MINEX Forum

Tag: ArcelorMittal Temirtau

  • Boston Consulting Group presented the results of the Qarmet audit.

    Boston Consulting Group presented the results of the Qarmet audit.

    The international company Boston Consulting Group, specializing in management consulting, has been conducting an audit of coal production at Qarmet since December of last year, reports the correspondent of the business information center Kapitak.kz, citing the company’s press service.

    “During the study of the Coal Department’s activities, it was noted that explosions, fires, and gas dynamic phenomena have been the cause of 95% of all tragic incidents in mines since 2021. It has been proposed to implement comprehensive modernization work, starting with the installation of a positioning system at all facilities. To manage the systems, the establishment of a central dispatch service has been recommended, which will increase the efficiency of production data consolidation and accelerate response to external factors such as geological disturbances,” Qarmet reported.

    The observations section also included irrational investments in the early years for acquiring outdated technological equipment, the absence of a unified standard for working conditions in mines, and others.

    “As a result of the BCG audit commissioned by Qarmet shareholder Andrey Lavrentiev, a joint working group has been established to develop a detailed comprehensive action plan for modernization in the Coal Department until 2028. The goal of the large-scale campaign is to implement the best international practices to improve productivity and work safety,” the message stated.

    Recall that on October 28, 2023, an explosion occurred at the Kostyanko mine in the Karaganda region, formerly owned by ArcelorMittal Temirtau, resulting in the death of 46 people. October 29, 2023, was declared a National Mourning Day. The president instructed the government to cease investment cooperation with ArcelorMittal Temirtau.

    On December 8, 2023, it became known that the Government of the Republic of Kazakhstan and ArcelorMittal Corporation had concluded a deal to transfer ArcelorMittal Temirtau JSC to Kazakhstan. The Kazakh State Direct Investment Fund Qazaqstan Investment Corporation acquired all the shares of the metallurgical enterprises ArcelorMittal Temirtau JSC and ArcelorMittal Tubular Products Aktau JSC. The deal amounted to $286 million. The investor became the Chairman of the Board of Directors of Allur Group of Companies, Andrey Lavrentiev. According to the terms of the deal, he is required to invest $3 billion in the modernization of the plant and mines.

    It is worth noting that on August 17, 2023, a fire occurred on the Kazakhstan mine, which belonged to ArcelorMittal Temirtau, resulting in the death of five miners. On November 3, 2022, in Shakhtinsk, at the Lenin mine, during drilling of gas drainage wells, there was a sudden gas outburst. There were 106 workers in the mine, and five people died.

  • Ministry of Industry Issues Notice to Qarmet Over Significant Contract Failures

    Ministry of Industry Issues Notice to Qarmet Over Significant Contract Failures

    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.

  • QARMET employees were paid salaries that ArcelorMittal Temirtau did not pay

    QARMET employees were paid salaries that ArcelorMittal Temirtau did not pay

    Investor Andrey Lavrentiev , who bought the metallurgical company ArcelorMittal Temirtau (now QARMET), has repaid debts to employees and suppliers, Minister of Labor and Social Protection of the Population  Svetlana Zhakupova said at a CCS briefing .

    How much debt did AMT have? Zhakupova reported that about 286 million tenge were allocated for repayment.

    “The new investor assumed obligations for the debts that Arcelor, the former investor, had. And repayment of debts to employees, even to the extent of repayment of debts to suppliers. About 286 million will be used directly to pay off debts,” Zhakupova said.

    The minister added that the employees have already received the money – there are no arrears either in salary or in payments to the Unified Pension Fund.

    Context. In early December, it became known that ArcelorMittal Temirtau faced financial problems due to the blocking of its accounts by court decision. The reason for this was a lawsuit with the contractor Backup Service Resorts LLP (BSR), which provided food and recreation services for AMT workers. 

    The company then stated that, due to the blocking of accounts, they could not transfer pension contributions and contributions to the Compulsory Medical Insurance Fund (CMHI) to all employees for October. Including those injured during the accident at the Kostenko mine. The miners in need of treatment  feared that they might be left without medical care

  • Is KarMet coming back?

    Is KarMet coming back?

    The deal for ArcelorMittal Temirtau has been completed. Now the company has come under the jurisdiction of Kazakhstan. This was announced by the Minister of Industry and Construction of the Republic of Kazakhstan Kanat Sharlapaev.

    As Kanat Sharlapaev stated, the decision-making center for the new Kazakh investor should be Kazakhstan.

    These should not be people who do not want to work in Kazakhstan or for whom Kazakhstan is part of their business. This is our position. If the decision-making center for an investor or group of investors is Kazakhstan, this is probably a better choice.Kanat Sharlapaev

    The minister also added that there is potential synergy between the current business of the Allur group and steel production.

