OneSteel has flagged more job cuts and possible closures in its loss-making steelworks division after retrenching 400 workers, as the industry reels from weak demand and a high Australian dollar.
The nation's second biggest steelmaker's full-year profit was down 10.9 per cent to $230.3 million from a year earlier.
The steel-making business posted a $185 million full-year loss but there were positive earnings in OneSteel's other segments: iron ore, recycling, distribution and mining consumables.
Chief executive Geoff Plummer said the reduction of 400 positions in the manufacturing and distribution business would save the company $40 million a year and be completed by September.
Investors reacted positively to developments, sending OneSteel's shares up 1.1 per cent to $1.45. But the shares have been recovering from Friday's almost nine-year low close of $1.38.
OneSteel has now axed about 1500 jobs since the global financial crisis in 2008 and Mr Plummer said the company was looking at more cuts.
Mr Plummer said there would not be significant job losses at its steelworks in Whyalla, South Australia but did not rule out closing operations there eventually.
"I wouldn't like to speculate on numbers (job losses) or where until we consult with our employees in the areas affected," Mr Plummer told reporters on Tuesday.
"You would only close Whyalla if permanently exiting a lot of the business."
Mr Plummer said the company had been forced to consider options, given it had lost $180 million already and had concerns about the outlook for the Australian steel market.
Australian Workers Union national secretary Paul Howes said he understood why the job cuts were made but said the union was working with the company to ensure there would be no further unnecessary "knee-jerk" job losses.
"We have seen in the past the steel industry left in worse positions later on when the market recovers, in terms of skills lost, you can't just go into market and pick up blast furnace operators," he told AAP.
Treasurer Wayne Swan said OneSteel was the victim of a patchwork economy - Qantas have slashed 1000 jobs - and the high Australian dollar, which affected its ability to compete with China.
Mr Plummer did not rule out a possible merger with another operator but said there had been no discussions about it, despite market speculation.
OneSteel did not provide earnings guidance but Mr Plummer said he was still optimistic that domestic demand for its mining consumables division would increase because of the mining boom.
The company increased iron ore earnings by 57 per cent to $524 million.
"We're diversifying the business away from being a pure steel business, if you have a look at the benefits that come from the iron ore, mining consumables and recycling results," Mr Plummer said.
OneSteel declared a final unfranked dividend of four cents, compared with six cents a year earlier.
