Iron and Steel Industry Leader Is Confident about the Future
The General Director of ArcelorMittal in Kazakhstan, Dr. Frank Pannir, answers the questions of the Kazakhstan Magazine.
Last year your enterprise celebrated the double anniversary – 50 years of the “Kazakhstanskaya Magnitka” and 15 years of operation of the LNM Group in Temirtau. What results has ArcelorMittal Temirtau achieved fort hese years?
On the occasion of the anniversary it is customary to sum up the results and to make plans for the future. Looking back at the past, I now see how a long way our country and we have gone together. When we acquired the assets in Kazakhstan, the Iron & Steel Works was on the verge of shutdown. The production facilities were worn-out, no circulating assets were available for purchase of raw materials and supplies. The traditional chain of supplies from the CIS countries was destroyed, the sales markets were lost, wages were not paid for months. The President of Kazakhstan took the only correct decision on transfer of the enterprise to a reliable investor. That measure saved the Iron & Steel Works and therefore, Temirtau, in hard times of the economic crisis.
Fifteen years passed away since that time. During this period, we have constructed profitable production facilities covering the whole process chain: from iron ore and coal mining to manufacturing of flat-rolled products in Temirtau and of large-diameter pipes in Aktau. Revival of the company revived the city itself and facilitated the development of the whole region.
From the first days, we focused on cost saving and reduction, on manufacture of higher-value-added products, and on improvement of quality thereof. We refused to use outdated open-hearth furnaces and shifted to the method of continuous casting. Launch of the continuous casting process allowed us to achieve a quality breakthrough in manufacture of rolled products.
During the same period, we constructed and put into operation a hot-dip alumino-galvanizing workshop, two lines for galvanized steel sheets production, a continuous coloring line and a long product rolling mill. We improved the rolled products manufacturing practice and methods, including the technology of production of tinplates of different degrees of hardness and of a wide range of finish, rolled products of a high drawing quality, tube steels, and high-strength low alloyed rolled steel products.
In 2006, we constructed in Aktau a plant for production of large-diameter steel pipes for needs of the oil-and-gas and construction industries.
Now we are constructing the production facility where technologies, methods, practices and processes will comply with our corporate philosophy “Safe Sustainable Steel”, that is, they will ensure safety, environmental friendliness, efficiency and quality of production, and we have everything required for achievement of the above goals and objectives.
What is the situation in the global steel market, and how does your company respond to changes therein? Have you managed to overcome the crisis impact on the iron and steel industry?
If we compare the current situation with that which took place two years ago, I would say that we are still experiencing the crisis, but it is not so severe, as before. For example, sales within Kazakhstan have considerably increased as against the crisis period, but, nevertheless, they have not yet reached the level which was three years ago. The same situation is in the neighboring CIS countries.
The Government has taken a number of measures to support enterprises during the crisis. That is why the attempts to mitigate its negative effects have been successful in Kazakhstan as compared with other countries of the region and world.
In 2010, our position improved: we ended the year with the increase in the finished products output to 3 million tons. It is important for us, that even in the hardest times we did not close down our operations and preserved the jobs. Though, we had to revise the dates of some investments projects. Nevertheless, we did not shift away from and did not refuse to implement any of the envisaged social programs.
Who are today the core customers of the products manufactured by ArcelorMittal Temirtau? What challenges and prospects has your enterprise faced with in connection with establishment of the Customs Union?
When we acquired the Iron & Steel Works and mines in the middle 90s, 95 % of the company’s products went for export outside of the Commonwealth of Independent States, approximately to 100 countries of the world. Today 53 % of our products is sold in the markets of Kazakhstan and the CIS countries. The rest of the products is sold in Iran, China, countries of the South-East Asia and Africa. Of course, we would like to have the opportunity to sell more products in the market of Kazakhstan, and we will welcome the Government’s efforts aimed at domestic demand promotion and stimulation.
Our products are widely used in many industries, including: construction, mechanical engineering, rail car building, production of pipes, metalware, furniture and sanitary food containers, etc.
We use our best endeavors to become a primary supplier for our customers. This means that customers and clients should be satisfied with quality of and prices for our products and with convenience of the work with us. We learn to hear our customers and clients, and try our best to establish with them a direct contact by holding seminars, by discussing new proposals and requirements for products quality and range. We have a group of specialists being in charge of logistics and maintaining a continuous feedback with our consumers, customers and clients.
We do not yet feel any immediate effect from establishment of the Customs Union, but we consider it a potentially attractive project and we will make every effort to take the advantages offered by this project.
How is the project for modernization and expansion of the production facilities of ArcelorMittal Temirtau coming along? What investment projects and programs have you planned within the framework thereof?
The work under the the project for modernization and expansion of the production facilities to increase the output to 6 million tons of steel is in a full swing. This year we continue the works on construction of a new steel continuous casting plant in order to launch production of bars and rods. Until now, their production has been restrained due to lack of a proper work material. The steel continuous casting plant will be capable of producing about 400 thousand tons of bars and rods, which should fully satisfy the Kazakhstan internal demand for such products.
