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Forging aheadSustainability Report 2011

Contents

www.arcelormittal.com/southafrica

Our annual reporting process comprises three main documents: our integrated annual report, our sustainability report and our financial report.

This report covers the 12 months ended 31 December 2011 and includes only the operations of ArcelorMittal South Africa Limited – which comprises Vanderbijlpark Works, Saldanha Works, Vereeniging Works, Newcastle Works, Coke and Chemicals and Pretoria Works, as well as corporate functions such as human resources, finance, procurement, logistics and sales and marketing.

We seek to provide a balanced account of our sustainability performance. It contains our response to managing the most material issues affecting the company and the way in which these impact all stakeholder groups. These stakeholder groups are defined as employees, the communities in which we operate, suppliers, shareholders, government, media and advocacy groups.

The information contained in this report is intended to be objective and credible. We continue to use the Global Reporting Initiative (GRI) guidelines to inform our reporting process. For this report, we have referred to the revised GRI G3.1 guidelines. A detailed GRI table, providing responses to each of the GRI G3.1 criteria, is provided on our website, available at www.arcelormittal.com/southafrica. The scope, reporting, periods, boundary and measurement methods applied in this report do not differ significantly from those applied in the 2010 Annual Report.

Report scope and boundaries

The JSE Limited (JSE) has granted ArcelorMittal South Africa Limited a listing in respect of 445 752 132 shares (the listing), share code ACL and ISIN: ZAE000134961

Financial year-end: 31 December of each year

Notice of annual general meeting is in the Integrated annual report

AssuranceExternal and independent verification of statistical information provided in this report was not obtained, as the Board considered this assurance to be premature while revised corporate reporting systems are bedded down. For this report, the Board and management accept responsibility for providing information that is accurate, adequate and relevant.

It is our intention to introduce external assurance for key statistical information in the reports issued for the years ending 31 December 2012 and beyond.

1 About ArcelorMittal South Africa2 Business philosophy and strategy4 Business management5 Business operations6 2011 performance at a glance7 Message from the Chief Executive

Officer10 Steel – the infrastructure of modern

life 12 Sustainable reporting process14 Material challenges 16 Stakeholder engagement20 Sustainability through steel22 Making steel more sustainable

22 Environmental impact of operations

27 Energy and climate change28 Investing in our people

28 Safety32 Human resources strategy35 Health and wellness36 Skills development

40 Enriching our communities40 Value added statement40 Transformation43 Social investment and

community affairs46 Responsible management of

products and customers47 Responsible sourcing of products48 Governance, ethics and human rights50 Performance data52 Key contacts52 Disclaimer forward looking

statements

ArcelorMittal South Africa Sustainability Report 2011 1

About ArcelorMittal South Africa

As Africa’s largest steel manufacturer, the company can produce up to 7.8 million tonnes of liquid steel per annum. It supplies over 60% of the steel utilised in South Africa and exports significant amounts of steel in sub-Saharan Africa and elsewhere.

Founded in 1929 as a state-owned enterprise and privatised in 1989, the company is part of the global ArcelorMittal Group, which is the world’s leading integrated steel and mining company, with a presence in more than 60 countries.

Our steel manufacturing and associated coke and chemical plants are based in Newcastle, Pretoria, Saldanha, Vanderbijlpark and Vereeniging.

The company directly employs 9 808 people and supports thousands more contractor jobs through outsourced and specialised functions. We are committed to producing safe, sustainable steel and take pride in our role as an important pillar and major driver of the South African economy.

Our business ArcelorMittal South Africa is an integrated steel producer. Our steel is produced in flat and long products that are suitable for further conversion by downstream manufacturers for use in the construction, automotive, packaging and appliance industries. We are continuously exploring opportunities to widen this core range to include more advanced or value-added steel products.

Steel manufacturing is complemented by a coke and chemical operation that produces commercial coke for use by the ferro-alloy industry and processes by-products resulting from the steel manufacturing process.

We are extending our interest in mines that supply iron ore and coking coal, to reduce costs and improve efficiencies through vertical integration of our sources of raw materials.

The key challenges facing our business in 2012The company faces a number of challenges, both from the external environment in which it operates and from internal operations.

In 2012, a key challenge is the need to update our mostly ageing plant – the relatively modern Saldanha Works excepted – to comply with new environmental legislation. The cost of the necessary upgrading is high, and we will need to manage the capital we expend on environmental compliance to remain affordable within the reduced profitability of the current economic reality.

We need also to remain profitable and sustainable in the face of input costs such as raw materials, energy and labour, which are rising faster than the price of steel. We are taking steps to mitigate the impact of increasing raw material and energy prices, but these solutions will mostly take several years to implement.

Much effort has gone into resolving the logistical problem of the transport of raw materials and finished products in recent years, and we anticipate a smoother and more cost-effective supply chain in 2012.

Government has questioned our pricing model, as steel is a major component of its developmental strategy, but we are confident that a realistic solution will be found.

Historically, the South African Rand is one of the most volatile currencies in the world and the results of its movements against other major currencies can only be mitigated to a certain extent. The Rand was relatively strong against the US Dollar for most of 2011 and is expected to remain so during 2012.

Within the company, we were severely tested in 2011 by operational failures at the Newcastle and Vanderbijlpark Works and the planned stoppage at Saldanha Works, which reduced steel output. The business improvement programme launched in 2010 is aimed at eliminating or minimising these outages, with much progress already made in 2011. The Saldanha Works was the first to complete its plant stabilisation process, with the others well on track.

In a country that is desperately short of the skills that we have in our workforce, retaining vital skills is a constant challenge. We are addressing this issue by revamping the rewards we offer to loyal employees, while operating a sophisticated skills development pipeline that streams suitably equipped new employees into our workforce.

2 ArcelorMittal South Africa Sustainability Report 2011

Business philosophy and strategy

Africa’s growing need for quality steel from its own heartland will make our vision prevail

VisionWe take pride in our market leadership position in South Africa and aim to extend our role to serve the broader sub-Saharan African continent. We value our customers and, aspire to be regarded by them as their supplier of choice. We intend to accomplish this by producing quality steel products through the expertise of the best people in the industry. We will continuously strive to be among the lowest cost steel-producers in the world.

ValuesOur goal is to provide safe, sustainable steel. We have a clear vision of the future with a well-defined set of brand values namely:

SUSTAINABILITY: Our commitment to the world around us extends beyond the bottom line, to include the people in whom we invest, the communities we support and the world in which we operate. This long-term approach is central to our business philosophy.

QUALITY: We look beyond today to envision the steel of tomorrow. Because quality outcomes depend on quality people, we seek to attract and nurture the best people to deliver superior solutions to our customers.

LEADERSHIP: We are visionary thinkers, creating opportunities every day. This entrepreneurial spirit brought us to the forefront of the steel industry. Now we are moving beyond what the world expects of steel.

Key strategic objectivesDrive business transformation to achieve excellence in safety, people, plants and processes in line with global ArcelorMittal Group benchmark targets for employee productivity and operational efficiency.

Meet customer expectations for product quality and service and thereby maintain our domestic market share and expand our presence in sub-Saharan Africa.

Continue embedding our corporate responsibility programmes for safety, health, environment and the well-being of employees, contractors and the communities in which we operate.

Build on relations with key stakeholders to improve interaction and enhance our reputation.

Further improve our levels of employee engagement to continue developing a positive work environment that attracts and retains talented people.

Retain our position in the lowest cost quartile to ensure that the company remains a globally competitive steel producer.

Comply with our short-term BEE goals by 2014.

Reach 80% self-sufficiency in iron ore within five years.


We are committed

Our commitment extends beyond the bottom line to include our people, the communities we support, and the environment.


Steel-making is inherently risky, but safety is our first priority. Over the past 10 years our record has improved steadily

It was regrettable that five fatalities occurred in a year in which we substantially improved the safety performance at our plants. These events caused a major refocus on entrenching compliance with our fatality prevention standards and safe behaviour code as part of the global ArcelorMittal Group’s Journey to Zero programme for eliminating all workplace fatalities and injuries.

Corporate governanceIn recent years, we have restructured our corporate governance and management systems to accord with the revised global ArcelorMittal Group standards and South Africa’s King III requirements.

We are confident that the Board and executive management are equipped to provide the highest standards of strategic oversight, leadership and operational control.

RiskWith the aid of expert consultants, we have conducted a deep review of our risk management process. During this process, we introduced further enhancements to our enterprise risk management system, which has standardised risk management throughout the business and has reassessed all risks in terms of a new risk database.

SustainabilityThe steel business is highly impacted by global economic cycles and, in response, moves between high profit and very lean years. In the immediate aftermath of the 2008 financial crisis, the industry entered a down cycle from which it is yet to emerge.

