KAZAKHSTAN: Kazakhs warn Mittal over safety

Publisher Name: 
The Financial Times Limited 2008

Kazakhstan
has warned ArcelorMittal, the world's biggest steel company, that it
could be forced to close one of its coal mines if it does not improve
safety following an explosion last month that killed 30 people.

Vladimir Bozhko, head of Kazakhstan's ministry of emergencies,
has given ArcelorMittal one month to draw up a plan to introduce 41
safety reforms at the company's Abaiskaya mine in central Kazakhstan,
where the blast took place.

Accidents in Kazakhstan, where ArcelorMittal employs 50,000
people, have killed 191 of the company's workers in the past 12 years.

The
emergencies ministry accused ArcelorMittal of neglecting safety during
the breakneck expansion of Abaiskaya, where production has risen more
than 30 per cent since 2001 to reach 1.3m tonnes last year, roughly 10
per cent of the company's global coal production.

Abaiskaya is
one of several mines operated by ArcelorMittal in Kasakhstan to feed
its huge and highly profitable Termirtau steel plant there.

ArcelorMittal has invested more than $1.4bn since it moved into Kazakhstan in 1996.

The
closure warning is a blow to the reputation of the Luxembourg-based
company, which is controlled by the Indian billionaire Lakshmi Mittal,
its chief executive.

It also puts Mr Mittal on a potential
collision course with Nursultan Nazarbayev, Kazakhstan's long-serving
president, with whom the steel magnate is on good terms.

The
company's Kazakh operations have set the tone of other moves by Mr
Mittal to take over underperforming industrial sites, often in the
former Soviet Union or other communist nations, and turn them into
profitable ventures.

ArcelorMittal said it was "working closely"
with the Kazakhstan government on health and safety matters, and had
committed $350m to help bring its coal mines in the country to
internationally recognised standards.

"During the coming month we
will be presenting to the government our plans for the next five years,
many of which are already being implemented.

"The safety of our employees is and will remain our number one priority," the company said.

Charles
Bradford, of Bradford Research, a US steel consultancy, said: "The
company has done a lot in Kazakhstan [to improve safety] but it needs
to do more."

Rob Johnston, an official at the International
Metalworkers' Federation, a body representing steel industry employees,
said Kazakhstan's action was a "positive move" as it would increase the
pressure on ArcelorMittal over safety standards.

Last week Karim
Massimov, Kazakhstan's prime minister, announced that the government
would nationalise by the end of the year any natural resource projects
where investors were found to have breached contract regulations.

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