At the same time, we are engaged in the work on reconstruction of coal-cleaning plants, installation of a new air separation unit, and completion of overhaul repair of the blast furnace № 2. As a result of use of more advanced technologies, the blast furnace productive capacity and useful life have increased. This year we have installed and put into operation a dust-exhaust system of the blast furnace № 4, and the coke gas cooling system. Moreover we have launched a unique project of construction of the gas cleaning system at the converter plant.
On a step-by-step basis, we invest money in development of our raw materials base. It is expected that by 2015 the coal and iron ore output will be increased to 13 and 8.4 million tons per annum respectively.
What are the key priorities of the Company’s HSE policy?
In Kazakhstan 40 thousand of our employees trust their health and life to us. Therefore, occupational safety is the priority № 1 for us. It is the safety of our employees which is our number one concern and the priority goal of our “Safe Sustainable Steel” philosophy.
In this field, we have accomplished much work and faced huge challenges. In 1996, about 1 475 accidents were registered in our mines and Iron & Steel Works. In 2010, the number of registered accidents was 76. From the beginning of this year, 13 accidents have been registered here, including 2 fatal ones. Such figures demonstrate that we are headed in the right direction, however, we still have not achieved our main goal: a zero level of fatal accidents.
Our enterprises have the integrated safety management system, which, first and foremost, provides for training of our employees in how to correctly assess risks, with acquiring of knowledge about global safety standards. Moreover, the above safety management system provides for explanatory and motivational work, and for daily safety inspections at every level. Of course, we make the necessary arrangements for special technical measures and modernization of equipment, and purchase up-to-date personal protection devices. However, nothing can replace a responsible care for occupational safety by employees and their direct supervisors.
Today all our subdivisions are certified under the standard OHSAS:18001. This year the Iron & Steel Works has worked for 100 days without any reportable injuries, while iron-ore enterprises have been working without any reportable injuries for almost 450 days. Our mines are under a special control. Over the last two years, we invested money in modernization and safety of our coal mines to the amount of about $180 million, one more amount of $117 million will be allocated this year. The “Davis Derby” system has been deployed at all our mines, and now we can monitor a gas environment below ground on a real-time basis. We continue to use the degassing process, and now we are testing the system of underground controlled directional drilling of longhole wells, which will also make its contribution to the improvement of the miners’ work safety.
Any metallurgical production is connected with a negative impact on the environment. What measures does ArcelorMittal Temirtau take to minimize the above impact?
Of course, it is impossible to completely eliminate any negative impact on the environment, but it is possible to mitigate such impact. For example, by refusing to use the open-hearth process, we have reduced air emissions by 45 thousand tons a year, and have prevented from formation of 60 thousand tons of solid wastes, while the switching over to the continuous casting process has allowed us to eliminate over 30 pollution sources and to further reduce air emissions by additional 10 thousand tons.
Some months ago, we installed and put into operation the dust-exhaust system of the blast furnace № 4. The previous multi-tubular collectors, which we used for extraction of dust from the bin trestle emissions, could maintain outlet-dust concentration at the level of 143 mg/m3. The up-to-date Alstom filters can maintain the outlet-dust concentration at the level of 27 mg/m3 as against the rated/ designed one of 50 mg/m3. New filters in the cast-house will be capable to reduce the dust concentration after extraction thereof by 10–12 times.
This year we have also constructed a fully closed-loop coke gas cooling system. Previously the gas cooling process took place in the atmospheric cooling tower, but now all the “muddy” recirculated water is cooled in closed heat exchangers. In that way we have completely excluded the possibility of air pollution with phenols, ammonia, naphthalene, benzol, sulphuretted hydrogen, hydrocyanite in the volume of 300 tons a year. Now we have proceeded to construction of an up-to-date gas cleaning system in the converter plant, which will be capable to reduce emissions of harmful substances into the atmosphere by 3 thousand tons of dust and 15 thousand tons of carbon monoxide per annum. As a result, it will be much easier to breathe in the city soon.
In all, by 2015, we intend to invest money in the ecological activities to the total amount of over $60 million.
How much importance does the management of ArcelorMittal Temirtau attach to the matters of corporate social responsibility? What contribution does ArcelorMittal Temirtau make in development of the Karaganda Region?
We understand perfectly well that we are responsible not only for our employees but also for well-being of the cities and the region where we work. The city cannot exist without the Iron & Steel Works, but the Iron & Steel Works cannot exist without the city either, therefore we provide all-round support both to Temirtau and to the whole Karaganda Region.
Over the last four years we jointly and in cooperation with local authorities and non-governmental organizations adopted the model of system-based cooperation within the framework of annual memorandums covering all the aspects of the work with our social partners at the levels of the city and region. For example, in 2011 the company allocated resources to the amount of about KZT1,8 billion for implementation of social projects in Temirtau, Shakhtinsk, Abai, Karazhal and other regions. The above money will be spent for infrastructure projects, for sports development, for social aid to children, veterans and low-income persons.
Such a practice was widely recognized and showed good results in the past, and we hope for the same effective cooperation in the future.