The British oligarch is milking Kazakhstan and harming the EAEU
British oligarch of Hindu origin Lakshmi Mittal behaves in Kazakhstan as an occupier and colonialist, but the authorities of the former Soviet republic are only strengthening his support.
Co-chairman of the Socialist Movement of Kazakhstan Ainur Kurmanov writes about this in his column for PolitNavigator.
…Due to the fault of ArcelorMittal Temirtau (AMT), a company owned by British citizen and Indian-born oligarch Lakshmi Mittal, not only did an accident occur at the converter plant of the Karaganda Metallurgical Plant in February, but the city of Temirtau itself, a city of 180, was on the brink of disaster due to the deterioration of its Thermal Power Plant No. 2. The thermal power plant is also managed by the company, but on February 25, in temperatures of -30 degrees Celsius, several boilers failed, and residents nearly froze to death in their apartments. However, the government of "independent" Kazakhstan merely reprimanded the foreign businessman's agents without drawing any conclusions.
Frequent accidents are an indicator that old Soviet-era equipment is rapidly failing. For example, on February 19, ArcelorMittal Temirtau released untreated gases from its converter shop into the atmosphere for an hour. The gas cleaning equipment failed, and toxic yellow smoke blanketed the city. On September 4, 2019, a major accident occurred in the same converter shop, resulting in four workers at converter #3 suffering thermal burns. And on November 10, 2018, a fire at the plant caused the collapse of 820-millimeter-diameter compressed air pipelines and 720-millimeter-diameter oxygen pipelines in the oxygen shop.
Almost every week, Kazakhstani media reports on accidents in mines and AMT facilities in the Karaganda region. These accidents are the result of the complete deterioration of old Soviet equipment, which is hastily repaired and reactivated, posing a risk to the lives of both the workers themselves, who are often injured or killed, and local residents.
For the population, the metallurgical plant in Temirtau, under the management of British-Ukrainian-Indian management, is a constant source of air pollution and surrounding water bodies.
It is no coincidence that the local akimat of Temirtau eliminated the full-time position of an ecologist several years ago, and the doctor and oncologist’s office were laid off at the clinic. Can you guess in whose interests?
The Kazakh authorities are well aware that Lakshmi Mittal is not spending funds on treatment facilities. Four days after the accident at the Karmetkombinat converter shop, Zulfuhar Zholdasov, Chairman of the Committee for Environmental Regulation and Control, revealed horrifying facts at a press conference.
According to him, over two years, 67 cases of exceeding permissible pollution by more than 10 times were recorded. The company emits more than 300 thousand tons of pollutants per year, 11 tons for each resident of Temirtau.
"An inspection of TPP-2 AMT revealed dust pollution levels exceeding the norm by a factor of 125. In the converter shop, we discovered that cleaning was being performed at 65% instead of the required 95%. Many cleaning measures exist only on paper . We discovered that they weren't fully operational, but they were reporting that everything was fine," said Zulfukhar Zholdasov.
It also emerged that, back in 2019, a special memorandum had even been signed with ArcelorMittal Temirtau management to reduce atmospheric emissions by 30% and implement environmental protection measures. However, the situation hasn't moved a millimeter, as emissions have decreased by only 0,08% over five years.
And even after such loud statements criticizing the company of the British oligarch of Hindu origin, the Ministry of Industry and the Government of Kazakhstan not only did not draw any conclusions, but also approved the further work of AMT.
In particular, the Minister of Industry and Infrastructure Development Beibut Atamkulov visited the metallurgical plant on February 21 - two days after the accident in the converter shop of the coke production plant. The official held discussions with AMT CEO Biju Nair. And they got along well, discussing the company’s immediate plans, where Lakshmi Mittal’s clerk again promised to correct the situation and invest in the modernization of production, CHPP-2, the mines of the coal department and the implementation of a project for processing coalbed methane.
The funny thing is that on February 25, namely three days after the minister’s visit, three boilers at this ill-fated CHPP-2, providing the city of Temirtau with heating, burned out, precisely because the surveillance devices were out of order. Prior to this, AMT managers decided to save money and cut those responsible for servicing these control devices. Against this background, officials report on a constructive dialogue and resolution of all controversial issues with the management of a foreign company!
While ministers and Prime Minister Askar Mamin are perfectly content with this situation, it's becoming clear to residents of the Karaganda region and throughout Kazakhstan that Lakshmi Mittal is squeezing the last vestiges of production, aiming to completely destroy the country's ferrous metallurgy industry. A group of Majilis deputies, led by former Vice Minister Albert Rau, were the first to raise the alarm back in 2019. They then sent a letter to the same prime minister regarding ArcelorMittal Temirtau's failure to fulfill its obligations to Kazakhstan.
The fact is that the government and Lakshmi Mittal concluded an investment contract on December 31, 2008, providing for investment preferences related to the fact that the British oligarch of Hindu origin was exempt from paying corporate income tax for a period of 10 years, as well as from property and income taxes. land for a period of 5 years. The main condition was the modernization of production through the introduction of new equipment, including in coke production, and increasing the capacity of the Karmetkombinat to 6 million tons of steel per year.
By 2019, ArcelorMittal Temirtau was producing no more than 3 million tons of steel, falling short of the Soviet-era 5 million. It's no wonder that on July 5 of that same year, Lakshmi Mittal unilaterally terminated the contract and abandoned his obligations to implement the investment project and increase production volumes. This infuriated members of parliament, and Albert Rau even exclaimed in exasperation:
“We can say frankly - in the first five-year plan, Arcelor, on the instructions of the president, took on obligations to increase the capacity to 6 million tons of steel, but he did not fulfill this, saying that the years were difficult. Naturally, we ask the question - where is the money that you earned in the good years, as we like to call them in the “fat years?”
