Head of «AcelorMittal Temirtau» explained reduction in salaries
ArcelorMittal Kazakhstan senior executives have met personally with the Government of Kazakhstan to explain the reasons for the company's intentions.
"It gives me no pleasure to announce this news. It is important that all our stakeholders, and most importantly our loyal and valued employees, know two things: first, that action to reduce the cost base is absolutely necessary if this company is to have a sustainable future; and second, that we believe potentially asking everyone to make a sacrifice is preferable to making large numbers of redundancies.
"I understand the information about this intention will be very difficult for our employees. I have written to them personally to explain why this is necessary and we are now in the process of meeting people in person to ensure they fully understand the reasons and have the opportunity to ask questions directly to management," Vijay Mahadevan, Chief Executive Officer, ArcelorMittal Temirtau commented.
"Several external factors are having an impact on our steelmaking and mining operations, resulting in substantial losses that we cannot continue to sustain.
The company is experiencing a significant increase in imports in Kazakhstan, primarily from Russia, due to Russian competitors enjoying a considerable cost advantage, largely due to the devaluation of the rouble. In 2013 the Kazakh market was not attractive for the Russian producers. However, post the rouble devaluation this situation changed and from the start of 2014 onwards there has been a flood of Russian imports into Kazakhstan. In 2014, imports from Russia totalled 1.3 million tonnes and, based on data for the first five months of 2015 (0.8 million tonnes), it is anticipated this figure could rise to 1.9 million tonnes in 2015. Given 3.7 million tonnes of steel were produced in Kazakhstan in 2014, the market impact of these imports is clear," he continued.
Furthermore ArcelorMittal Temirtau's traditional export markets are increasingly limited due to weak demand, compounded by high transport and logistics cost. And the company's iron-ore and coal mines are no longer a competitive advantage due to a decrease in prices for the raw materials.
Despite this, the company, which has received significant financial support from ArcelorMittal at group level, has continued to make important investments in its asset base. During this period, in excess of $1.5 billion has been invested in projects including the re-lines of blast furnaces two and three, converter gas cleaning, the billet caster, sinter plant de-dusting and investments in safety, quality, environment and maintenance.
"Employment costs are the highest cost of our steel-making process. Savings made from salary reductions will be invested into the business in order to improve our competitive position. Kazakhstan has a long and proud history of mining and steel-making - recently we celebrated 55 years of metallurgy in the country and we must all work together to ensure a sustainable future." Mr. Mahadevan concluded.