Safety and the Journey to ZeroThe 2011 lost time injury frequency rate (LTIFR) decreased to 1.24 (2010: 1.64), which is the lowest ever recorded in the history of the company. All our plants improved compared to 2010 with Saldanha Works, Newcastle Works and Tubular Products recording outstanding LTIFR scores of below 1.

The safety of our employees and contractors is our first priority, and the company’s safety record has improved steadily over the past decade. Steel-making is an inherently dangerous business and we train our people to be constantly aware of personal safety, while rooting out risky behaviour and rectifying unsafe situations that can result in fatalities or injuries.

Business management

Cumulative lost time injury frequency rate

Employees Contractors Employee contractors Target

2007

Jan 11

Feb 11

Mar 11

Apr 11

May 11

Jun 11

Jul 11

Aug 11

Sep 11

Oct 11

Nov 11

Dec 11

2008

2009

2010

O 0.5 1.0 1.5 2.0 2.5 3.0

We are confident that we have the resources and leadership to sustain ourselves through another lean period despite the multiplicity of challenges confronting us, such as carbon tax, emissions control and the steel pricing model.


Business operations

Operational segments

Operational segments Key products Performance 2011 Additional information

Flat Steel Products Slab, heavy plate or coils. Hot rolled strip, cold rolled and coated products such as tinplate and hot dip galvanised, electro-galvanised and pre-plated sheet.

Liquid steel production (’000 tonnes): 4 060 Steel sales (’000 tonnes): 3 424 EBITDA (Rm): 597 LTIFR: 1.14 Number of employees: 5 544

Detail of financial performance is contained in the Integrated annual report

Long Steel Products Bar, billets, blooms, hot finished and cold-drawn seamless tubes, window and fencing profiles. Light, medium and heavy sections and rod.

Liquid steel production (’000 tonnes): 1 393 Steel sales (’000 tonnes): 1 284EBITDA (Rm): 500 LTIFR: 1.06 Number of employees: 2 501


Coke and Chemicals Commercial coke for the ferro-alloy industry and metallurgical and steel by-products, including coal tar. By-products from coke and iron-making production is processed and sold as raw materials to make aggregates for road pavement, cements, fertilisers, plastics, electronics and roofing.

Commercial coke production (’000 tonnes): 633 Sales (’000 tonnes): – Coke 631– Tar 117EBITDA (Rm): 870 LTIFR: 2.43 Number of employees: 251


Sites of operations

Site Profile

Vanderbijlpark Works One of the world’s largest inland steel mills and the largest producer of flat steel products in Africa, with an annual capacity of 4.4 million tonnes of liquid steel. Vanderbijlpark Works has two blast furnaces, three electric arc furnaces and three basic oxygen furnaces.

Vereeniging Works This year celebrating 100 years of iron and steel production, Vereeniging Works is the country’s major supplier of speciality steel products, seamless tube and forge products. It has the capacity to produce about 400 000 tonnes of speciality product per annum, by processing billets and ingots generated by its electric arc furnace as well as input from material transferred from the Newcastle plant.

Newcastle Works Located in northern KwaZulu-Natal, the Newcastle facility is the country’s foremost supplier of profiled steel products. It is rated among the lowest cash-cost producers in the world. Newcastle Works has one blast furnace and three basic oxygen furnaces. It can produce 1.9 million tonnes of liquid steel per annum.

Saldanha Works This is the only steel mill in the world to successfully combine the Corex/Midrex process into a continuous chain that eliminates the need for coke ovens and blast furnaces. It is a world leader in emission control and environmental management, and can produce 1.2 million tonnes of liquid steel per annum.

Coke and Chemicals This operation produces commercial coke for the ferro-alloy industry from coke batteries located in Pretoria and Newcastle Works, as well as from excess capacity at Vanderbijlpark Works. It also processes and beneficiates metallurgical and steel by-products, including coal tar.


2011 performance at a glance

2011 2010

Liquid steel production (‘000 tonnes) 5 453 5 674Number of fatalities 5 0Lost time injury frequency rate 1.24 1.64Number of employees 9 808 9 233Training hours of full-time employees 388 954 305 993Training expenditure (Rm) 154 173Total Scope 1 CO2 emissions in million tonnes (direct emissions) 10.96 11.85Total Scope 2 CO2 emissions in million tonnes (due to electricity consumption) 4.49 4.44Total energy consumption in PJ 127 130Total water abstraction in kl 20 231 422 20 554 392Total particulate emissions from point sources in tonnes (ducted emissions) 4 729 4 081Percentage of by-products disposed (%) 45 39Community investment (Rm) 47 29


Message from the Chief Executive Officer

Dear stakeholdersThe challenge of the 2008 financial crisis gave impetus to an all-encompassing business improvement programme focusing on reliability, cost efficiencies and enhancing operational processes throughout ArcelorMittal South Africa. This programme draws extensively from the best practices and methodologies developed in the broader ArcelorMittal Group.

OverviewArcelorMittal South Africa and the steel industry faced a series of challenges during the 2011 financial year.

A key challenge was the continuing and sharp rise in the input costs of raw materials. Another was the steep rise in electricity tariffs. Together with disruptions to the supply chain, these placed severe pressure on steel margins.

Globally, steel demand softened in the second half of the year due to slower or negative growth in Europe and the US. Whilst domestic operating conditions were challenging in the second half of the year, aggregate steel demand for the year as a whole was slightly higher than 2010.

For ArcelorMittal South Africa, the most significant impact on the year’s steel output was the structural failure of the blast furnace dust catcher at our Newcastle facility. We were also affected by certain other production outages, as well as the general steel industry strike in July. Even though our employees did not participate in the strike, many customers were affected, leading to knock-on effects on despatches from our operations.

PIC TO

COME

Nonkululeko Nyembezi-HeitaChief Executive Officer


Message from the Chief Executive Officer continued

considerably in mid-2011 as the eurozone debt crisis steadily grew in scope and impact, while the economic recovery in the US has been sluggish at best. The major shift of economic activity towards emerging economies is nowhere clearer than in the steel industry. China is now the single most important factor influencing steel industry dynamics, accounting for 46% of global steel production and 45% of steel consumption. Signs of a slowdown in China are understandably being monitored very carefully – and anxiously – by everyone in our industry. While European and US demand for steel may well be muted for years to come, the African continent’s economic prospects are more positive. In South Africa, the extensive construction of infrastructure that preceded the 2010 FIFA World Cup™ slowed to a near halt. The South African government has, however, announced an economic and jobs stimulus programme worth R845 billion comprising much needed infrastructure development. The flagship of the programme thus far has been Eskom’s power station construction programme, with the rest of the planned projects being slower to launch. Indications are that these projects will raise local steel demand by an estimated 2.5 million tonnes over the next three years.

In the broader sub-Saharan African region, countries such as Mozambique, Tanzania, Zambia, Kenya, Ghana and Nigeria are consistently registering growth rates of over 5.5% per annum. Their outlook is promising enough to have been dubbed the “African lions”, ready to emulate the sparkling economic performance of the “Asian tigers” in the 1990s. These economies lack the infrastructure to support consistent growth and the African Union is prioritising continent-wide development of rail, road and electricity links – all of which will require considerable quantities of steel. We estimate that the demand for steel in Africa – in particular, the sub-Saharan region – will grow by 5% per annum over the next five years.

The South African Rand traded at fairly strong levels for three quarters of the year, posing challenges to our export facing business and strong competition

from steel imports in the domestic market. The currency did however weaken against the US Dollar in the fourth quarter, providing much needed relief to exporters.

Refining the business for continued sustainabilityThe economic challenges that began with the 2008 financial crisis instilled a renewed sense of urgency in the drive to improve the company’s competitiveness. In 2010, we launched a formal, all-encompassing business improvement programme focusing on reliability, cost efficiencies and enhancing operational processes throughout ArcelorMittal South Africa. The prime objectives of the initiative were to improve throughput, reduce costs and maintain consistent quality. These change programmes drew extensively from the best practices and world-class methodologies developed elsewhere within the broader ArcelorMittal Group. Over time, these initiatives should deliver an improvement in overall equipment effectiveness and reverse the recent negative trend in operational performance, particularly at our Vanderbijlpark operation.

The Saldanha business unit introduced World Class Manufacturing (WCM), which is a recognised methodology for improving efficiency in manufacturing. The strength of WCM is the involvement of the entire workforce from the outset, ensuring total commitment from all levels – from management to the shop floor. The early results achieved since programme launch are promising and exceeded the 2011 cost reduction target.