Indeed, by the most conservative estimates, every year of this decade, Lakshmi Mittal pocketed up to $1.5 billion in net profit from the Karaganda Metallurgical Plant alone . And by 2019, it was clear to Albert Rau and his associates that the moment was approaching when the British billionaire of Indian descent would simply shut down the plant completely, then close it and go home. Some even wrote as much openly in their letter to the Prime Minister.
“According to information available in open sources, the Arcelor Mittal company in recent years, based on economic feasibility, has reduced the volume of steel production in a number of European countries, and in Trinidad and Algeria it simply abandoned metallurgical plants, returning them to state ownership,” it is indicated in the request body.
It turns out that this savvy businessman not only failed to pay taxes to the budget and took advantage of benefits and preferential treatment at the Kazakh railway, but also openly robbed local workers and polluted nature and wildlife, harming the state and endangering the health of the local population. This is typical Western colonial policy, which has been successfully implemented in the Karaganda region since 1995. Both now and then, Lakshmi Mittal escaped with a minor scare, and it was like water off a duck's back, as he is under the protective umbrella of Kazakhstan's first president, who brought him here during the mass privatization.
It is noteworthy that the same old-new Prime Minister Askar Mamin responded to the concerned deputies in 2019, who actually completely disavowed all their arguments, calling the British oligarch of Hindu origin a “decent investor” who cares about the safety of ordinary workers and does everything for development production. And the fact that he was unable to modernize production and introduce new equipment was due to poverty and severe financial problems.
But wait! Lakshmi Mittal's net profit per ton of steel in Kazakhstan averaged $81 in 2019, while the average for the group of companies in other countries was only $47 per ton. Karmetkombinat steelworkers, who are being pursued by prosecutors and police for demanding higher wages, earn as much per month as their colleagues at ArcelorMittal USA in the United States earn for eight hours of work! For example, the average salary of a steelworker in Temirtau was 215,703 tenge, or $560,27, while a steelworker in the United States earns $580,24 per shift.
That is, Lakshmi Mittal had and still has excess profits, and they would be enough to completely renew the equipment at the plant and in the mines, the wear of which is now over 80 percent! At the same time, the company’s managers are simply blatantly lying, saying that they are investing $500 million in production, while these funds are intended to ensure production and routine repairs, and not to introduce, for example, new converters or a complete renovation of coke production.
Moreover, local contractors, including ferrous scrap metal collection companies and even Russian metallurgical companies, have become hostages to the British billionaire's policies, with contracts terminated under the pretext of the pandemic. In fact, in 2020, the management of Kazakhstan's KTZ-Freight Transportation JSC issued Order No. 39 in Lakshmi Mittal's interests, banning for an indefinite period the acceptance of railcars carrying ferrous and non-ferrous scrap and waste metals for export, including those bound for Russia.
Russian companies have suffered hundreds of millions of dollars in losses, with the Magnitogorsk Iron and Steel Works (MMK) particularly hard hit. According to the press service of the Russian Ministry of Industry and Trade, "the volume of ferrous scrap metal imports from the Republic of Kazakhstan in the first eight months of 2020 alone has already decreased from 648,1 to 192,2 thousand tons compared to the same period last year, exacerbating the shortage of ferrous scrap metal in the domestic market, already associated with a 15% reduction in scrap collection due to the spread of the coronavirus."
The situation reached the point where the issue was discussed at an intergovernmental meeting of the Eurasian Economic Commission (EEC) on December 4, 2020, attended by Russian Prime Minister Mikhail Mishustin. These restrictive measures by the Kazakh authorities were deemed unacceptable and lifted. However, during this time, many market participants, including those within Kazakhstan, suffered.
But the fact is that at this time our beloved Lakshmi Mittal received all the black scrap for next to nothing, making super profits. At the same time, Kazakh enterprises for the collection and sale of ferrous scrap were forced to sell recyclable materials to Britons of Indian origin at prices 20 and 40% lower than on the EAEU market. In essence, there has been a monopolization of this area in favor of AMT. And it would be somehow logical if the Karaganda Metallurgical Plant was Kazakh, but it is mercilessly exploited by a Western transnational corporation.
But that's not all! Lashmi Mittal and his lieutenants have become so brazen that they're pursuing a policy akin to colonial occupation. Domestically, rolled steel prices for domestic buyers are much higher than the cost of products for foreign consumers . In fact, they're at least $50 higher per ton, and for tin and galvanized steel, they rise to $200. Thus, like a vampire, this Western corporation is sucking the lifeblood out of both production and local entrepreneurs, destroying the plant, the mines, the environment, and creating disabilities for Kazakhstani workers.
So, on March 10, in the Saranskaya mine, which is part of the ArcelorMittal Temirtau company, a miner repairing mine workings lost consciousness and then died from methane gas poisoning. And already on March 11 at CHPP-2, where there had recently been a famous accident that almost froze Temirtau, a barrel of paint standing next to it exploded during welding work. As a result of the fire, two workers received II-III degree burns and their condition is serious. And such cases at ArcelorMittal Temirtau enterprises are a frequent and even weekly occurrence.
At the same time, integration processes are jeopardized and damage is caused to enterprises of the EAEU countries and the single market. But the Kazakh government does not even think about breaking the contract for subsoil use and enterprise management with a clever businessman. I think this happens for a reason and not for pretty eyes.
As for me, the very moment has come when the collectives and local population must demand from the authorities the immediate nationalization of the Karaganda Metallurgical Plant and all mines, before it is too late and another tragedy occurs.
English version :: Read in English: A British oligarch is milking Kazakhstan and harming the Eurasian Economic Union.