    Everyone understands that cars are made of metal. And here, in this regard, to also achieve the production of automotive steel at KarMet (AMT) and integrate this with current businesses – there is normal business logic in this, because this allows us to reduce quite large logistics costs. Deepen the localization of this production. And at the same time, it is clear that this is not some kind of individual decision. A lot of people were involved in it. An entire government commission was involved in selecting investors. And we looked at who could handle it and for whom it really is the main business and somehow allows us to create a synergy effect with their current business.Kanat Sharlapaev

    The new investor of ArcelorMittal Temirtau is Kazakh businessman Andrey Lavrentyev, who is the chairman of the board of directors and shareholder of the Allur Group of Companies. The businessman acts as an independent Kazakh investor. Under the terms of the deal, he must invest three billion dollars in the modernization of the plant and mines, as well as fulfill all obligations regarding employee salaries and social packages.

    Of course, the new owner faces important challenges. First of all, it must create conditions for labor safety and improve the level of well-being of workers. He will also have to actively participate and help develop the local community through social projects.Akim of the Karaganda region Ermaganbet Bulekpayev said while in Temirtau during the presentation of the new investor to the heads of structural divisions of the steel and coal departments

    Meanwhile, the company called ArcelorMittal Temirtau will no longer exist. The company is awaiting rebranding. The new investor said that the company will return its old name – “KarMet”, and Vadim Basin will take the place of the general director. 

    Also, the Kazakh businessman, in addition to acquiring assets, undertakes to invest $3 billion in modernizing production and protecting the environment of the region, of which $1.3 billion will be invested next year.

    Meanwhile, the Prosecutor General’s Office announced a pre-trial investigation into the explosion at the Kostenko mine, which killed 46 people. The pre-trial investigation into this fact is carried out by special prosecutors of the General Prosecutor’s Office with the participation of employees of the Ministry of Internal Affairs, the AIC, the AFM and the Ministry of Emergency Situations.

    “It was established that the explosion initially occurred at the coal mining site of longwall No. 48K3-west from the ignition of a methane-air mixture emanating from the underlying coal seam K2, the source of which was mechanical sparking from the operation of the face scraper conveyor-2.”General Prosecutor’s Office

    The explosion led to a subsequent series of explosions in the mine workings of coal dust, the concentration of which significantly exceeded permissible standards.

    “The investigation established that during the operation of the mine, numerous violations of industrial and fire safety rules, as well as labor protection rules, were committed, directly related to the tragic event. At present, the management and engineering staff of the mine, numbering 7 people, are suspected of failing to ensure safety measures during coal mining.”General Prosecutor’s Office

    The suspects, in accordance with Article 128 of the Code of Criminal Procedure, were placed in the temporary detention center of the DP in the Karaganda region. It is noted that as part of the investigation, a legal assessment will also be given to officials of ArcelorMittal Temirtau JSC and the Department of Industrial Safety of the Ministry of Emergency Situations for the Karaganda region, who did not ensure proper control over the safe operation of the mine.

    The investigation is ongoing and is under special control.

  • Lavrentiev will invest $1.3 billion in the first stage of modernization of the former ArcelorMittal Temirtau

    Lavrentiev will invest $1.3 billion in the first stage of modernization of the former ArcelorMittal Temirtau

    The company will update equipment, introduce modern technologies and raise safety standards.

    The government of Kazakhstan held a meeting on the development of Qarmet, the former ArcelorMittal Temirtau, with the participation of ministers and the company’s new investor Andrey Lavrentiev, reported in the Prime Minister’s Office

    “We discussed measures to stabilize the operational processes of the enterprise, provide it with the necessary raw materials, and carry out a number of legal procedures. We separately considered the implementation of the investment program, which provides for the modernization of the plant’s equipment, the introduction of modern production technologies and raising industrial safety standards. At the first stage, about $1.3 billion will be allocated for these purposes,” the statement says.

    Prime Minister Alikhan Smailov emphasized that the enterprise must fulfill all obligations to employees in a timely manner.
    “The head of government pointed out the importance of further dynamic development of production, growth in product output and the gradual elimination of identified environmental violations. He instructed central government agencies to provide the necessary support to the enterprise in resolving current issues and, together with the investor, to develop specific action plans for each area of ​​Qarmet’s development,” the prime minister’s office said.

  • ArcelorMittal Temirtau in Kazakhstan has been renamed to Qarmet

    ArcelorMittal Temirtau in Kazakhstan has been renamed to Qarmet

    The team was introduced to a new investor who took on production and social obligations

    ArcelorMittal Temirtau, which was sold to state private equity fund Qazaqstan Investment Corporation (QIC) last week, has been renamed Qarmet. This was reported by the press service of the administration of the Karaganda region of the country.

