EMBATTLED company OneSteel will create an extra 450 jobs in Whyalla as it changes its business focus from manufacturing to iron ore mining.

The company yesterday announced that it will cut 430 steelworkers across Australia but hire an extra 450 at Whyalla by the end of June as part of a $200 million investment to double its exports operation. The 430 job losses will come from its 11,000-strong national workforce in a bid to bring its steel division back to profitability.

But new jobs in mining and construction at Whyalla will more than offset job losses at the steelworks in the Eyre Peninsula centre.

OneSteel spokesman Steve Ashe said an unspecified reduction in employees at the steelworks would be achieved through natural attrition, not forced redundancies, and there would be a net increase in employment in SA.

"There will be an extra 450-odd jobs in the mining business," he said.

"About half of those will be permanent and half during the construction project in terms of the port."

OneSteel, whose divisions include mining, steelmaking, recycling and distribution, yesterday posted a net loss of $74 million for the six months to the end of December, compared with a net profit of $116 million for the previous corresponding period. The job cuts will save the company $90 million and, in combination with other cost-saving measures, would bring the steel division back to profitability by the end of June.

The company said in August it was considering further job cuts after axing about 1500 positions since the global financial crisis in 2008.

OneSteel has already shed 300 employees and 170 contractors so far this financial year.

In Whyalla, however, it continues to grow, with the mining division that is based there turning a before-tax profit of $171 million.

The company said it was on track to sell about six million tonnes of iron ore this financial year, but hoped to double this figure in the next couple of years.

To this end the company bought the Peculiar Knob iron ore deposit from WPG Resources last year for $346 million.

"Once Peculiar Knob is in full production we expect our annual iron ore sales to lift to approximately 11 million tonnes," OneSteel said.

"First sales from Peculiar Knob are expected in the fourth quarter of this calendar year."

The company has also repaired the Whyalla blast furnace during the past six months and said it was "very pleased" with its performance.

Overall the steel business had been adversely affected by the strong Australian dollar and weak construction industries. "Domestic confidence levels continued to be affected by concerns over potential implications from European debt issues, the impact of the high Australian dollar and high interest rates," the company said.

"Domestic demand remained well below pre-GFC levels.

"In Australian steel, we believe that key construction markets are at their cyclical low points, and that as these markets recover demand will improve.

"Given our reducing cost base and relatively low utilisation levels, we are strongly leveraged to the recovery."

The return of OneSteel's steel division to profitability does not take into account $64 million it will receive from the Federal Government under the $300 million Steel Transformation Plan.