The implementation of Standardised Work Routine Management in Newcastle is a direct outcome of the twinning initiative with Monlevade, an ArcelorMittal Group long steel plant in Brazil. The foundation of the programme is an integrated management system, which focuses on instilling operational discipline by eliminating variation, with special attention being paid to simplifying and properly documenting standard operating procedures.

After a complete site diagnostics in early 2010, Vanderbijlpark embarked on a business transformation programme

Overall liquid steel production was 4% lower at 5.5 million tonnes and capacity utilisation decreased from 71% to 68%. Steel shipments declined by 7% to a total of 4.7 million tonnes, with export sales falling 26% year-on-year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 51% to R1.7 billion. The EBITDA margin of 6% was half of that achieved in 2010.

The overall result for ArcelorMittal South Africa was a headline loss of R52 million from a profit of R1.3 billion last year.

Safety performanceAfter a fatality-free 2010, we had five fatalities in 2011, of whom three were employed by contractors. Thorough investigations were carried out to determine the root causes of each incident, and the outcomes have served as a basis for enhancing our safe working procedures in the all-important drive to eliminate all fatalities and injuries from the workplace.

While the Board of Directors has formally expressed its condolences, I would like to extend my personal sympathy to the families and friends of the deceased employees.

Safety continues to be an overriding priority for all of us at ArcelorMittal. We have seen steady progress in our safety performance as measured by the lost time injury frequency rate, which improved by 24% from the year before to 1.24 in 2011, an all-time record for the company. The foundation of our safety improvement programme across all plants is the much higher intensity of shop floor and plant audits to observe employee behaviour and assess plant conditions. We have also stepped up our supervision of contractor safety management and training

Global environmentSteel is primarily used in the building and construction sector and its fortunes are directly linked to national and global economic cycles. Since the global economic crisis, the steel industry has experienced much higher levels of volatility and poorer visibility of demand factors. The upturn of late 2009 slowed


Our stakeholders include our customers, employees, shareholders, suppliers, government authorities, neighbouring communities, advocacy groups and the media. We are especially mindful of dependent stakeholders consisting of those who rely on us for their livelihood, either directly or indirectly, or those whose health, safety, or well-being could be affected by how we operate.

Corporate social investmentOur corporate social investment strategy focuses on the communities surrounding our operational sites at Vanderbijlpark, Newcastle, Saldanha and Vereeniging. In our CSI policy, we prioritise the critical areas of education, health and community development. We encourage company employees to volunteer for a range of CSI projects, and support their efforts with two funding programmes.

Skills development We are justifiably proud of our active support for national skills development efforts. Our programme commences with basic education and introduces thousands of learners from disadvantaged areas to maths, science and English at high school level through our three Science Centres. This extensive initiative prepares thousands of young South Africans for tertiary education and enables the most talented to progress through to engineering degrees and technical diplomas with financial assistance from ArcelorMittal.

South Africa’s economic development depends critically on skills, with engineering and technical expertise in particularly short supply. We are proud that the millions the company invests annually into maths, science and technical training are directed at bolstering a particularly weak aspect of our national education system.

OutlookWe expect 2012 will bring with it a great deal of uncertainty as there remains no great optimism that the global economy will prove resilient against the many negative forces affecting the developed world and indeed, many emerging economies.

There is much we can do to sustain our business through an unfavourable market cycle. Our immediate goal is to restore our cost position in the lowest quartile of the global cost curve from the median position we currently occupy. Further, we understand the imperative to create more jobs in South Africa, not least in downstream manufacturing, which is generally threatened by imports of finished products. We are exploring various avenues to combat this trend and will consult with affected industry participants as appropriate.

Internally, we will continue to focus on the execution of our operational improvement programmes whilst externally, the crucial matters to resolve are the dispute over the Sishen iron ore supply agreement and the ongoing discussions with the Department of Trade and Industry over steel pricing. Moreover, there are a number of outstanding issues relating to competition legislation matters, where we are complying fully with the authorities.

Thus, it is difficult to predict with any degree of certainty what the future will bring for our industry and more specifically, our company, clouded as it is by a number of factors that pose a risk to the overall health of the economy. Nevertheless, we have complete confidence that ArcelorMittal South Africa will weather this storm – as it has done numerous times before.

initially focusing on maintenance, quality control, human resource development and reducing production costs. The methodology deployed at the site is modelled on a change programme used widely within ArcelorMittal’s Flat Carbon Europe business unit.

Tackling our environmental impactsWe made steady progress in meeting our environmental goals. The coke clean gas project at Vanderbijlpark was commissioned and delivered a substantial 46% reduction in sulphur dioxide emissions. We are close to completing the off-gas treatment project at the sinter plant, which will further reduce sulphur dioxide and particulate emissions.

Without doubt, the most significant challenge in the short to medium term is upgrading our facilities to adhere to the air emissions standards prescribed by the new Air Quality Act. The greatest difficulty lies with the coke oven batteries, some of which may prove too expensive to modify and will therefore have to be decommissioned. The Board will review final plans during 2012 to ensure compliance within the required five to 10 year period.

The steel industry is presently experiencing tough trading conditions. The proposed carbon tax and South Africa’s positioning at the 2011 COP 17 conference in Durban to cap carbon emissions in absolute terms would further strain our profitability – even to the extent of forcing the company to cease certain operations. We are currently in negotiations with the National Treasury regarding the provisions of the envisaged carbon tax. The outcome of these discussions will no doubt unfold over the course of the year.

Stakeholder engagementAs a responsible corporate citizen and a long-standing pillar of South African industry, we are aware that our circle of stakeholders extends across the nation. All South Africans have a stake in ArcelorMittal South Africa continuing to produce high-quality steel as the foundation of much of the country’s built environment and its manufacturing sectors.


Pre-consumer scrap

Steel – the infrastructure of modern life

Post-consumer scrap

Transport

ArcelorMittal South Africa’s raw material procurement is one of the pillars of our

production strategy. In 2011, we sourced 7.7mt iron units, 4.9mt coal, 1.3mt fluxes

and 0.5mt scrap.

RAW MATERIALSRECEIVED

In 2011, approximately 4.3 mt of steel were produced through the basic oxygen

furnace route and 1.1 million tonnes through the electric arc furnace route. This diverse

approach gives us greater flexibility in raw material and energy usage.

STEEL PRODUCTION

ArcelorMittal South Africa is the leader in all

main steel markets from automotive to

construction and from household

appliances to packaging.

MANUFACTURING

USE PHASE

Steel’s unique properties include a combination of low cost, high performance, strength, durability and functional flexibility.

We work with customers to continuously improve steel’s properties further.

RECYCLING

Steel can be recycled an indefinite number

of times. Steel recovery rates are

estimated at 70%.

Assessing a product’s life cycle means looking at the entire ‘life’ of a product, from beginning to end (and sometimes back to the beginning again). ArcelorMittal South Africa is involved in all stages of the life cycle of steel including: raw material receiving, manufacturing, distribution, use and disposal. The development of Life Cycle Analysis tools for steel products has made it possible for us to analyse and understand places in the life cycle where environmental impacts are most critical, enabling project teams to develop effective solutions or alternatives that help minimise negative effects.

The life cycle of steel


Consumer benefits of steel

Affordable housing

Solar energy

Writing

Fitness equipment

Musical instruments

Security

Lighter cars

Energy transmission

Food preservation

Renewable energy

Connecting communities

Safer roads

Quicker travel

Smarter technology

Farming machinery

Water management

Stronger construction

Containers

Interior design

Protective equipment


Sustainable reporting process

This report reviews the steps we are taking to manage sustainability in terms of ethics, skills, the environment and transformation

To live our vision and values, we have to create a sustainable business. Our strategy therefore drives sustainable development and focuses on the safety of our employees, skills development and retention, as our employees are the cornerstone of our business. Simultaneously, we must address our production costs as well as quality and service to our customers by pursuing plant reliability, actively identifying improvement areas at our plants and improving yields.

The company will cease to exist if we do not address our environmental footprint in a mature and well thought-through process. Taking ownership of what is entrusted to us is not negotiable.

Our commitment to sustainable development is coordinated at group level and implemented at business unit level, with ultimate responsibility residing with our Board of Directors. The Board receives strategic and operation-specific inputs from specialised committees. One of these is the Safety, Health and Environment (SHE) Committee, which reviews performance in a SHE context, and considers and approves recommendations on sustainable development as well as SHE guidelines and policy for the group. The Board also receives input from the Audit and Risk Committee. In line with King III requirements, the Audit and Risk Committee plays a critical role in reviewing our integrated report and the nature of any associated external assurance processes. The composition and activities of these various committees are outlined in more detail in the annual financial statements report.

