ArcelorMittal Temirtau, Kazakhstan-based subsidiary of steel giant ArcelorMittal, has decided starting from July 1, 2009 to cut the wage fund for steel workers by nine percent and for miners by 14 percent in order to reduce production expenses, thereby avoiding employee layoffs and the suspension of the plant's operations.
The measure in question, effective for a period of three months up to September 30, 2009, is to expected to allow ArcelorMittal Temirtau to save about Tenge 200 million (approx. $1.33 million) per month. The producer has stated that currently each metric ton of rolled products causes a loss to the company of $150, while in the first quarter of 2009 the company's losses amounted to more than $100 million. The new measure will allow the plant to cut its losses from by $40 per metric ton of rolled products. By the third quarter of 2009, ArcelorMittal Temirtau plans to achieve production stability and to decrease the prime cost of rolled products from the current level of $350/mt to $275/mt.
In addition, starting from July 2009, the monthly delivery schedule at ArcelorMittal Temirtau will be fixed at the range of 300,000 mt. In May, the plant delivered 260,000 mt of rolled products from its scheduled 320,000 mt.
Currently, ArcelorMittal Temirtau employs 45,000 people and is operating at 70 percent of its production capacities. In May, the plant's daily average output of pig iron amounted to 9,000 mt, up from not more than 6,000 mt in the last quarter of 2008.
As SteelOrbis previously reported, at the end of May ArcelorMittal Temirtau said that it was experiencing serious financial problems and that it could be forced to halt production and lay off workers in Kazakhstan unless "urgent measures" were taken.