ArcelorMittal may temporarily close two of its three Russian coal mines pending a recovery in global markets should a cost-saving programme now under way fail to produce sufficient savings.
ArcelorMittal, the world's largest steel maker, said it had introduced a voluntary retirement programme at its Anzherskaya and Pervomayskaya mines in western Siberia and would redeploy some key operating personnel to a third mine, Beryozovskaya. If the cost reduction programme does not result in sustainable operation of the mines, the process of temporary dry conservation of the Anzherskaya and Pervomayskaya mines would be initiated until market conditions improve, the company said in a statement sent to Reuters late on Wednesday.
Coal miners in Russia, the world's No. 5 producer, have gone from boom to bust in six months as the global economic downturn has slashed demand for their products. Loss-making employers have scaled back production and cut salaries. [ID:nLM394112] Preserving social stability through the financial crisis is one of the major challenges facing the Russian government as it prepares for its first recession in a decade. About 800,000 Russians lost their jobs in December and January combined.
A trade union leader this week called on ArcelorMittal to reconsider plans to idle the mines in western Siberia's Kemerovo region, Russia's coal-mining heartland. [ID:nLI263565]
ArcelorMittal will monitor the situation and review the decision based on the performance of the global coal market, the company said.
It said the restructuring would be carried out in line with Russian law and would also include payments toward retraining programmes for affected workers and the cancellation of external services to provide more internal employment opportunities.
The Beryozovskaya mine will continue normal operations.
ArcelorMittal remains committed to the development of its business in Russia and its long-term investment plans in the territory of Kuzbass, said Frank Pannier, the company's vice-president and chairman of the Russian coal mines.
Kuzbass, an abbreviation of Kuznetsk basin, is the unofficial name of the western Siberian region estimated to hold 85 percent of Russia's coking coal reserves.
ArcelorMittal's three mines in the region, plus the Severnaya washery and several auxiliary entities, employ 5,830 people. The mines produced 2.7 million tonnes of coal and 1.3 million tonnes of coal concentrate last year.
ArcelorMittal paid $720 million last year to acquire the assets from Russian steel maker Severstal and owners affiliated to Severstal.
(Editing by Keiron Henderson)
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