bold spirit - ArcelorMittal South Africa

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52 ArcelorMittal South Africa Annual Report 2010 Socio-economic equity The Department of Trade and Industry (dti) has challenged companies operating in South Africa to contribute to the broad-based empowerment of black people who were disadvantaged under the previous government regime. This brought about significant disparity in wealth, education, ownership and control of the factors of production, as well as general living conditions, such as housing, services and health. In this section we report on our progress towards the socio-economic transformation of the company and its key stakeholder groups. Highlights and challenges We continued an excellent track record in skills development and rolled out further long-term capitalintensive corporate social investment projects. Our biggest challenges are to improve our employment equity, enterprise development and ownership. Tackling these challenges is an ongoing priority and one to which we remain fully committed. However, our realistic expectations are that in order for transformation to be sustainable and meaningful, progress must be made incrementally over a longterm period. Governance of transformation Transformation forms part of our broader commitment to corporate responsibility, and as such falls under the Corporate Responsibility and External Relations portfolio. It forms an integral part of our engagement with and responsibility towards communities, society, employees, government and other key stakeholders. The portfolio is managed by the Group Manager, Corporate Responsibility and External Relations, who reports to the CEO with oversight by the Transformation Committee, which met twice in 2010. In meeting our transformation objectives we are guided by an internal transformation policy and transformation targets which are aligned with the dti Codes of Good Practice. Progress against targets is reported internally to the board on a quarterly basis. Ownership During the year we announced a B-BBEE deal whereby the Ayigobi Consortium and Esop will acquire a 26% ownership stake in the company. The B-BBEE transaction will have to be approved by shareholders at a special shareholders meeting once all the conditions precedent to this transaction have been fulfilled. Management control Programmes to develop a black leadership pipeline and invest in young up-and-coming managers will further strengthen our sustainability as a new era of leadership comes into force. For more details on these programmes see the chapter on growing a robust skills pipeline on page 62. Employment equity Employment equity represents our biggest transformation challenge. A hiring freeze in the previous year prevented us from making any progress, and attrition of black employees during the year under review only served to lower our employment equity numbers further. We remain committed to our transformation journey and continue to invest in developing a culture that is welcoming and accepting of all groups of people. During the year we revived the diversity training placed on hold in 2009 and since 2008 have trained
53 ArcelorMittal South Africa Annual Report 2010 approximately 4 000 employees. This training is run by an external service provider, the Diversity Institute. It is a highly interactive programme that affords delegates a platform to voice their concerns and thoughts regarding diversity. Skills development We are renowned within the ArcelorMittal Group and recognised by peers in the industry as a bestpractice organisation for skills development. Some 85% of our skills development pipeline candidates are from historically disadvantaged groups, and all training and skills development programmes favour black candidates. The highly mechanised nature of our business makes the employment of people with disabilities a challenge, but one we are committed to overcoming. To this end we have embarked on a programme to identify those areas in the business suitable for the employment of people with disabilities, and the future will see a strong drive towards filling such positions. For more information on skills development initiatives and how these are benefiting historically disadvantaged individuals, refer to the chapter on growing a robust skills pipeline on page 62. Preferential procurement We are unable to procure critical services and raw materials such as electricity, coal and rail transport from other vendors and are therefore unable to make improvements in our most significant areas of procurement. We have therefore concentrated our preferential procurement efforts on other services where it is possible to improve performance. The total spend for the year was R1 391 million of which R940 million was spent on BEEcompliant road transport companies. Small black-owned companies require additional assistance and support to make it on to our vendor lists and deliver the consistent quality we require. To this end we embarked on a pilot project during the year to identify such smaller suppliers and put them through a four-month programme to improve their quality management systems. Our intention is for these suppliers to achieve SABS quality accreditation. On successful completion of the pilot, we will roll out the programme to other areas and operations. The logistics department embarked on an initiative to facilitate procurement access for small and micro black-owned businesses, without exposing the company to the risks associated with doing business with start-ups. We appointed a group of experienced transport management team members who will transfer skills to the beneficiaries, negotiate bulkbuying discounts for diesel, tyres, spares and insurance services and provide a centralised workshop for the maintenance and parking of trucks, and sleeping quarters for drivers. During the year we also signed a memorandum of understanding with Absa Bank to provide support to B-BBEE companies who require financing and preferential payment terms. This will allow them easier access to capital for expansion and the purchasing of equipment, and help them to overcome cash-flow challenges by securing payment seven days after invoicing. Enterprise development This represents another significant transformation challenge and will receive more focused attention in the forthcoming period.
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Annual Report 2010 bold spirit
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Brand values Our goal is to provide
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bold spirit - ArcelorMittal South Africa

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