The Ministry of Industry and Infrastructure of Kazakhstan has sent a notice to ArcelorMittal Temirtau (now known as Qarmet) demanding a penalty of 4.6 billion tenge for violating the terms of a contract for the extraction of coal and methane in the Karaganda region.
The notice states that the company failed to fulfill its financial obligations for 2020-2022, including:
- 948.9 million tenge in 2020 for financing research and development;
- 1.017 billion tenge in 2021 for financing research and development;
- 2.587 billion tenge in 2022, including:
- 150 million tenge for social and economic development of the region and its infrastructure;
- 940.6 million tenge for training, upskilling and retraining of Kazakhstani employees;
- 1.49 billion tenge for financing research and development;
- 8.8 million tenge for in-country value of works.
In addition, the company failed to invest in 2022, despite a plan of 157.1 billion tenge.
The notice also lists other violations committed by the company.
Qarmet is also required to pay a fine of 20 monthly расчетных показателей (73,84 thousand tenge in 2024) for failing to provide a report on the implementation of license and contract terms for 2022.
The company is required to eliminate the identified violations of contractual obligations within a month and submit all necessary documents confirming their elimination (copies of payment orders, contracts, acts of completed works); submit documents confirming payment of the penalty.
In case of non-fulfillment of the requirements of the notice within the established time frame, the Ministry of Industry has the right to take measures in accordance with the terms of the contract and applicable legislation, including termination of the contract in a unilateral order.
In late December 2023, it was reported that Allur owner Andrey Lavrentiev, who bought the metallurgical companies ArcelorMittal Temirtau and ArcelorMittal Aktau, invested 28.6 billion tenge of private investments in stabilizing the operations of Qarmet (Karmetkombinat). In December, the enterprise also increased production, increased stocks of ferroalloys and coal, and resumed shipment of finished products.
ArcelorMittal, with the mediation of the Ministry of Industry and Infrastructure, transferred control of Kazakhstani assets to the state development institute Qazaqstan Investment Corporation. QIC, in turn, transferred the enterprise to Qazaqstan Steel Group of Andrey Lavrentiev, known for his projects in mechanical engineering.
The deal with Arcelor was announced on December 8, 2023 at a press conference in Astana, where the Minister of Industry, former head of the Baiterek holding Kanat Sharlapayev announced the terms of the asset transfer.
The purchase was financed by the placement of bonds on the Astana stock exchange AIX, specially created for this purpose by Lavrentiev’s company QSG Holding. The volume of the first issue was $355 million, the rate was set at 15% per annum. Redemption is expected in 2027. The program is expected to operate for five years. According to the site, since the placement on November 21, no transactions have been made with the company’s securities on the secondary market.
The total amount of the deal for the sale of ArcelorMittal assets was $286 million, and another $700 million is the debt of AMT and ArcelorMittal Aktau to the former owner.
In late November, it became known about the intention of the ENPF to invest 1.5 trillion tenge in large-scale infrastructure projects, including those related to energy. It was expected that 500 billion tenge out of the total volume will be allocated by the end of the year.
An analytical report by Arcelor for the third quarter of 2023 states that the current carrying value of AMT is $1.8 billion, while the company generated negative EBITDA for 9 months of the year, and the average EBITDA, excluding 2021, was $0.3 billion. Arcelor emphasizes that since 1995 the company has lost $1.3 billion on the exchange rate.
In addition, ArcelorMittal, which is leaving Kazakhstan, will allocate 16 billion tenge to the Kazakhstan Halkyna Fund for social development of the Karaganda region.
