Our progress towards Safe Sustainable Steel - ArcelorMittal

ArcelorMittal Corporate Responsibility Report 2009Chairman and CEO’s overview 3Our 2009 financial results71.1mTonnes of steel shipped$118mNet income*$65.1bnSalesIt will come as no surprise that2009 was an extremely tough year– both for our Company, and forour sector as a whole. Few of ushave ever seen such a dramaticslowdown, both in terms of itsspeed and its suddenness, andno business will emerge from itentirely unscathed. Like manyinternational companies, we wereforced to take swift actions tosafeguard the long-term interestsof our operations, our employees,our shareholders and otherstakeholders. Nonetheless, I believethat through our determined actionto strengthen our business, whichcharacterised so much of 2009,ArcelorMittal will emerge as astronger company.At the worst point of the crisis, demand forsteel in some regions of the world droppedby as much as 35%. We had no alternativebut to shut down parts of our productionand to restructure. It was unavoidable, inthe circumstances, but no less regrettablefor that. We have always had a loyal andcommitted workforce, and we successfullydid everything we could to avoid anycompulsory redundancies. Even though wehad to reduce our personnel by close to34,000, we managed to do this entirelythrough voluntary redundancy and earlyretirement measures. Remaining employeesaccepted salary reductions and ourshareholders accepted a halved dividend.It is a tribute to our people and our TradeUnions that we were able to work togetherto find the best way to deal with thisexceptionally difficult situation. On behalf ofthe whole management team, I would liketo thank them for the constructive partthey played, and the support they are givingus to re-position the business for the future.To briefly explain our financial results in2009: we shipped 71.1 million tonnesof steel, achieving a net income of $118million and sales of $65.1 billion. Althoughthese figures are lower compared to 2008,the fact that ArcelorMittal recorded amarginal net income during a year ofeconomic recession is a considerableachievement and one which demonstratesthe resilience of our Company.It is in this context that I will try to answerthe question on the cover of this report:what progress has ArcelorMittal madetowards Safe Sustainable Steel? The firstthing to say is that we will report on theimprovements we have made but also onthe areas where progress has been slowerthan previously predicted. As in so manyother aspects of our business, we have hadto prioritise our efforts and investments inthe last year. However, there are some keycorporate responsibility objectives that wewill never compromise, because they areabsolutely integral to our operatingphilosophy. The most obvious of these isHealth and Safety. I am pleased that wesaw a considerable improvement in ourLost Time Injury Frequency Rate, which wasreduced by 24% in 2009, to 1.9 per millionhours worked. This is good, but it is not yetgood enough, and we maintain a strongfocus on sharing best practice across theGroup, so that all our sites can attain thestandards and performance of the best ones.Another area where investment remaineda priority was Research and Development.This is partly because the success of ourbusiness has been built on the creation ofnew products that exploit the strengths ofsteel. In addition, intelligent innovation isalso one of the most important ways wecan help tackle climate change, both byimproving our own industrial processes, andby developing more environmentally-soundapplications for steel in buildings, appliances,machinery, cars, and road infrastructures.In other areas our progress against ourcorporate responsibility goals has beenslower this year, for the reasons I haveexplained. For example, we had totemporarily suspend some of our employeedevelopment and training programmes.In addition, whilst our carbon footprintdecreased significantly, our normalisedemissions are quite inconsistent for 2009,since a number of our plants were idled formost of the year. However, we remaincommitted to our 2020 aim to cut carbonemissions by 170kg per tonne of steel,which would equal an 8% reduction overall.As production comes back on stream in2010, we will have a clearer understandingof the progress we are making towards thisimportant target.One of our main areas of focus during theyear was identifying and engaging with ourkey stakeholders, at local, national and globallevels, and continuing a proactive dialoguewith non-governmental organisations.This reflects the value we place on engagingwith those who are affected by ouroperations. We at the Group ManagementBoard have taken a direct interest in eachof the sites’ engagement plans and willcontinue to support this activity. We havealso made good progress in strengtheningour performance in line with internationalbest practice standards in areas such astransparency, anti-corruption, climatechange, human rights, sustainable supplychain and community engagement.Our active engagement in the UnitedNations Global Compact working groupson supply chain and human rights and ourcommitment to its Caring for Climateinitiative have been an important contributorto achieving this progress.About 40% of our business is in developingmarkets: we are a major steel producer inBrazil, South Africa, Kazakhstan, EasternEurope, and the Ukraine, and our mostsubstantial expansion projects are the newplants and mining operations we are planningin India and Liberia. All of these marketsface considerable social and environmentalchallenges as their economies grow, and weaccept that we have a significant role toplay in their development. Throughout thisreport you will find examples of the workwe are doing in these markets and others,and evidence of our commitment to active,positive and continuous engagement withall our local communities, wherever weare in the world.I have used the word commitment a numberof times in this introduction, and I willconclude by repeating it again. 2009 was adifficult year, and we were not able to makeas much progress as we would have liked.However, I am proud that we were still ableto make some important achievements inkey areas, and we remain committed to ourgoal of Safe Sustainable Steel.Lakshmi N MittalChairman and CEO, ArcelorMittal*Excluding non-controlling interests