The Executive Committee (EXCO), chaired by our CEO, is responsible for ensuring that the group’s strategy is executed in a sustainable manner. It meets on a monthly basis to monitor the implementation, effectiveness and challenges faced in executing our strategy. The corporate Safety, Health and Wellness department and the corporate Environmental department report on a monthly basis to the EXCO on performance, progress and material issues being experienced. These departments are supported by a network of specialists that has been established throughout our operations to share experiences in addressing a range of sustainable development-related issues – such as auditing, process safety, greenhouse gas management, air quality, water, waste management and site remediation. Each of our businesses has dedicated SHE staff responsible for assisting line management with SHE implementation. As outlined later in this report, some of the other aspects that contribute to our broader sustainable development performance – such as ethics, human resources, skills development, transformation and human rights – are managed by specific corporate functions within the group.

There are definite reasons why we see sustainable development issues as being integral to the achievement of our core strategy. Some of these reasons relate to protecting value – where the focus is on risk management, legal compliance and operational efficiency – while others emphasise creating value. We believe that there is a strong causal link between addressing these issues and achieving our strategic objectives. Growing our business is ultimately dependent on a stable political environment and attracting and retaining the most appropriately skilled and experienced employees to ensure

good customer service. A fundamental competitive advantage is to maintain our cost position in the lowest quartile of the global steel industry. We need to coordinate wherever possible with government social and economic priorities. Our national contributions in terms of job creation, skills development and infrastructure development help to foster a more stable political environment, which is good for business.

The new King III Code of Governance in South Africa calls for integrated sustainable development reporting. Underlying this call is the desire that companies should demonstrate more clearly how social, economic and environmental considerations impact on their growth drivers, and that they should also show how these issues are being integrated effectively within the company’s core strategy and throughout its operations and sphere of influence. The remainder of this report reviews the steps that we have been taking – and are planning to take – to manage and address the strategic imperative of sustainable development.


y

Impact on growth drivers

We show how social, economic and environmental considerations are integrated within our core strategy


Material challenges

The following table summarises the key material challenges, the stakeholders impacted and our progress in addressing these challenges.

Material challengesStakeholders concerned Progress in 2011

Goals (short, medium, long term)

Additional information

Safety Employees

Contractors

Employee LTIFR reduced to 1.12 from 1.61 in 2010.

Contractor LTIFR reduced to 1.45 from 1.68 in 2010.

Elimination of fatalities in short term.

Reducing LTIFR to below 1.0 in 2012 and 20% reductions in subsequent years.

Page 28

Regain zero effluent discharge (ZED) status

Society at large Vanderbijlpark Works experienced problems during the year impacting their ZED status. Urgent steps have been taken.

Newcastle Works was issued with a new water-use licence and plans are on track to achieve its target of ZED status.

Upgrades to be completed in 2012 and Vanderbijlpark Works reissued with a ZED status. Newcastle Works’ achievement of ZED status planned for 2013.

Page 22

Air emissions standards in terms of the Air Quality Act, No. 39 of 2004

Society at large New compliance plans were drawn up and are being reviewed by the Board.

Necessary facility upgrades to be completed in the required five- to 10-year time periods.

Page 22

Improvement of energy efficiency

Society at large Own power generation capacity is 80 MW.

A smaller wind project – which will limit capital expenditure and allow further research into wind as an alternative green electricity supply option is currently under development at Saldanha Works.

Aim to reduce our electricity consumption by some 12% by 2014.

Page 27

Reduction of CO2 emissions

Society at large Overall carbon emissions decreased by 5.8% to 15.4 million tonnes of CO2.

The achievement of the targeted 8% group-wide reduction in CO2 emissions.

Page 27

Skills development and increased worker productivity

Employees All employees declared competent in their manning points.

Production learners being trained in order to release employees on the NQF programmes.

Pipelines strengthened to allow self-reliance.

All bargaining unit employees to be declared competent to perform their respective jobs.

Production employees to be at NQF level 4.

Pipeline sufficient to address the ageing workforce and to enable self-reliance in terms of skills.

Page 36 – 37

Reliability of supply and improved service delivery

Customers With the plant failures experienced during 2011, our reliability was negatively impacted.

Business improvement plans at all the plants have been implemented and are focusing on plant availability and efficiency improvements.

Improve production stability and service delivery.

Page 46


Material challengesStakeholders concerned Progress in 2011

Goals (short, medium, long term)

Additional information

Iron ore supply agreement with Sishen Iron Ore Company (SIOC), subsidiary company of Kumba Iron Ore Limited

Society at large The arbitration hearing scheduled to take place in May 2012 was postponed following the court application hearing held in August 2011, in which we joined SIOC. The application was brought by SIOC against the Department of Mineral Resources (DMR) and Imperial Crown Trading 289 (Proprietary) Limited (ICT) after the DMR awarded ICT 21,4% of the prospecting rights over the Sishen Iron Ore deposit. The judgment released on 15 December ruled, among other things, that the DMR erred in granting the prospecting rights to ICT, because the DMR granted SIOC 100% of the prospecting rights in 2008.

Engaged with SIOC and the arbitrators on dates for the arbitration to resolve the matter.

Page 9

Ethical business Society at large Training programmes are in place to train employees.

Fraud hotline is available 24/7.

Scheduled training on detection and prevention of fraud to ensure that awareness is increased.

Page 48

Competition Commission and Competition Tribunal cases

Society at large The Competition Commission added a new case during the year regarding the “basket of goods” pricing methodology and the iron ore surcharge.

We have delivered all the requested documentation.

Continue to cooperate fully with the Competition Commission on all the matters under investigation to seek swift resolution.

Page 48


Stakeholder engagement

We spend time and effort in engaging as broadly as possible, as this can lead to better decisions

Since 2010, ArcelorMittal South Africa has prioritised the development of an enhanced and comprehensive stakeholder engagement programme. As a responsible corporate citizen and a long-standing pillar of South African industry, we are aware that our circle of stakeholders extends across the nation. All South Africans have a stake in ArcelorMittal South Africa continuing to produce high-quality steel, as the foundation of much of the country’s built environment and its manufacturing sectors.

As part of the global ArcelorMittal Group, we are also required to align our stakeholder engagement strategy with the Group’s stipulated community engagement standard.

Our policy is implemented by the Corporate Responsibility and External Relations’ office, with regular feedback directly to the Board.

The Group’s approach to engagementThe concept of stakeholder engagement is based on the recognition that what we do has an impact on others. Some insets are negative, and should, where possible, be avoided or minimised. Others, such as our contribution to national economic development, are clearly positive. We need to understand exactly what these impacts are and manage them responsibly, while taking into account other people’s rights and priorities.

Our stakeholders are those who have an interest in how we perform as a company. The number and nature of our stakeholders varies in accordance with the size and character of our operational sites. These will also change over time, as new projects and developments affect different people and groupings in varied ways.

The value of stakeholder engagementWe believe that a genuinely committed approach to long-term stakeholder engagement:

gives us a better understanding of local concerns;helps us to be proactive in identifying and addressing issues;makes a positive contribution to local social and economic development;ensures that we play a full part in shaping our future operating environment;safeguards and reinforces our “licence to operate”;helps gain acceptance and support for new projects; andbuilds and protects our brand and reputation.

We work to create meaningful engagement with everyone affected by our presence in particular communities, although the highest priorities are accorded to groups adjacent to our facilities that are influential, or dependent on the company. Influential stakeholders are those that can directly affect our operations, assets, our reputation, or our “licence to operate”. These include government authorities, shareholders, the media and relevant community or activist groups. Dependent stakeholders are those that rely on us for their livelihood, either directly or indirectly, or those whose health, safety or well-being could be affected by how we operate. This includes the employees, suppliers, business partners and those communities living close to our sites.

We specifically communicate with stakeholders in a culturally appropriate manner, so that stakeholders receive information in a format that is accessible to them. We also afford them the chance

to express their views and concerns, regardless of status in the community.

We spend time and effort on engaging as broadly as possible, as this can lead to better management decisions. People directly affected by an issue or project can often offer a new perspective and ensure that the decisions we make are more robust, even if some may still disagree with them.


g g

Authentic engagement

We specifically communicate with stakeholders in a culturally appropriate manner, so that information is accessible to them


Stakeholder engagement continued

Job

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Day-to-day workplace contact

Safe, rewarding work

Income generation

leadership, dedication,

Our business depends on the:

Training and skills developm

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Performance management

Income and benefits

Career and skills development

Job security

programmes

quality of work, skills

productivity of our employees

Provide jobs and

Community upliftment

Corporate social investment

Community participation

Community development Infrastru

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Health and wellness Environmental impact a

nd

Income stream restoration Job creation

Available for jobs

Stakeholder meetings

Media Forms Investor communicatio

ns Consumers

income

Produce a vital product

Our environmental impacts Supply chain management Pricing

Carbon tax and emissions controls Quality of products Predictability of delivery

Meetings

Presentations and reports

Digital communications

Sustainable market

Innovative partnerships for

sustrainable growth

Manufacturing

Primary supplier of steel

Business opportunities

Media

opportunities

Impact on environment

Briefings

communities and the

economy

Key in the SA

Lunches with media Iron ore supply contract dispute

Environmental challenges Expansion

Analysis of issues

Influence stakeholder perceptions

Steel pricing issues Pricing method

Dipstick surveys

Site visits M

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Convey information

Public iscussion

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Our stakeholders

Key issues of interest for our stakeholders

Ways of engaging with our stakeholders

Why are our stakeholders important to us?

