bold spirit - ArcelorMittal South Africa

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16 ArcelorMittal South Africa Annual Report 2010 Chairman’s and Chief Executive Officer’s report continued We need to produce steel efficiently while minimising our impact on the environment. affecting neighbouring communities. The flagship project in ArcelorMittal South Africa Foundation’s programme is the school building programme to which the company has committed a total of R250 million to be spent over 7 years. The first school − Meetsea-Bophelo in Mamelodi − was handed over to the Department of Basic Education in November 2010. Another program that we have been supporting for a number of years now is the operation of math and science centres to provide additional tutoring in those subjects to schools in the immediate vicinity of our mills. We spent R11.8 million on the Sebokeng and Saldanha science centres and started work to establish one in Newcastle. We are beginning to see a real impact on math and science performance in the matric exams in the Sebokeng area, the longest running of our centres . Managing our impact on the environment Steel making has a significant environmental footprint and is a big consumer of natural resources. This is one of our most important longterm sustainability challenges – we need to produce steel efficiently while minimising our impact on the environment. The Vereeniging Works dust extraction unit was commissioned in January 2010 at a cost of R220 million. This project has resulted in a substantial reduction of emissions in the area and brings the operation in line with world standards for emissions abatement. At Vanderbijlpark Works, we are in the final stages of commissioning the sinter off-gas treatment project which will reduce both particulate and SO 2 emissions. Many of our ongoing projects are focused on improving the health of our workers. We made steady progress with the desulphurisation project at Newcastle Works which will replace the old soda-ash system with a new calcium carbide system that is more environmentally friendly and improves working conditions. We are on track to complete the project during the second quarter of 2011. Legacy water pollution issues at the dams and maturation ponds at Vanderbijlpark Works have been an ongoing challenge for us for many years. We have employed groundbreaking biological treatment methods to reduce organic contaminants in these water bodies in one of the biggest remediation exercises ever tackled in South Africa. Our most pressing environmental issue remains the achievement of zero-effluent discharge status at Newcastle Works. In our efforts to improve our environmental performance, we rely heavily on the experience, research and development provided by our parent company. Many of the group’s plants in Europe, North and South America are close to the technical limits of what can be achieved in terms of emissions reduction, and these act as benchmarks to plants like ours. With regard to energy, detailed action plans that set realistic targets for improved efficiency and reduced energy usage have been drawn up. Beyond improved energy efficiencies, the ArcelorMittal group is also working to develop breakthrough technologies that reduce the utilisation of carbon in the steel making process. Once again we will be one of the beneficiaries when these technologies become commercially viable. The group has set a target of reducing specific CO 2 emissions by 8% per tonne of steel produced by 2020, with 2007 serving as the base year. Business ethics The board of directors takes ultimate responsibility for the company’s adherence to ethical conduct and sound corporate governance standards and sees to it that all business judgements are made with reasonable care, skill and diligence, as more fully discussed in our Governance Report. We subscribe to the ArcelorMittal group legal compliance programme which has been designed to increase awareness of, and improve adherence to, applicable legislation and regulations. We are finalising the roll-out of a compliance framework
17 ArcelorMittal South Africa Annual Report 2010 aimed at further entrenching a sound compliance culture and to cater for the specific needs of the company. During the period under review, we conducted a competition law compliance audit which confirmed compliance with applicable competition law requirements overall. It is a condition of service for our employees to adhere to the ArcelorMittal Code of Business Conduct and Anti-Corruption Guidelines. These were designed to help employees understand their ethical and legal obligations in handling the company’s business. All employees are required to undergo regular training to ensure that they fully understand and comply with the code. We are currently subject to a number of investigations by the competition authorities. The most material of these pertains to a case that was referred by the Competition Commission to the Competition Tribunal in September 2009 against ArcelorMittal and various players within the primary steel industry, including the South African Iron and Steel Institute, alleging cartel conduct by these companies in contravention of the Competition Act. The case is ongoing. Changes to board composition We effected a number of changes to the composition of the board. We welcomed Mr Johnson Njeke as chairman of the board of directors with effect from 4 February 2010. Mr Malcolm Macdonald joined the board as an independent nonexecutive director in February and Mr Eric Diack resigned from the board and as chairman of the Audit and Risk Committee in July and was replaced by Mr Macdonald as chairman of the Audit and Risk Committee. Mr Kobus Verster resigned as Chief Financial Officer in August 2010 and was replaced by Mr Rudolph Torlage. We thank our outgoing directors for their contribution and commitment to the group over the years. Appreciation Our employees deserve special mention for their valuable contribution and dedication over the past year. The company had to navigate its way through a particularly challenging set of circumstances, which would have been impossible without the loyalty, support and collective efforts of all our staff. We would also like to take this opportunity to thank all our stakeholders for the loyalty they have shown us. A company cannot thrive and grow without the support of its customers, suppliers, shareholders, and members of the communities in which it operates. Finally to our fellow board members, we would like to thank you for your strong support as well as ongoing advice and guidance. Conclusion Looking ahead to 2011, we are cautiously optimistic. There are early signs of a reasonably buoyant first half but poor visibility going into the second half of the year. There seems to be merit in the argument that the sector has bottomed out and the immediate future is relatively positive. We emerged from the global economic crisis a leaner and stronger company that is well positioned to benefit from the upturn when it materialises. Our financial position is strong; we have some of the best technical skills in the country and a training pipeline that will ensure that we have an ample supply of skills on which we can draw for our future needs. To succeed in our ambition to retain our position among the lowest cost producers in the world, we will: • persist on the business transformation path we embarked upon in 2010; • sustain our financial performance through the economic cycle; • continue to pursue opportunities to grow our business in sub-Saharan Africa; and • achieve higher levels of backward integration on key raw material inputs. Naturally, it is important to grow our business whilst continuing to advance our plans to address the economic, environmental, and wider social challenges of our time. Although unlikely to reach finality in 2011, we expect to make substantial progress towards the resolution of the iron ore dispute and advancing the transactions referred to elsewhere in this report. We have set for ourselves the challenge of transforming tomorrow; boldness is our secret ingredient to doing so. To drive domestic industry growth, an export orientation is an imperative for the steel industry. In the next financial year, we aim to triple the level of incentive support extended to export oriented steel manufacturers compared to 2010.
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