Management Report - Beursgorilla

ArcelorMittal Annual Report 200976 Consolidated Financial StatementsNotes to the Consolidated Financial Statements continuedArcelorMittal and Subsidiaries(millions of U.S. dollars, except share and per share data)The ground and surface water allocationlargely represent the cost of investigatorywork. Consequently, the percentageallocation is expected to increase once theinvestigatory work is complete and finalremediation actions are devised. NewcastleWorks site is the main long carbon steeloperation of the South Africa unit hasbeen in operation for more than 30 years.Approximately 35 of the obligation isallocated to this site. As with all operatingsites of the South African unit the aboveretirement and remediation actions dovetailwith numerous large capital expenditureprojects dedicated to environmentalmanagement. In the case of the Newcastlesite, such dovetailing is currentlyparticularly prevalent with regards to watertreatment. The remainder of the obligationof approximately 11 relates to theVereeniging and Saldanha site.Asset Retirement Obligations (“AROs”)AROs arise from legal requirements andrepresent management’s best estimateof the present value of the costs that willbe required to retire plant and equipment.As of December 31, 2009, ArcelorMittalhad established reserves for assetretirement obligations of 35 in provisionsrelating to Canada and 27 in provisionsrelating to South Africa. Most of theAROs relate to ancillary plants andequipment that will be retired as partof the closure of the facilities subjectto remediation obligations.The AROs in Canada are legal obligationsfor site restoration and dismantlingof the facilities near the mining sitein Mont-Wright and at the facilityof Port-Cartier in Quebec, upon closureof the mine pursuant to the restoringplan of the mine.The AROs of approximately 27 forutilization over 18 years in South Africaare spread evenly between the Pretoriaand Vanderbijlpark sites, and relatesto the closure and clean-up of the plantassociated with decommissioned tankfarms, tar plants, chemical stores, railwaylines, pipelines and defunct infrastructure.Environmental RemediationObligations (“EROs”)EROs arise from legal requirements andrepresent management’s best estimateof the present value of the costs that willbe required to restore a site at the end ofits useful life. As of December 31, 2009,ArcelorMittal had established reserves forenvironmental remediation obligations of130 in provisions relating to Ukraine and96 in provisions relating to Russia.The EROs in Ukraine are legal obligations forsite rehabilitation at the iron ore mining sitein Kryviy Rih, upon closure of the minepursuant to the restoration plan of the mine.The EROs in Russia are related torehabilitation of three coal mines uponclosure of the mines pursuant to the miningplan. It is mainly related to quality control ofwater pumped out of mines and monitoringof gas drainage bore-holes, soil and air.Legal ClaimsArcelorMittal is a party to various legalactions. The principal legal actions aredisclosed below.Tax ClaimsArcelorMittal is a party to various taxclaims. As of December 31, 2009,ArcelorMittal has established reservesin the aggregate of approximately 9 forthe claims disclosed below.BrazilThe Brazilian Federal Revenue Servicehas claimed that ArcelorMittal Brasil owes138 for IPI (Manufactured Goods Tax)concerning (1) its use of tax credits onthe purchase of raw materials that werenon-taxable, exempt from tax or subjectto a 0% tax rate and (2) the disallowanceof IPI credits recorded five to ten yearsafter the relevant acquisition. On March 31,2009, ArcelorMittal Brasil agreed toparticipate in a Federal Revenue programsettling a number of these disputes. OnNovember 30, 2009, ArcelorMittal Brasilpaid the full amount due under the program(i.e., 60) with 13 in cash and the remainderby utilization of tax loss carryforwards,closing this case.In 2003, the Brazilian Federal RevenueService granted ArcelorMittal Brasil(through its predecessor company, thenknown as CST) a tax benefit for certaininvestments. ArcelorMittal Brasil hadreceived certificates from SUDENE,the former Agency for the Developmentof the Northeast Region of Brazil,confirming ArcelorMittal Brasil’s entitlementto this benefit. In September 2004,ArcelorMittal Brasil was notified of theannulment of these certificates.ArcelorMittal Brasil has pursued its rightto this tax benefit though the courtsagainst both ADENE, the successor toSUDENE, and against the Brazilian FederalRevenue Service. The Brazilian FederalRevenue Service issued a tax assessmentin this regard for 451 in December 2007.Taking into account interest and currencyfluctuations, this amount totaled 690 atDecember 31, 2009. In December 2008,the administrative tribunal of first instanceupheld the amount of the assessment,ArcelorMittal Brasil is appealing to theadministrative tribunal of second instance.The Brazilian Social Security Administrationhas claimed that ArcelorMittal Brasil owescertain amounts for social contributions inrespect of amounts paid by ArcelorMittalBrasil to employees under its profit sharingscheme for the 1998-2005 period. InDecember 2007, it issued a further 11tax assessments to ArcelorMittal Brasilin respect of the same subject matter,bringing the total amount claimed to 112.On November 30, 2009, ArcelorMittaladhered to a Federal Revenue programpursuant to which it was required to pay56 of which 40 is payable in 30 monthlyinstallments and the remainder byutilization of tax loss carryforwards,closing this case.