Why are we important to our stakeholders?

Stakeholder mapWe rely on good relationships with our stakeholders. Whether that means profitable trading links with our customers and suppliers, or connections with other stakeholders who are influenced by, or interested in what we do, and how we conduct our business.


Stakeholder influence on company

No influence Low influence Some influenceFormal power/high influence

Stak

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com

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High dependence – no choice

Treat fairly – honour commitments to these stakeholders in line with policy,

regulations and industry norms. Otherwise endeavour to keep

stakeholders satisfied insofar as balance of costs and benefits allow.

Strategic threat or opportunity – invest in engagement process to understand

concerns and develop solutions.

No direct impacts – stakeholders

have broad range of choice

Low priority – provide access to general channels of information and

feedback.

Keep involved and informed, but ensure balance between concerns of high influence stakeholders and those people actually impacted by decisions.

Identifying our stakeholdersDuring 2011, we held workshops to identify stakeholders and their concerns clearly. During this process, we assessed who our primary stakeholders are and considered a sustainability strategy in terms of our identified stakeholders.

We have used the methodology set out to identify and categorise our stakeholders.


Sustainability through steel

We contribute about 1.3% of South Africa’s GDP and significantly improve its international balance of payments

National infrastructureOur steel underpins South Africa’s national infrastructure, which includes:

transport systems – road, airport and rail; electricity transmission and distribution systems – power stations and grid;telecommunications networks – signal transmission stations;water supply and treatment – dams, pipes and purification plants; andfuel supply systems – piping for liquid, gas and solid fuel transportation.

In his 2011 budget speech, the Minister of Finance announced public sector capital spending of R487.4 billion in the next four years, with Eskom taking the largest allocation of 69% (R335 billion).

The planned public sector infrastructure programme will use an estimated 2.5 million tonnes of steel between 2007 and 2015 in these sectors. Development has commenced with Eskom’s Medupi and Kusile power stations, to be followed by the country’s rail network and dam-building projects.

Many transport-related infrastructure problems will be addressed by 2015, but Eskom’s projects are scheduled to run through to 2020. Dam-building commissioned by the Department of Water Affairs will continue through 2015.

Construction, manufacturing and miningConstruction activities, especially large infrastructure developments within the public sector, mining and manufacturing sectors, has been the key driver of growth in gross fixed investment in the South African economy. Steel is the mainstay of these sectors and hence, the steel industry contributes directly to the country’s gross domestic product (GDP), tax revenues and foreign exchange earnings.

Steel is also the key raw material for the manufacturing and metal fabrication sectors and a vital ingredient in many downstream consumer industries such as transport, aviation, housing and packaging. Few modern constructions do not contain steel as part of their design. Steel is a building material of choice with significant advantages in terms of speed of construction, safety, cost and aesthetic appeal.

Steel is a key resource in the development of the South African economy, as it feeds into the gross domestic fixed investment through infrastructure development, which is critical to a balanced and sustainable economic growth.

Endlessly recycled steelSteel is an endlessly recycled product. Due to its magnetic properties, steel packaging can be readily and cost-effectively recovered from the waste stream. Unlike other materials, the intrinsic strength of steel does not deteriorate when it is re-processed. For this reason, every steel plant is a recycling plant and the product always contains recycled steel. Used steel cans are recycled into part of a guard rail, which may one day be recycled into an appliance. Across the world, 435 million tonnes of steel products – including used steel cans, appliances, automobiles and construction materials – are recycled every year as part of the steel-making process. This equates to a worldwide recycling rate of over 50%.

As an international group, ArcelorMittal is the biggest recycler of scrap steel in the world and the group works with local and national governments to promote it further. Every year, more than 25 million tonnes of products are recovered and recycled, which also saves around 35 million tonnes of CO

2.

GDP and balance of paymentsThe company contributes about 1.3% of South Africa’s GDP and significantly impacts the country’s international balance of payments. The cost and quality of our steel means that less than 20% of national steel demand needs to be imported.

South Africa is the 21st-largest producer of steel in the world and manufactures about half of Africa’s crude steel. According to our latest calculations, primary steel producers in the country have the capacity to produce over 8 million tonnes of finished steel products per year. According to the South African Iron and Steel Institute (SAISI), almost 5 million tonnes was sold domestically in 2011.

Job creation and skills developmentThe steel industry is a major employer for South Africans and according to SAISI, directly employs more than 33 000 people.

The steel sector also plays a critical role in skills development. The steel manufacturing process requires a broad set of skills and a continuous programme of upskilling employees. Maintaining a healthy skills pipeline through training and bursaries is a company imperative. Skills being developed in our company range from project managers and engineers to technicians and artisans. Such training programmes contribute to the broader industrial skills base of the country at a time when these skills are urgently needed. Over 3 000 people, with more than 90% from previously disadvantaged communities, are presently in our skills development pipeline.


Recycling steel

The ArcelorMittal Group is the biggest scrap recycler in the world and works with governments to promote recycling


Making steel more sustainable

The Green Scorpions (Environmental Management Inspectorate) inspected the Newcastle plant in February 2011 – that report is not yet issued. This agency also inspected the Mooiplaats waste disposal site near Pretoria in August 2011, but we do not anticipate negative findings. The report resulting from a Green Scorpion inspection conducted during August 2010 at Vanderbijlpark Works is not yet available. We were not issued with any fines or non-monetary sanctions for non-compliance with environmental laws and regulations during 2011.

The Vereeniging Works electric arc furnace (EAF) dust extraction system, introduced in 2009, continues to reduce our particulate emissions significantly and emission results are comparable to best practices globally. SO2 emissions at the Vanderbijlpark Works are being reduced by the coke clean gas project, although this installation ceased operating on several occasions due to technical issues so that total SO2 emissions rose significantly in 2011 against the 2010 figure. Similar operating problems were experienced at the coke gas desulphurisation unit at our Newcastle Works during the year, also resulting in significant SO2 emission increases. Good progress continues to be made on the rehabilitation of legacy sites, especially at our Vanderbijlpark Works.

When considering various environmental impact parameters (air, water and waste), progress can be described as variable and this is a reflection of the difficult conditions the company operated under, with various facilities not operating at full capacity or facing unscheduled stoppages.

ChallengesOur most pressing environmental issue is to regain the ZED status of Vanderbijlpark Works during 2012, and to achieve ZED status at Newcastle Works. Construction work at Newcastle Works will commence in 2012 to erect the necessary infrastructure and we are confident that ZED status will be achieved by late 2013 or early 2014. Newcastle Works was issued with a new water-use licence during 2011 which is currently the subject of an amendment process.

The new air emissions standards, promulgated in terms of the Air Quality Act No 39 of 2004, compelled us to draw up new compliance plans, which include a revised coke strategy. The Board is busy reviewing these plans and will approve the

Environmental impact of operationsThe impact of our operations on the environment constitutes one of our most significant business and reputational risks. The environmental footprint of iron- and steel-making derives from its need for natural resources, electricity and coal. As some degree of environmental impact is therefore unavoidable, we recognise our responsibility to manage and reduce this impact as far as possible. This needs to be balanced with the demand for steel by South Africa’s growing economy and infrastructural needs.

Our most pressing environmental issues, as outlined below, are:

emissions to air, of which particulates and compliance with the new air emissions standards are the key concerns;CO2 emissions and their impact on climate change;water usage and efforts to achieve zero effluent discharge (ZED) status at Newcastle Works, as well as regaining ZED status for Vanderbijlpark Works;waste, by-products and recycling; andsoil and ground water pollution from past and current operations.

OverviewThe promulgation of the Air Quality Act No 39 of 2004, which became effective on 1 April 2010, continues to present a stiff challenge. To achieve compliance, the company has to invest significantly on its plants in the next few years.

