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ArcelorMittal Temirtau

After the fatal accident on October 28, the authorities suspended investment cooperation with AMT

After another fatal accident at the ArcelorMittal Temirtau (AMT) mine – a methane explosion at a mine in the Karaganda region – Astana is reclaiming the company’s assets.

The accident at the Kostenko mine occurred on October 28. According to Kazakh bureau of Radio Svoboda, it is the largest industrial disaster in terms of the number of victims in the entire history of the country’s independence. The local press writes about 46 dead, but this has not yet been officially confirmed.

After the accident, the president of Kazakhstan Kasym-Zhomart Tokaev instructed to terminate investment cooperation with ArcelorMittal Temirtau. In addition, at a meeting with the relatives of the dead miners, he named AMT «the worst in the history of the country in terms of cooperation with the government and the enterprise.» The head of state also announced that he had instructed him to head the company Vadym Basin – he managed the headquarters for the liquidation of another, August accident at one of the AMT mines, and until July 2021 held the position of executive director of ArcelorMittal Temirtau. In total, he worked for the company for 18 years.

Prime Minister of the country Alikhan Smailov on October 28 stated, that the government has reached a preliminary agreement with the shareholders of AMT and the process of signing the agreement on the transfer of ownership rights to the enterprise in favor of the Republic of Kazakhstan is being completed.

As a result of the tragedy, a government commission was created to investigate the causes and eliminate the consequences of the accident, and the Prosecutor General’s Office initiated a criminal case.

Theses about the nationalization or transfer of ArcelorMittal Temirtau assets to other investors have arisen before.

So, in December 2022, the Minister of Industry and Infrastructure Development of Kazakhstan Kairbek Uskenbaev declared, that the government commission to investigate accidents at AMT makes tough decisions about the company’s management.

«On behalf of the head of state, several commissions have been created, in which more than 70 specialists from various ministries work. You will soon find out, because tough decisions are being made regarding the managers of ArcelorMittal Temirtau. There is even a question about whether AMT will work in Kazakhstan or not,» he noted.

In August 2023, after an accident (fire of a conveyor belt) at a mine in the Karaganda region, which led to the death of 5 people, a number of local mass media reported that the Ministry of Finance of the country reported about the possibility of selling the country’s largest steel plant to Russian investors. The decision to change shareholders was made amid high mortality at work and a weak investment policy.

It was about the fact that the authorities are negotiating with the company’s shareholders regarding the exit from Kazakhstan business. The press referred to the Minister of Finance Erulan Zhamaubaev about the possibility of transferring the company’s assets into the ownership of the Russian Severstal, later this information was not confirmed.

At the same time, in September 2023, the Minister of Industry and Construction of Kazakhstan Kanat Sharlapaev stated to the press that there is no question of nationalizing AMT, as such a step «will be a big blow to the investment climate.»

At the beginning of October, Sharlapaev again commented a possible change of owner, denying the information about the forced transfer of the enterprise to another investor. However, he emphasized: if an investor wants to work in the country, he must obey the requirements of the law, in particular, regarding industrial safety and ecology.

«The change of investor is a voluntary desire of one investor to replace himself with another. Someone has to go and transfer their share to another person. And now in this case it is about the following. There is a sufficient number of incidents on which the state is working. And when she completes it, I think there will be consequences for the company,» he noted at the time.

However, after the fatal incident at the Kostenko mine in Karaganda, the rhetoric changed dramatically. On October 29 AMT also did its statement.

The company reported that negotiations on nationalization began even before the tragedy.

«Several months ago, we entered into negotiations regarding the transfer of ownership of ArcelorMittal Temirtau back to the government, and last week, before this tragic accident, we signed an agreement in principle,» the message reads.

It was also noted that ArcelorMittal has owned mines in Kazakhstan since 1995. The company has indicated that their operation involves a high safety risk due to the complex geology, which has led to several fatal accidents in the past two years.

ArcelorMittal has been operating in Kazakhstan since November 1995. ArcelorMittal Temirtau JSC is the country’s largest iron and steel enterprise and is an integrated mining and steel complex with its own coal, railway ore and energy base.

The joint-stock company includes three departments: steel (the total production capacity of the steel plant is about 6 million tons of steel products per year), coal (established in the summer of 1996, currently there are 8 mines with a production capacity of 7 million tons of coking coal per year), and iron ore (4 enterprises in the central and northern part of the country). Companies too belongs to a number of other assets.

After the latest tragedy, the government denied information about the transfer of AMT to other foreign owners, reacting to rumors on social networks. But experts in the country are already discussing whether the nationalization will be temporary and who can become the next owner. However, not many companies can afford to purchase AMT assets, and in the case of the Russians, there is also the issue of sanctions restrictions. However, the main thing now is whether it will be possible to prevent tragedies and cope with security problems at enterprises.

As GMK Center reported earlier, the steelmakers of Kazakhstan in January-September 2023 increased production of steel by 11.2% compared to the same period in 2022 – up to 2.94 million tons.