Maintaining our licence to operate

Engaging with government and local communities

Our board and management are acutely mindful of our company’s place in the South African economy and society.We are committed to doing everything within our power and ambit to bring to reality the objectives of the National Development Plan of 2011 and to realise the inclusive, prosperous society which that plan envisages.

In discharging these responsibilities, we interact consistently and proactively with a broad range of stakeholders. These stakeholders include many individuals as well as the elected representatives of the communities in which we make, transport and sell our steel.

In the government sphere we communicate constantly with the executives of local and district municipalities, provincial and national government as well as the organs of these spheres of government. Government at all levels enforces compliance with environmental and other legislation and grants us the permits and licences we need to operate. Policies, including those relating to issues such as energy tariffs, carbon tax, environment, the regulation of imports and exports, and broad-based black economic empowerment, have a direct impact on our business.

Broad-based black economic empowerment (B-BBEE)

As with any company operating in South Africa, we need to embrace transformation and be able to clearly demonstrate that we are working affirmatively to change who we are and how we operate. In our case this need is especially pronounced given the political dimensions of our operating context and the many ways in which political decisions inform our licence to operate, even our survival.

At the beginning of 2015 our broad-based black economic empowerment (B-BBEE) rating stood at 6 under the old codes of best practice which were replaced with new, amended, codes in May. (In our 2014 Integrated Annual Report we reported Level 7 compliance but a formal audit subsequent to our reporting raised this to Level 6.) Under the new codes, maintaining the status quo would have meant that we would have become non-compliant.

Driven by an interim B-BBEE subcommittee of the board, in 2015 we worked with purpose towards defined outcomes in order to overhaul our B-BBEE performance. This year a B-BBEE transformation team was established with an operating budget of R6.8 million. Comprising the CEO and nine senior officials, the B-BBEE management committee met with the board on a quarterly basis, reporting on progress against all five pillars of the amended B-BBEE codes.

The headline result of this increased resource and commitment was that, at year-end, we had improved our compliance score – lifting our score from 45 points under the old code to 75 under the new. This achievement reflected not only our determination to prove our commitment to transformation but to put this commitment into everyday practice.

For most of the year we received no points under the ownership element of the revised scorecard – out of a possible 25. This was partially addressed in the second half of the year when we announced the creation of an employee share ownership programme (ESOP).

Being environmentally responsible

Steel is a vital component in the country’s infrastructure development, but steelmaking has an environmental footprint and requires natural resources. Our challenge is to produce the steel the world needs while minimising its environmental impacts and ensuring that we contribute to global efforts to tackle climate change and other environmental concerns.

We do not yet have all the answers, but we are continually investing in resources to find them. At the same time we are working hard to ensure that our environmental impact is as low as possible on all indicators. We are aware that environmental compliance is one of our biggest business risks.

Systems to manage our environmental impact

ArcelorMittal South Africa is  governed by the global ArcelorMittal environmental policy. The group has directed that all production facilities comply with ISO 14001, an internationally recognised standard for environmental management systems. During the year the group also launched the ArcelorMittal energy policy and energy management system. These cover every aspect of how the group purchases, uses and monitors energy, from technology upgrades to the integration of energy efficiency priorities into our equipment design. We also follow the principles of ArcelorMittal South Africa’s safety, health and environmental (SHE) policy, which is aligned with the group’s environmental policy.

Highlights on the environmental front during recent years include the completion of the new dust extraction unit at Vereeniging Works, the launch of the zero effluent discharge project at Newcastle Works and our ongoing engagement with various stakeholder groups on environmental issues.

  Environmental Policy

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