The steel industry is presently experiencing its most severe downturn in a decade and tough decisions may need to be made on mothballing certain non-compliant infrastructure, with concomitant effects on production output. The proposed carbon tax and South Africa’s position at the COP 17 conference in Durban to cap carbon emissions in absolute terms could further strain our profitability – even to the extent of forcing the company to cease certain operations. We are currently in negotiations with the National Treasury regarding the provisions of the envisaged carbon tax and believe that our proposals are logical and would produce a fair and equitable outcome, while also preserving the livelihoods of thousands of our employees and their dependants.

Vanderbijlpark

Newcastle

Saldanha

Vereeniging

TOTAL group

Particulate emissions (kg/t CS)

2009 2010 2011

0.22

0.20

0.25

0.12

0.12

0.09

0.68

0.72

0.87

0.52

0.66

0.83

0.95

0.99

1.14

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

necessary facility upgrades to ensure compliance within the required 5 to 10-year time periods provided for in the Act.

Due to several technical disruptions, the company produced a lower overall volume of steel in this period. However, despite the reduced production, CO2 emissions in terms of electricity and coal consumption per tonne of product produced, remained fairly stable when compared to previous years.

Company environmental frameworkOur environmental policies are aligned with the global ArcelorMittal Group’s environmental and energy policies, which ensure that sound principles and requirements are applied uniformly across its operations. We adhere to the group’s policy stipulation that all production


facilities are certified to the international ISO 14001 standard on environmental management systems.

Specific incidentsOn 29 July 2011, a pipeline conveying effluent from the Cold Mills to the CETP was damaged by a contractor. The pipeline was under pressure and the spill could not immediately be contained. The effluent in the line contained Cr (III and VI) and Sn compounds, which potentially pose a risk to the environment. Due to the significant soil pollution that occurred over a large area of up to 700 m2, the incident was reported in terms of section 30 of the National Environmental Management Act No 107 of 1998 to the relevant authority.

By the third quarter of 2011, it became apparent that the Vanderbijlpark Works water treatment facility was no longer able to consistently maintain ZED standards, and plans were drawn up for necessary upgrades. Negotiations were opened with the Department of Water Affairs (DWA) regarding the way forward, including possible amendments to the plant’s water-use licence. The DWA inspected the plant on 13 October 2011 and we submitted the requested documentation. We envisage that the agreed upgrades will be completed in 2012 and Vanderbijlpark Works’ water treatment shortcomings will be successfully addressed.


commissioned during 2010 at a cost of R327 million play a pivotal role in reducing SO2 emissions. However operational problems were experienced during 2011 at this plant resulting in a significant increase in specific SO2 emissions. There was also an increase in the emissions from our Newcastle Works facility, which can be attributed to improved monitoring and problems experienced with the coke gas sulphur recovery unit at the coke batteries. The increase in specific SO2 emissions from our Saldanha Works facility was due to improved monitoring and the higher utilisation of the coal-based Corex furnace to produce liquid iron.

We continue to invest in the following projects to reduce air emissions:

Vanderbijlpark WorksSinter plant off-gas treatment project – This project, which is expected to significantly reduce SO2 and particulate emissions, is scheduled for completion in the first quarter of 2012. EAF dust extraction system – Detailed design is complete, but given the current economic uncertainties, other options are being considered. Should this system be installed, it is anticipated to reduce visible air emissions similar to the system currently operational at Vereeniging Works. Blast furnace D stock house bag house project – This R100 million system is expected to be completed by the end of 2013. Various improvements at the coke batteries will be implemented over the next four years or longer, to comply with the Air Quality Act No 39 of 2004.

Newcastle WorksBlast furnace cast house dust extraction unit improvements – Scheduled for completion in 2014 and will be installed when the furnace is taken out of production for three months to be relined.Desulphurisation facility at steel meltshop – Scheduled for completion during 2012.Improvements will be implemented at the coke batteries, as per National Environmental Management: Air Quality Act No 39 of 2004 requirements.

Coke and ChemicalsThe coke battery at the Pretoria Works is presently scheduled for an upgrade in order to comply with the: Air Quality Act No 39 of 2004 requirements. This is an ageing facility; therefore, should

its continued operations not justify the cost of upgrading, it may be shut down. The tar distillation plant located at Vanderbijlpark has high VOC emissions (many are of a fugitive nature) and an action plan will be drawn up in 2012 to reduce such emissions. It is envisaged that some of these emissions can be reduced by implementing improved maintenance programmes.

CO2 emissions and impact on climate change CO2 emissions are a further important air emissions indicator but, because of the fact that they are inextricably linked with issues of energy usage and climate change, are dealt with separately in the chapter on energy and climate change (page 27).

Water usage and pollution Although the manufacturing of iron and steel uses large quantities of water, we are making good progress in reducing water abstraction from the baseline date of 2005 in absolute terms. The 37% to 39% result already achieved, is close to the 40% reduction that we set ourselves as a target and we believe that the target can be significantly exceeded, once the planned water treatment improvements come on line at Newcastle Works towards the end of 2013.

Environmental impact of operations continued

Air emissionsParticulate and SO2 emissions are the most significant air emissions produced by our operations.

Particulate emissions Point source particulate emissions during the year under review increased slightly from 0.72 kg/tonne of crude steel in 2010 to 0.87 kg/tonne of crude steel in 2011 (total combined score for all operations). The increase is not only due to poorer environmental performance of our abatement systems and production facilities not running optimally, but also due to the fact that monitoring systems were expanded and improved. The new Vereeniging Works EAF dust extraction system is working well and emission results compare well to global best practices. There are no visible emissions escaping through the roof which used to be of concern to our stakeholders prior to the new abatement system being installed. Fugitive emissions, especially from our coke-making operations, remain a concern and the implementation of requirements as specified in the Air Quality Act over the coming years should improve the situation considerably. Stack emissions from our coke batteries have already improved significantly over the past years due to improved maintenance, which includes ceramic welding on a continuous basis. These stack emission concentrations are already within the limits set in the Air Quality Act.

Fugitive particulate emissions from our steel-making facilities at Vanderbijlpark and Saldanha Works have caught the attention of our stakeholders during 2011, and we are investigating possible solutions to such emissions.

Monthly reporting highlights any potential problems and we have focused on improving our response time for rectifying any issues. Unfortunately some good progress in this regard was countered by production facilities not running optimally, which often results in emission increases especially in specific terms (normalised per tonne of crude steel produced).

SO2 emissionsSO2 emissions have increased significantly when compared with 2010 figures, from 2.66 kg/tonne of crude steel to 4.56 kg/tonne of crude steel. The Vanderbijlpark Works coke clean gas project, which was

Making steel more sustainable continued

Vanderbijlpark

Newcastle

Saldanha

Vereeniging

TOTAL group

SO2 emissions (kg/t CS)

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009 2010 2011

4.32

2.32

4.32

5.33

4.73

0.12

4.56

3.42

2.84

0.12

2.66

2.44

2.35

0.12

3.26


concern at our Newcastle and Vanderbijlpark Works where discharges into the environment of this element amounted to 52 tonnes and 33 tonnes per annum, respectively. In both cases the necessary water treatment improvements (already mentioned) will reduce significantly the release of this element into the environment.

Update on key water-related projectsNewcastle Works

ZED project – Design of the biological water treatment reactor (bulk of project) has been finalised and is scheduled for completion before the end of 2013.

Vanderbijlpark WorksCoal water project – The initial design challenges were overcome and planning of the project is going ahead. This project will improve our ability to treat

organically polluted water from coke-making operations and is now scheduled for completion by 2014. The project was postponed due to the poor economic situation of the steel sector. The second phase of this project will entail a biological treatment plant, to be installed after completion of the coal water project, to further enhance the recycling of effluent from the coke batteries. Water treatment capacity and process improvements are scheduled to be implemented during 2012 as part of the drive to restore the ZED status of the plant.Groundwater management plan – The initial plan was completed in the fourth quarter of 2010 on the preferred methods to reduce current pollution levels and restrict its spread in the underlying aquifer. This plan underwent a peer review process and the most feasible option will be implemented from 2012 onwards. Although not yet finalised, “pump and treat” options appear to be most efficient in cases of significant pollution.

By-products and recyclingWe are committed to reusing as many by-products as possible and to finding markets for those that cannot be reused internally. Unfortunately, certain by-products are still disposed of in landfill sites due to recycling or reuse solutions not yet being found, or capital could not be allocated due to more pressing air and water issues. During the year, we generated 4 093 918 tonnes of steel by-products, of which we managed to recycle 12% and sell 43% to customers.

In total, 45% was disposed of as waste. This is up by 6% on the previous year’s figures. The main reason for the increase is the decrease in demand for our by-products as the economic situation deteriorated, especially during the second half of 2011. The most significant by-product streams that were disposed of are listed in the following table:

Our total fresh water intake for 2011 in specific terms was 3.71 kl/tonne of liquid-steel produced, which was up on the 3.64 kl/tonne of the previous year, mainly due to production outages at our Newcastle Works.

