EoW November 2008

The agreement, reached 29 th August, affects hourly workers at plants in Indiana, Ohio, Pennsylvania, New York, South Carolina, West Virginia, and Minnesota. The 18,000 people that Luxembourg-based ArcelorMittal employs at 17 facilities in the US make up almost 6% of its 320,000-strong workforce in more than 60 countries. The agreement, hammered out amid talk of a strike by the workers, provides for a $3 billion capital investment in ArcelorMittal’s US plants, an increase in the company’s contribution to pensions for current workers and higher payments to retirees and fixed health care contributions through the life of the contract. But the contract’s pay provisions – a one-time lump sum of $6,000 plus a $1 hourly increase in the first year and 4% increases in each of the following three years – indicate a weakening of the ability of powerful unions to dictate terms to big steel companies. ArcelorMittal, which produces 10% of the world’s steel, has said it plans to increase shipments by more than one-fifth by 2012 in response to global demand. The United Steelworkers union represents 850,000 workers in the United States and Canada. Its members work in the rubber, chemicals, paper, and oil industries, as well as in metals. In other news of ArcelorMittal, on 20 th August, to increase its self-sufficiency in the vital raw material of steel making, the company announced an agreement to buy the Brazilian iron-ore unit of London Mining Plc for about $810 million. London Mining Brasil, located in the state of Minas Gerais, was acquired by the British company only in May 2007, the owner said in a statement. The exploratory and production unit is currently expanding its yield of concentrate and lump ore to 3.2 million metric tons per year (mtpy), from 1.4 million tons. ArcelorMittal intends to raise output to more than 10 million mtpy with an investment of up to $700 million. News of the acquisition came two weeks after ArcelorMittal announced plans to invest $1.6 billion to increase its steel production in Brazil by two-thirds. Recently, London Mining reported iron-ore resources of 598.8 million tons at its Brazilian mine, up from an earlier estimate of 266.3 million tons. Iron-ore prices have gained for a sixth straight year, and the cost of coking coal has surged to record highs. Elsewhere in steel . . . Russian steel giant OAO Severstal has said it will buy ❈ ❈ PBS Coals Corporation (Somerset, Pennsylvania) for about $1.3 billion in cash. The plan, announced 22 nd August, reflects the trend among international steel companies seeking to guarantee their access to raw materials. The US coal industry had dwindled by the 1980s, and domestic steel makers who spun off their coal operations have lagged their overseas counterparts in buying up coal reserves. Severstal said PBS Coals commands at least 228 million tons of in-place coal reserves. PBS operates six underground and six surface coalmines near Severstal’s North American production centres. The mines have production capacity of more than 4 million tons of metallurgical coal per year, Severstal said in a statement announcing the planned acquisition.

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EuroWire – November 2008