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ArcelorMittal Temirtau Disputing Environmental Claim of $4.3 million

Officials seek compensation for excess emissions caused during steel production

Photo: Nikolay Olkhovoy / Wikimedia Commons

ArcelorMittal Temirtau JSC (AMT), Kazakhstan’s largest metallurgical company, is set to appear in court and defend itself again environmental damage charges that could result in compensation payouts worth KZT 1.8 billion and KZT 15.3 million.

The Ecology Department of the Karaganda region has filed claims against AMT with the local economic court. According to the agency’s data, the company’s generation facility, TPP-TBS (thermal power plant and turbo blower station), has released fugitive emissions into the atmosphere. The company also failed to contain emissions when forming and fortifying the dam around the ash pond. The damage from these violations could cost AMT up to 15.3 million tenge (about $36,600).

The state agency estimated the damage to be much higher – 1.8 billion tenge (about $4.3 million) – when excess emissions were made by the converter plant, which houses equipment for steel manufacturing, including oxygen converters, mixers, ladle furnaces and bow-type continuous casters.

In turn, AMT filed a counterclaim to declare the court order demanding payment of KZT 1.8 billion illegal.

“We are not disputing the damage in the amount of 15.3 million tenge. The Department of Ecology calculated the penalties based on the measurements provided by ArcelorMittal Temirtau JSC. At the same time, we do not agree with the other damage claim of 1.8 billion tenge. However, since the trial is currently ongoing, we believe comments on this matter to be premature. It’s necessary to wait until the court ruling,” noted the AMT press office when solicited for a comment by kursiv.kz.

Ardak Zhumashev, judge of the Karaganda Economic Court, has merged the claims into one civil case. He later decided to grant the request from AMT to transfer the case by jurisdiction to the city court of Nur-Sultan, which addresses disputes related to investor interests. In 2018 and 2019 – when the company committed the alleged violations – AMT was under an investment contract made with the designated committee of Kazakhstan’s Ministry of Industry and Trade. Under the agreement, the company was provided investment preferences such as exemption from corporate income tax as well as land and property taxes in exchange for increasing steel output to 6 million tons per year.

In 2019, ArcelorMittal Temirtau JSC’s earnings decreased by 65.8 billion tenge (from 708.6 billion to 642.8 billion). At the same time, the company’s net profit increased by 20 billion tenge (from 59.5 billion to 79.5 billion).

AMT primarily produces semi-finished and finished steel in the Republic of Kazakhstan. The company’s goods are sold in the domestic market and exported to foreign markets of Russia, the Middle East and Central Asia. ArcelorMittal Temirtau also operates coal mines, power plants, iron ore mines and other ancillary production sites. 

The sole shareholder of AMT is ArcelorMittal Holdings B.V., a public company registered in the Netherlands. Its shares are listed on the New York Stock Exchange, the pan-European stock exchange Euronext N.V. (Amsterdam, Paris), the Luxembourg Stock Exchange and the Madrid Stock Exchange.

In March 2019, it was reported that ArcelorMittal Temirtau paid 1.4 billion tenge for damages it caused to the environment. The regulatory authorities discovered excess emissions from sources of air pollution and cited the company with a failure to comply with environmental requirements during the discharge of domestic wastewater and waste management. Additionally, AMT was cited for misuse of natural resources as well as failing requirements for operating production lines in boiler rooms.

* 1 USD = 418.09 KZT as of August 26, 2020.

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