Each production facility draws its water from a particular source. Vanderbijlpark Works extracts its water from the Vaal River and Vaal Dam, Newcastle Works from the Ngagane River, Saldanha Works from the municipality, and Vereeniging Works from the Vaal and Klip River. The total water extraction per plant is outlined in the graph above. We are working hard to reduce the amount of waterborne effluent discharged by our plants. The Saldanha Works has ZED status and Vanderbijlpark Works is coordinating with the DWA to regain its ZED status in the coming year. ZED status is gained when plants recycle 100% of their process effluent.

Newcastle Works has received its water-use licence and anticipates achieving ZED status by the end of 2013.

At Vereeniging Works, projects to reduce the levels of fluoride in the discharged effluent, delivered the anticipated results. Fluoride levels occasionally spike up to 2 mg/l – a huge improvement on the 30 mg/l spikes experienced in the past. Spikes are typically due to overflows or leaking pipes and are, without exception, reported to the relevant authorities as part of permit requirements.

Boron levels from our Tubular Products division at Vereeniging Works reduced further and have remained compliant since August 2011.

During the year, Pretoria Works experienced an increase in sulphate and chloride levels in its discharged effluent, due to high leachate volumes from the slag disposal sites. This was reported to the authorities. An internal investigation suggests the problem was caused by the excessively high rainfall in 2010 and 2011, which exposed slag reclamation areas. Towards the end of 2011, leaking municipal water pipes on the hill above the slag reclamation areas were detected, which could have added to the leachate problem. This situation is being monitored, as these events are unprecedented and never occur during the dry seasons.

Improved monitoring of effluent has also revealed that fluoride is an element of

Vanderbijlpark

Newcastle

Saldanha

Vereeniging

Fresh water intake (kl/tonne liquid-steel)

3.45

4.18

3.88

3.73

3.69

5.14

2.17

2.15

2.18

3.67

2.87

2.10

3.36

3.64

3.71

TOTAL group

2009 2010 2011

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

Waste type Mass (tonnes) Disposal method

Steel slag 1 176 977 LandfillIron slag 46 178 LandfillOther metallurgical waste, including:Furnace and gas treatment sludges, dust and dolochar 485 653 Landfill


in 2008, but we have not yet received a decision from the DEA. Rehabilitation cannot commence until the DEA has approved the submitted plan. Mooiplaats waste disposal site – located 10 km west of Pretoria Works at the Mooiplaats Quarry: A tender process is underway to select contractors and this R50 million capping project is expected to commence by May 2012. Zwartkops waste disposal site – located east of the Zwartkops racetrack in Pretoria: Negotiations with the site owners are ongoing, as they contested the findings of an external study they commissioned to determine its environmental risk. We remain confident that further discussions and the awaited promulgation of new waste classification systems will resolve this issue. Dunswart waste disposal site – located south of Benoni: The Environmental Impact Assessment (EIA), placed on hold in 2009 and 2010 due to financial constraints, was revived in 2011, but the illegal occupation of this land has caused further delays. Court orders were obtained and the planned relocation of the squatters should be completed during 2012. We look forward to rehabilitating the site once the EIA process is completed and the necessary authorisation obtained.Klip waste disposal site – located on the banks of the Klip River, close to the Vereeniging Works: Rehabilitation of this site was placed on hold in 2009 and brought back on line in 2010. A waste management licence was issued, and the potential requirement for a water-use licence resolved. Work will commence in the first quarter of 2012 to remove tarry waste from the premises.Dam 10 – located on the Vanderbijlpark Works premises: Remediation of this important dam is well advanced and due for completion in 2012, by establishing suitable vegetation as the final phase. This project used innovative biological rehabilitation techniques, involving the use of bacteria, to reduce the organic contamination levels in the dam sediments. Covering an area of 80 hectares, it is among the biggest remediation exercises of its kind tackled to date in South Africa, and is providing invaluable lessons for other rehabilitation projects identified for the future. Identified as a primary source of groundwater pollution in surrounding areas, the drying out of Dam 10 commenced in 2004.

Environmental impact of operations continued

The company’s hazardous waste streams consist mainly of tarry sludges, certain dust streams and oil-contaminated waste, which were disposed of at permitted hazardous-waste disposal sites. Newcastle Works has an internal hazardous-waste disposal site, but hazardous waste from the Saldanha, Vereeniging, Pretoria and Vanderbijlpark Works is transported to external and appropriate facilities by contractors who comply with regulations to transport hazardous waste.

Financial constraints have prevented us from making progress in improving our disposal rate, but we continually seek out alternative markets for by-products. The appointment of new slag and scrap handling companies throughout ArcelorMittal South Africa with significant expertise in the re-use of steel by-products, may improve disposal ratios from 2012 onwards. While the steel-making process has a significant environmental impact, the products we make are almost infinitely recyclable and easy to recover from waste streams. Around 22% of the steel we produce is made from recycled scrap steel. While we do not yet track the percentage of packaging reclaimed once our products leave our operation, such packaging is also made largely from recyclable steel and paper.

Soil and groundwater pollutionWe remain committed to fulfilling our responsibility of rehabilitating so-called “legacy sites” that may have suffered soil and groundwater pollution at a time when environmental standards and legislation were not as stringent as today. An environmental provision is in place to take care of the company’s rehabilitation needs, and is reviewed biannually. An amount of approximately R1.4 billion was in the provision account at year-end.

An update on the rehabilitation progress being made at various sites

Vaal waste disposal site – located at Vereeniging Works close to the Vaal River: This site remains closed in accordance with the directive issued by the Green Scorpions in 2007, and we completed the removal of all magnetite in 2009. The provincial authorities have approved the rehabilitation plan proposed

Making steel more sustainable continued

Vanderbijlpark

Newcastle

Saldanha

Vereeniging

By-products disposed (% of total )

54.55

48.40

53.00

28.02

17.31

25.00

40.94

36.20

37.00

43.80

38.62

45.00

90.36

93.90

94.00

TOTAL group

2009 2010 2011

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

Maturation ponds – located on the Vanderbijlpark Works premises: A long-term project, these ponds that stored organically polluted coke-making effluent are being remediated using the successful biological treatment options pioneered at Dam 10. The major advantage of using biological treatment options is that organic pollutants are reduced to acceptable levels, thereby significantly reducing disposal volumes.Capping the existing slag disposal site at Vanderbijlpark Works: An initial 39 hectares (one-third of the existing site) was capped during 2010, at a cost of R45 million, to limit the ingress of rainwater into the waste body, thereby reducing the generation of potentially harmful leachate from the site. A phased approach into 2014 was adopted to cap the remainder of the existing disposal site, with the second 38 hectare phase presently underway. This project is anticipated to cost R120 million in total. A new disposal site, constructed during 2010 at a cost of R30 million, has phased out the previous unlined site, in accordance with the requirement of the water-use licence of Vanderbijlpark Works.


reducing our electricity consumption by some 12% by 2014. In addition, proposed electricity tariff increases over the next three years will strengthen the business case for alternative energy projects. The company’s annual electricity cost has increased from R700 million in 2007 to R2.1 billion in 2011.

Status of energy efficiency projectsWe have invested in various electricity generation and alternative energy projects, chief among these is the 40 MW installed capacity, power generation plant at Vanderbijlpark Works, which uses waste heat from the DRI kilns to generate power. This plant raises the company’s own power generation capacity to 80 MW.

In 2010, we reported on research being conducted at Saldanha Works into the viability of a large wind power generation facility. The research concluded that, under current conditions and taking into account expected price escalations, pure wind energy is too costly to be included in the generation mix. A smaller wind project – which will limit capital expenditure and allow further research into wind as an alternative green electricity supply option – is currently under development.

Steel as an energy saverWhile steel-making consumes considerable energy and is associated with a significant carbon footprint during production, steel products can help to save energy over long-term periods. With high levels of durability and strength, the material’s life cycle is prolonged and it is easily recyclable. Steel products and infrastructure are durable and do not need to be replaced as often as those made from other materials. In addition, recycled steel reduces production costs and carbon emissions.

The development of advanced and lighter steel products reduces carbon emissions in many ways. The World Steel Association reports that: “Light-weight advanced high-strength steels (AHSS), allow for less steel to be used in cars, reducing their weight by 9%, fuel consumption during the use phase by 5,1% and greenhouse gas emissions by 5,7%, without compromising safety.” Prof JP Birat, AutomotiveWorld.com (12/08/2011)

Measuring our performanceOur carbon footprint is calculated by using a global ArcelorMittal Group model that

benchmarks similar steel plants in the global ArcelorMittal Group.

