TBY talks to Vijay Mahadevan, CEO of ArcelorMittal Kazakhstan & Vice-President of ArcelorMittal, on his company’s drive to provide value-added to Kazakhstan’s mineral potential.
TBY How does ArcelorMittal’s experience in Temirtau reflect Kazakhstan’s economic progress in the past two decades?
VIJAY MAHADEVAN ArcelorMittal moved into Kazakhstan in 1995 when we took over the steel plant in Temirtau and the coal mines in the Karaganda region. We have seen significant progress ever since we came to this market, particularly in terms of industrial development in this region. There are several reasons behind this marked improvement. First of all, this country is blessed with lots of natural resources, particularly minerals, and the government is headed in the right direction to add value to these products and make it economically viable and sustainable in the long term. We have also invested quite a lot in our operations and benefited from the growth in this part of the world. In 1995, we were not a 4 million-ton company as we are today. In all three of our focus operations, which are mining, steel making, and transforming steel into value-added end products, we are making significant contributions to the country’s progress.
ArcelorMittal experienced increased steel production in 2011. To what extent is this due to post-crisis recovery, and to what extent do you see new demand?
This increase is partially due to new demand in Kazakhstan. Kazakhstan was one of the countries that anticipated the 2008 crisis. In 2007, we experienced financial issues and this government took some well-calculated measures. Due to these prudent policies, it was one of the first countries to emerge from the crisis. We still feel the positive impact of those decisions, which translate into a relatively stronger economic performance compared to other countries in the region. We are expecting GDP growth of around 7%, which is a high number. Therefore, fundamentally, growth has come to some extent from Kazakhstan. However, the per capita consumption rate for steel is low in this country, and thus a certain level of growth must also have come from the CIS region.
How do you to strike a balance between the installation of new production lines and the modernization of existing infrastructure?
We need new installations for growth, as customer requirements change. Additionally, we invest to improve efficiency and reduce costs. With respect to new offerings, we are launching long products. This mill has traditionally produced flat products. However, our investments are not limited to quantifiable indicators such as production volumes and efficiency. First and foremost, we have invested in health and safety, which is the prime focus for the company. As far as improvement is concerned, health and safety is one angle. The second is the augmentation of production. The third level is improving the existing product portfolio. As far as improving the quality is concerned, we have also invested in high value-added product lines and services. Lastly, distribution is an area in which we are investing. One other area that requires attention is ArcelorMittal’s prioritized efforts to comply with Kazakhstan’s environmental laws. In 2011, we completed the reconstruction of blast furnace 2 with state-of-the-art de-dusting and gas-cleaning equipment, installed electric dust filters at blast furnace 4, and launched a closed-circuit cooling system for coke gas. In 2012 we are working on the reconstruction of the gas cleaning system at the converter’s shop, which will eliminate a large portion of the plant’s air emissions. Our coal mines are also improving their environmental performance. For example, in early 2012 we launched a 1.4 MW power generator that uses coal bed methane as fuel. Methane is also used as fuel for boilers to produce heat during the winter season.
How does ArcelorMittal support Kazakhstan’s target to establish an export-oriented industry focusing on end products with high value-added?
The country will need to support value-added exports as the population is limited and development of the industrial base will have to rely on exports. This is very much in line with ArcelorMittal’s strategy in Kazakhstan. Our exports from steel plants are this country’s natural riches—coal and iron ore—and are converted into various kinds of flat and long steel products. Everything we do is value addition and our focus has always been to climb up the value chain. In addition to steel making, ArcelorMittal has invested in the manufacturing facility in Aktau, which produces large-diameter pipes for oil/gas, water, construction, and mining applications. We are also supporting the government in the development of transport infrastructure. Kazakhstan has experienced a shortage of railcars for the movement of goods within the country and beyond. We are now involved in a project to build wagons. This initiative will enable us to execute our core business and it will benefit Kazakhstan’s economy at large.
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