    The head of the region, Ermaganbet Bulekpayev, introduced a new investor to the team: the Qazaqstan Steel Group (QSG) company and its founder Andrey Lavrentiev.

    “The new owner faces important tasks, primarily to ensure and create working conditions, improve the well-being of workers, and will also have to actively participate and help develop the local community through social projects,” he noted.

    Vadim Basin became the CEO of Qarmet . Basin served as executive director of ArcelorMittal Temirtau in 2017-2021, and at the end of October this year, after the death of miners at the mine named after. Kostenko, the President of Kazakhstan instructed him to head the enterprise.

    “QSG, represented by Kazakh businessman Andrey Lavrentyev, has reached an agreement with the Ministry of Industry and Construction of the Republic of Kazakhstan on the acquisition of the assets of ArcelorMittal Temirtau. Under the terms of the agreement, QSG will purchase AMT’s assets for $286 million and will also make guaranteed deferred payments of $450 million, payable in four equal annual installments. In addition, an additional $250 million will be paid at the time of closing as payment of AMT’s outstanding intercompany indebtedness,” the company said in a statement.

    In addition to the acquisition of assets, the Kazakh investor undertakes to invest another $3 billion in modernizing production and protecting the region’s environment, of which $1.3 billion will be invested next year.

    The new investor calls his short-term goals, in particular, a radical improvement in production safety indicators and the environmental situation, modernization and reorganization of production, increasing the size, range and types of products.

    On December 12 , President of Kazakhstan Kasim-Jomart Tokayev commented on the arrival of a new investor – a Kazakh company – at ArcelorMittal Temirtau (Qarmet), writes Zakon.kz.

    “Now the government’s job is to help it, especially in the initial phase of operation, and then the demand from the new owner will be very tough,” he said.

    Let us recall that last week the steel corporation ArcelorMittal sold its assets in Kazakhstan – QIC acquired all shares of the metallurgical enterprises ArcelorMittal Temirtau and ArcelorMittal Tubular Products Aktau. During the negotiations, ArcelorMittal requested $3.5 billion, which did not correspond to the calculations of international consultants. The State reduced the value of assets from this amount to $286 million.

  • “$1.3 billion will be invested in 2024” – the new owner of ArcelorMittal Temirtau

    “$1.3 billion will be invested in 2024” – the new owner of ArcelorMittal Temirtau

    The new investor ArcelorMittal Temirtau announced short-term plans.

    Let us recall that the Kazakh company Qazaqstan Steel Group (QSG) became an investor in the enterprises of the former ArcelorMittal Temirtau.

     

    Under the terms of the deal, QSG will purchase AMT’s assets for $286 million and will also make guaranteed deferred payments of $450 million. In addition, $250 million will be paid at closing as payment of AMT’s outstanding intercompany debt.

    “Subsequently, the investor undertakes to invest more than $3 billion, of which $1.3 billion will be invested next year,” the company said in a statement.

    In the short term, the national investor sets himself the following tasks:

    • maintaining the existing collective agreement and remuneration system for employees of the enterprise;
    • radical improvement of production safety indicators and environmental situation;
    • modernization and reorganization of production;
    • increase in volumes, range and types of products.

    The company said that officials will provide detailed comments after conducting an analysis of the enterprise’s activities.

    Let us recall that on October 28, another tragedy occurred at the Kostenko mine in Karaganda, which claimed the lives of 46 miners . President Kassym-Jomart Tokayev went to the scene of the emergency, expressed condolences over the death of the miners and instructed to stop cooperation with ArcelorMittal Temirtau .

    The government has determined the requirements for a new investor. It also became known that after the change of ownership, Kazakhstan will no longer use the name ArcelorMittal .

  • The transfer of ArcelorMittal Temirtau to the Kazakh investor will be completed by the end of November – Smailov

    The transfer of ArcelorMittal Temirtau to the Kazakh investor will be completed by the end of November – Smailov

    The Kazakh government is committed to completing the transfer of ArcelorMittal Temirtau to the Kazakh investor by the end of November, Prime Minister Alikhan Smailov said. He hopes that no force majeure will happen and the deal will be officially announced next week.

    “We are now specifically working on this (on the transfer – V.). And we set ourselves a deadline – to complete this deal and legalize this deal by the end of November. We are heading towards this. God grant that nothing force majeure happens, and next week, I think, we will complete it,” Smailov told reporters on Thursday on the sidelines of the Senate.

    He once again emphasized that budget funds will not be used to buy out the enterprise; it is planned to attract money from a Kazakh investor.

    The prime minister recalled that the preliminary purchase and sale agreement was signed a month ago, and the final one is scheduled to be signed next week.

