09.01.2024 Author: Boris Kushhov

Arcelor-Mittal in Kazakhstan: an unmitigated horror and an inglorious end

Arcelor-Mittal in Kazakhstan

The blatant negligence of transnational corporations towards their employees in developing countries is clearly visible in their activities in Kazakhstan, which is not for the first time the site of tragedies of colossal proportions caused by the negligence of employers: just remember the recent disaster at the Kostenko mine in October this year, which belonged to a subsidiary of Arcelor-Mittal. At that time, more than 40 miners died as a result of methane leakage caused by chronic safety violations for the sake of increasing output. This tragedy was the fifth at Arcelor Mittal Temirtau’s mines in 2023 alone.

Arcelor-Mittal is one of the largest mining and metallurgical companies in the world. In 2008, at the peak of its power, it controlled up to 10% of the entire steel industry globally. Its dominance in Kazakhstan’s mining industry began with the acquisition of a number of the largest mines and combines in 1995 – as part of a closed tender, to which other investors were not allowed.  During this year, the corporation controlled four iron mines, eight coal mines, a pipe plant, a thermal power plant, a hotel, a number of auxiliary enterprises, as well as one of the largest enterprises in the republic – the Karaganda Metallurgical Combine. Arcelor-Mittal promised to invest enormous funds in the modernization of the latter: however, in fact, it produced only residual exploitation aimed at sucking out profits. According to some indicators, the company failed to achieve the production volumes that existed at the purchased enterprises during the Soviet era. At the same time, in the 1990s-2010s, steel production in China increased significantly (or even tenfold), which Arcelor-Mittal focused on when buying enterprises in Kazakhstan. This led to increased competition with Chinese manufacturers, in order to keep afloat, social guarantees for workers were cut, large-scale reductions took place, systemic safety violations, emergency equipment was used to the fullest. At the same time, in front of the employees of the enterprise, in such conditions, the corporation even managed to form salary debts to employees!

This was the brief history of aggressive exploitation of the citizens of Kazakhstan by a transnational corporation. Fortunately, all this seems to have come to an end. On 8 December 2023, it became known that the state private equity fund of Kazakhstan “Qazaqstan Investment Corporation” will buy 100% of the shares of Arcelor-Mittal Temirtau and Aktau – the two largest subsidiaries of this TNC operating in the country. The sum of the deal totalled $286 million. Nevertheless, the state in this transaction acted no more than as an intermediary, providing the procedure of the corporation’s exit from the Republic, and successfully reduced the cost of the “exit” from 3.5 billion to 286 million: following this news, it became known that the new investor of ArcelorMittal Temirtau will be the shareholder of the car manufacturer Allur Andrey Lavrentiev – one of the richest citizens of Kazakhstan. On his shoulders is entrusted to work on the return of Arcelor Mittal debt of almost $ 700 million, which was formed in its own subsidiary. Also, the new investor undertook to invest up to $3 billion in the plant bought out from the corporation, which implies its complete modernisation. AMT now bears a new name, Qarmet. On 15 December 2023, a meeting of the government of the republic was held, at which it was decided to determine the obligations of the new investor to the workers and the state as soon as possible.

In general, the prospects of the Kazakh authorities’ intervention in AMT’s mess could be traced back to 2022, when the authorities of the Republic achieved the possibility of conducting an audit, thus preparing the details of the future transaction. Realising this, the corporation’s management decided to siphon off maximum funds from the enterprise, cutting depreciation expenses even more severely on the eve of its almost inevitable exit. In many respects, it was this investor’s attitude to the enterprise that led to the largest accident in recent years, mentioned above.

It is worth noting that Arcelor Mittal’s ignominious departure from Kazakhstan turned out to be quite fortunate for the corporation: it avoided litigation and received a guarantee for the payment of all debt obligations to it. Nevertheless, it should not be overlooked that the Kazakhstani leadership has shown a sensible initiative to ensure the safety and well-being of its citizens by such a decisive method as buying out all assets from a very unscrupulous foreign investor. The Kazakhstani authorities could hardly have been expected to take tougher measures: it is important for a country still dependent on foreign assets not to scare away other, more bona fide and promising investors.

In general, this event is fully in line with the logic of the new vision of Kazakhstan’s economic policy, which the country’s president familiarised the public with in September 2023. Important aspects of the new policy, according to him, were to be the state’s growing concern for the welfare of workers, a focus on modernisation of industries, and increased state participation in key economic sectors.

Undoubtedly, there are still a number of “grey spots” in the deal on the purchase of Kazakh assets of Arcelor-Mittal. Some experts have doubts about the rejection of nationalisation of assets in favour of their privatisation by a national investor. They are also concerned about the nature of the new investor’s debts to the transnational corporation, as well as its probable ties to the influential political clans of the republic. Nevertheless, this experience has become a vivid illustration of the predatory intentions with which some of the world’s largest corporations come to developing countries. It is also a testimony to the awakening in these very states of the understanding of their own responsibility for the well-being and security of their citizens. Developing countries and their people should take into account the sad experience of Arcelor-Mittal’s activities in Kazakhstan and realise that foreign TNCs come to them not for the sake of development and progress, but for the sake of extracting super-profits: and if the situation is let out of control, they will achieve these profits at absolutely any cost – and even dozens of similar “Kostenko mines” will not be an obstacle for them.


Boris KUSHKHOV, Department of Korea and Mongolia, Institute of Oriental Studies, Russian Academy of Sciences. Especially for online magazine “New Eastern Outlook”.

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