The Kazakh government, worried about rising discontent amid growing unemployment, has called on metals and mining companies to avoid laying off their employees and promised some tax breaks in return.
http://www.reuters.com/article/marketsNews/idUSLJ56708220090519
UPDATE 2-ArcelorMittal says may stop work at Kazakh unit
* Says "urgent measures" needed to avoid stopping production
* Lost $100 mln in Q1 in Kazakhstan
* In talks with trade unions over pay cuts
(Adds planned output, background)
By Olzhas Auyezov
ALMATY, May 19 (Reuters) - ArcelorMittal (MT.N) (ISPA.AS) may have to halt production at its loss-making unit in Kazakhstan unless it takes urgent measures including pay cuts for its workers, the company said on Tuesday.
The Kazakh unit of the world's largest steel maker, which includes the Temirtau steel plant and several coal mines, said in a statement it incurred a $100 million loss in the first quarter of 2009 as global steel demand slumped. "ArcelorMittal Temirtau is experiencing serious financial difficulties that may lead to operations being partially or completely halted ... unless urgent measures are taken," the company said in a statement.
The World Steel Association forecasts a 15 percent decline in global steel demand this year, the steepest fall since World War Two, as the economic slowdown cuts demand for cars, household goods and new construction projects. ArcelorMittal has announced nearly 1,000 layoffs in the United States and another 1,000 European steel workers clashed with riot police outside its May 12 shareholders' meeting in Luxembourg in a protest over output cuts. [ID:nLC45767]
ArcelorMittal Temirtau spokesman Nikolai Kubrakov said urgent cost-cutting was needed both at the firm's steel and coal divisions. ArcelorMittal produces coal for its steel mill at nearby mines in the Karaganda region in central Kazakhstan.
"Russian companies are sacking people," he said. "Here, we are trying to negotiate pay cuts."
The Kazakh government, worried about rising discontent amid growing unemployment, has called on metals and mining companies to avoid laying off their employees and promised some tax breaks in return.
Kubrakov said monthly production at the Kazakh unit was about 30 percent lower than before the global financial crisis. He said the pay cuts, if agreed, would take effect from July 1.
ArcelorMittal Temirtau said in January it would cut liquid steel output this year to 3.17 million tonnes from 3.43 million tonnes in 2008.
The company's other main plant in the former Soviet Union, in the Ukrainian city of Kryviy Rih, expects a 20 percent output reduction this year and will cut investments on lower demand. [ID:nLE926514] (Editing by Robin Paxton and Anthony Barker)
