The world's largest steel producer ArcelorMittal has decided to implement a comprehensive program for cost saving and restructuring of the workforce at its Russian, Kemerovo region-based coal mines Anzherskoye and Pervomayskaya, due to the critical situation in the global and Russian coal and steel markets.
However, the company may temporarily halt operations at the coal mines in question, pending a recovery of the global market, if its proposed cost-saving program fails to stabilize operations at the mines.
As part of its restructuring program, ArcelorMittal had introduced a voluntary retirement program, and will redeploy some key operating personnel from the Anzherskoye and Pervomayskaya mines to its third coal mine Berezovskaya, which will continue its normal operation while contracts for the supply of new equipment for the mine will be implemented.
Accordingly, restructuring of workforce is to be carried out in line with the Russia Federation's labor laws and collective labor agreements, and will include payments toward retraining programs for affected workers and the cancellation of external services, to provide more internal employment opportunities.
"If the cost reduction program does not result in sustainable operation of the mines, the process of temporary dry conservation of the Anzherskoye and Pervomayskaya mines would be initiated until market conditions improve," says ArcelorMittal's statement.
During the current week, the chairman of the Federation of Trade Union Organizations in Kuzbass, Yuri Kaufman, asked ArcelorMittal to reconsider its plans to idle some of the operations at its Kemerovo region-based mines, as it will lead to about 3,000 job cuts. According to Mr. Kaufman, during October 2008 to March 2009, ArcelorMittal had already cut by ten percent the workforce at all three of its Kuzbass-based mines, reduced wages by about 30 percent, and decreased by about three times the production assurance costs.
ArcelorMittal acquired its three Kuzbass-based coal mines and associated assets last year from Severstal-Resurs, a raw materials division of the Russian steel producer Severstal, for a total of $720 million. In 2008, its mines saw a decrease in their coal output of 14 percent year on year to 2.698 million mt, thus falling short of their production target by ten percent due to the low demand in the coking coal market.