    Earlier, Minister of Industry and Construction Kanat Sharlapaev said that the issue of attracting a new foreign investor for the ArcelorMittal Temirtau company, which becomes the property of the government, is not being considered. He also assured that all the current conditions of the enterprise, based on collective agreements with trade unions, wages, and the number of employees will remain unchanged when a new investor arrives. At the same time, Sharlapaev refused to announce the terms of the deal for ArcelorMittal Temirtau, but named preliminary dates – the end of November. He also said that the issue of appointing former Prime Minister Serik Akhmetov as head of the company “was not discussed.”

  • Who can become a new investor in ArcelorMittal Temirtau?

    Who can become a new investor in ArcelorMittal Temirtau?

    The Chairman of the Presidium of the Atameken National Chamber of Entrepreneurs Raimbek Batalov spoke about which investors are ready to buy out ArcelorMittal Temirtau JSC, a Kazinform agency correspondent reports.

    — The National Chamber has proposals that come from national and foreign businesses for investment in Karmetkombinat. These are investors from the Russian Federation, China and the Middle East who are ready to consider Karmetkombinat,” answered Raimbek Batalov on the sidelines of the plenary session of the Business Council of the Conference on Interaction and Confidence Building Measures in Asia.

    He noted that over the past two years, the National Chamber has received a lot of questions and complaints related to suppliers, when they pay poorly, when there are problems with the execution of contracts.

    “We see that this situation is now improving. It is very important that the government has taken control of this. And there is an improvement in issues related to suppliers for Karmetkombinat. The second point is that we understand that there are projects that require new grades of new metal, which Karmetkombinat can potentially produce. This requires small investments,” added Raimbek Batalov.

    Let us remind you that on October 28 at 02.33, an explosion occurred at the Kostenko mine in the Karaganda region, owned by the ArcelorMittal Temirtau company . At the time of the accident, there were 252 people in the mine, 205 miners were brought to the surface. 46 miners died.

    The Prosecutor General’s Office has launched a criminal investigation into the incident at the Kostenko mine . Presumably, according to the company, a gas methane explosion occurred in the lava .

    The President of Kazakhstan Kassym-Jomart Tokayev also went to the scene of the incident . The President expressed sincere condolences to the families and friends of the deceased miners. On behalf of the Head of State, they will be provided with comprehensive assistance.

    The Head of State also instructed to stop investment cooperation with ArcelorMittal Temirtau.

  • The head of Polymetal commented on ArcelorMittal’s departure from Kazakhstan

    The head of Polymetal commented on ArcelorMittal’s departure from Kazakhstan

    Gold mining company Polymetal has made a firm commitment to sell its Russian assets, which are subject to U.S. sanctions, no later than the first quarter of next year. The CEO of the company, Vitaly Nesis, informed investors about this during a conference call on the production results for the third quarter last week.

    “When we relocated to Kazakhstan in August, we signed an official commitment stating that the company will sell its sanctioned Russian subsidiary, which is listed on the Specially Designated Nationals and Blocked Persons List, within nine months. This document serves as a preliminary condition for changing jurisdiction. While we cannot be excluded from the Moscow Exchange, we believe that this commitment represents a contractual obligation for us. Violating this obligation would have serious consequences for the company,” said Nesis.

    In September, Nesis predicted that the Russian division of Polymetal International would be sold within the next 6-9 months.

    Nesis also highlighted that if the deal is not completed within the required timeframe, there may be significant consequences.

    “If we fail to meet the deadline, we will lose a substantial amount of political capital in Kazakhstan. Political capital is crucial in the mining sector. I don’t want to draw any inappropriate parallels, but it’s worth considering what happened to ArcelorMittal in Kazakhstan after multiple security failures. While we hope to avoid such a scenario, it is evident that managing potential problems arising from the loss of political reputation is of utmost importance,” he noted in response to a question about the potential issues that may arise if the company’s Russian assets are not sold within the promised period.

    According to Nesis, obtaining official approval from Russian authorities for the planned deal is unlikely to be necessary. However, repatriating the proceeds from the sale to Kazakhstan may face challenges due to currency restrictions imposed in Russia. This is particularly relevant as some of the current shareholders of Polymetal, who may benefit from the sale through dividends, are residents of countries considered unfriendly by the Russian government. The decision on dividend payments for this year will depend on the progress of the sale of Russian assets. If the deal with the Russian subsidiary cannot be completed, the company may consider the previously discussed option of establishing a separate entity in Kazakhstan, although this could have tax implications.

    One of the conditions for finalizing the deal, as discussed with potential buyers, is Polymetal’s requirement for strong assurances that toll processing of low-carbon concentrate from the Bakyrchik deposit in Kazakhstan at the Amursk hydrometallurgical plant will continue. The matter of preserving these supplies from the Kazakh mine is still under discussion with the Office for Foreign Assets Control (OFAC) of the U.S. Treasury’s Foreign Assets Control.