In the event, the Lysaght offer was that John Lysaght Ltd. take out shares to the value of not less than £10,000 in Wm. Sandford Ltd. and in consideration for this undertake not to manufacture iron or steel in Australia for ten years, together with numerous sub-clauses. This agreement finally lapsed, evidently through lack of agreement on the part of Sandford, for undoubtedly John Lysaght Ltd. would have been aware that there were rumblings that Delprat of BHP was urging that Company to exploit its rich iron ore deposits in South Australia and open up an iron and steel works.

As the financial crisis became more acute Sandford made stronger overtures to the NSW Government to take over the works but, in less adverse times, he had also thought seriously of this. In other correspondence he envisages that the State would take over the works at valuation, give him a seat in the Upper House and appoint him Minister of Railways and Manufactures.

A bail-out for the failing company was proposed but rejected by the banks, so the Government, which had been prepared to assist Sandford with a substantial loan, finally helped arrange a deal with the Company's largest client G. & C. Hoskins Ltd., manufacturers of cast iron pipes in Sydney. At the end of 1907, G. & C. Hoskins took over the Eskbank works from Wm. Sandford Ltd., on terms involving cash and guarantees including the payment to Sandford of £50,000 over ten years. While this was a substantial sum of money, a Manufacturer's Encouragement Act became law less than two years later and paid bounties amounting to £140,000 to Hoskins between 1909-14. Assisted by the bounties, government contracts and shortages of iron and steel during the First World War, the re-organized works carried on with some success, but costs of production were high and raw materials less than the best quality. Finally, when it became increasingly obvious that siting a major steel complex at Lithgow was just uneconomic, investments in coal, coke and land were made on the coast near Wollongong where the industry finally moved in 1928 to be re-established as Australian Iron and Steel.

Beginnings at Newcastle

G. D. Delprat, a General Manager with BHP, was undoubtedly the driving force behind the development of BHP steel works at Newcastle. For some time he had been counselling the BHP Board, specifically, to utilize more profitably the vast iron ore deposits they had on lease in South Australia. It was a propitious time to be contemplating such work as important advances were being made in the steel industry overseas. The modern Open Hearth practice was replacing Bessemer converters and more particularly basic furnace practice was replacing acid slag practice, enabling low phosphorus steels of improved quality to be made. Further, the value of steel imported into Australia was around £6 million per annum and in 1910 some 150,000 tonnes steel rails were imported.

The initial BHP proposal was for:

• 1 X 350 tonne per day blast furnaces


• 3 x 65 tonne open hearth furnaces


• 1 bloom mill


• 1 heavy rail mill.

It appears, however, that Delprat envisaged ultimately having eight blast furnaces; with subsequent furnace and practice improvements as each new furnace was added over the years, the eight furnaces contemplated proved to be grossly excessive.

Australian Academy of Technological Sciences and Engineering