fed into a section mill producing a wide range of rod, bar, flats and shapes. The adverse costs of the imported materials resulted in the dose down of the steelmaking plant and the same fate befell the wrought iron operation when steel became the more favoured material for engineering and construction, nevertheless the mill continued to operate with imported feedstock until 1953. lronmaking capability was further demonstrated when the Onekaka Iron and Steel Company Limited, commissioned in the early 1920s, produced pig iron from the local limonite ores. Operationally the plant performed well but suffered from inadequate capitalisation and the consequent absence of steelmaking and rolling operations. Because of the problems of a restricted market coupled with the onset of the worldwide recession the company closed down in 1935. The failure of the iron works and the Otago steelmaking activities was a function of economics and not technical problems. When operating they confirrned the local capability to successfully manage conventional process technology. The second major argument of the thesis is that the involvement of the state and bureaucratic intervention were in the final episodes responsible for a bifurcated industry that failed the best national interest. Resolving the technical problems of the ironsands remained a key issue into the 1960s but of growing significance was the role of the state and the part played by the bureaucrats. The latters' attempt to give the Korman group the majority private sector shareholding in the proposed joint venture investigating company would have placed control of any ensuing operating company in overseas control, contrary to the government's expressed preference. Even more damaging than the joint venture fiasco was the bureaucrats' subsequent action in setting up the wholly government-funded investigating company with the exclusion of all the New Zealand interests who had experience of the industry, and particularly of the New Zealand market. Many of those in this group were not only informed on local demand and prospects but had strong ties with major producers and associated industries overseas. Fletchers also had the experience in setting up and operating the major industrial complex Tasman Pulp and Paper Company Limited. There is no rational explanation for the action taken, but as most of those discriminated against were from the group that had opposed Industries and Commerce's joint venture scheme an act of reprisal cannot be ruled out. Both steel companies eventually achieved their respective operational and economic objectives but not before a great deal of time, money and effort had been disbursed on process and market issues that might have been avoided had the industry been structured as a single entity.