Scope 1 and Scope 2 emissionsDuring the year under review, overall carbon emissions decreased by 5.2% to 15.5 mt (10.96 mt scope 1 and 4.49 mt scope 2) tonnes of CO2. This is mainly due to higher market coke sales than 2010 selling product with the footprint and improvements on efficient data capture of residue streams containing free carbon not converted to CO2.

Plant instabilities and major plant disruptions at the Newcastle Works had a marked effect on its scope 2 emissions, as electricity was consumed with no liquid steel being produced for a period of four months. The transfer of energy carriers like coke to external customers and energy efficiency efforts on the plants, decreased our energy intensity from 22.86 GJ/tonne to 22.2 GJ/tonne of liquid steel produced.

Our electricity generation and waste heat recovery projects will take two to three years for full implementation before the net effect of carbon emission reductions will be realised. Power generation projects will primarily impact on scope 2 emissions.

C02 /tonne liquid steel

1.92 0.82

2.09 0.78

1.96 0.80

2009

2011

2010

Scope 1 Scope 2

Energy intensity (GJ/tonne)

2009

2011

2010

Electricity Carbon origin

19.09 2.68

20.33 2.54

19.63 2.55

Energy and climate changeAlthough mitigating climate change is a global and national priority, implementation of climate change policies can pose a threat to our manufacturing operations.

At group level, ArcelorMittal’s goal is to reduce its carbon dioxide (C02) emissions by 8% (170 kg/tonne of steel produced) by 2020. While we do not believe that it is possible for South African industry and businesses alike to achieve government’s target to reduce CO2 emissions by 34% by 2020, as outlined in the 2009 Copenhagen Climate Change Summit, we remain fully committed to engage with key stakeholders to set achievable targets.

Global warming precipitated by increased carbon emissions is likely to result in weather pattern disturbances that may hamper the company’s ability to operate. Steel-making operations that rely heavily on water will be impacted by potential droughts and floods. Flooding, in particular, has the potential to disrupt the supply chain from mines that provide our raw materials for production.

Quantifying the challengeIron and steel-making relies heavily on coal and natural gas as reducing agents and fuel to enable the chemical reactions required for the process.

Electric arc furnace technology, which uses scrap metal, provides a lower-carbon alternative. However, the availability, quality and cost of scrap steel prevents us from being able to use this technology more extensively and still meet the country’s demand for steel.

In South Africa, a company’s carbon footprint is inextricably linked to electricity usage, because the national electricity supply is derived from coal. This makes benchmark comparisons with other steel-makers across the globe – many of whom use nuclear energy and cleaner forms of electricity – inherently problematic.

Reducing our reliance on the national electricity grid and investigating cleaner forms of energy provides the most significant possibilities for reducing indirect carbon emissions. As a signatory to the National Energy Efficiency Accord, we have already committed ourselves to


Investing in our people

SafetyThe Journey to Zero programme engages all employees to work toward zero fatalities and work injuries

ArcelorMittal Group health and safety policy The global ArcelorMittal Group is intent on becoming the safest steel and mining company in the world. To that end, the global Journey to Zero (JTZ) programme, which engages all employees to work towards the common goals of zero fatalities and virtual elimination of lost time injuries, continues to be rolled out across the company. Although much remains to be done before we achieve this ambition, we are steadily progressing in the right direction due to our continuous focus on health and safety improvements.

Managing health and safetyThe health, safety and wellness of our employees and contractors are paramount. The business of steel-making and its associated operations is inherently dangerous, and we continue to motivate and train our people to be aware constantly of personal health and safety, while rooting out behaviours and rectifying unsafe situations that potentially cause fatalities, injuries or physical and mental health issues.

We focus our prevention drive on four key areas to establish the necessary organisational mindset:

Remaining focused on health and safety fundamentalsProactively anticipating and eliminating unsafe acts and conditions Creating a culture of shared responsibilityEngendering operational self-discipline.

Focus on fundamentalsIt is fundamentally important to entrench fatality prevention standards (FPS) and learn from relevant incidents occurring elsewhere. FPSs have been developed for

all ArcelorMittal Group operations worldwide. These include:

Isolation and lockout procedures and practicesSafely working in confined spaces and gas hazardous areasSafely working at heightsRail safetySafely operating vehicles on our sites and driving with the requisite careSafely operating cranes and lifting equipmentConducting shop floor auditsManaging our contractors to execute their tasks safelyConducting incident investigations so that corrective action may be taken to limit repeating similar incidentsMaintaining a state of preparedness to deal with emergency situations.

External service providers audit the company annually to ascertain the extent that the FPSs are entrenched. In 2011, two of our operations were the first global ArcelorMittal Group operations to attain the highest level (level 5) of conformance. A further three operations met the level 3 satisfactory compliance target.

Culture of anticipation and preventionProactive safety improvements are enabled through the early identification of unsafe behaviours and conditions. We have increased our frequency of shop floor audits (face-to-face leadership interventions with employees and contractors), and also audit plants for conditions that may pose unwarranted health and safety risks. We have become more active in contractor safety management and supervision. All adverse findings are analysed to determine the potential worst outcomes and rectify newly identified risks.

Shop floor audits conducted in 2011 (SFAs)

January (3 149)

(6 446)

(7 009)

(6 562)

(8 505)

(8 056)

(8 871)

(9 063)

(11 295)

(13 081)

(14 122)

(12 414)

February

March

April

May

August

July

September

October

November

December

June

2009

Monthly SFA


Improved safety performance

Our lost time injury frequency rate (LTIFR) dropped to 1.24, its lowest ever


Investing in our people continued

the requirement for disciplinary action against the encouragement gained from affirming and rewarding safe behaviour. However, we added a proviso that sites might exercise their rewards only after attaining level 3 (satisfactory compliance) of the FPSs. Due to satisfactory performance during the course of the year, many of our plants were able to exercise their rewards.

Operational disciplineStandards and procedures have been developed, and appropriate management systems are in place. These company protocols are being aligned with local legislation and ArcelorMittal Group requirements. It is imperative that operational practices are consistent with these procedures. For example, a key requirement is that no task may be commenced without hazards being identified and the risks of that job being assessed. While this requirement is generally obeyed, lapses do occasionally occur and are appropriately disciplined.

FatalitiesIt is with sad regret that we recorded five fatalities during 2011, of which three were contractor employees.

Vanderbijlpark Works On 16 February, a contractor rigger assistant was fatally injured when a five-tonne elbow being rigged, moved unexpectedly and crushed him against the elbow’s saddle.

Vanderbijlpark Works On 28 May, a contractor employee was fatally injured when the pot carrier he was driving slipped down an embankment as he was attempting to empty a slag pot.

Vanderbijlpark Works On 13 July, two of our employees died of asphyxiation at the PCI unit of the blast furnaces.

Vereeniging Works At about midnight on 27 August, the front-end loader being driven by a contractor worker caught alight and the driver, attempting to escape, fell into the slag pit and was seriously burnt. He succumbed to his injuries on 7 September while undergoing medical treatment.

In all of these instances, investigations were undertaken to determine the root causes and contributing factors. Areas requiring further attention have been attended to.

Safety highlights and challengesIt was especially disappointing that these five tragedies occurred in a year in which the company substantially improved safety performance at its plants. There were fewer injuries recorded compared to the previous years.

Lost time injuries (LTI) 2011 – 56 (2010: 77)Restricted work day cases (RWDC) 2011 – 68 (2010: 102)Total injuries 2011 – 962 (2010: 1 085)

The 2011 lost time injury frequency rate (LTIFR) reduced to 1.24 (2010: 1.64), which is the lowest ever recorded in the history of the company. All of our plants improved their LTIFR compared to 2010. The Saldanha Works, Newcastle Works and Tubular Products recorded outstanding LTIFR scores of below 1.

The restricted work day cases rate (RWDCR) also significantly reduced to 1.38 (2010: 2.17). Our RWDCR was, however, higher than the 1.00 recorded in 2008.

The total injuries frequency rate (TIFR) of 19.27 was a new company record, and the first time ever that we have scored a TIFR value of below 20.

Contractor managementContractor management standards were revised to manage subcontractors better. All subcontractors are now appraised in the same way as principal contractors, and those not already on our vendor list are screened by our Safety, Health, Environment, Risk and Quality (SHERQ) departments in terms of vendor management audit criteria. Compulsory audits are now required for vendors performing projects or tasks scheduled for more than 14 days. Increased controls were also implemented for multiple contractors working in close proximity to one another.

Safety continued

Our operational managers and supervisors collectively conducted over 108 000 shop floor audits. A further 2 900 plant condition audits were also conducted.

Shared responsibility for safetyWe are actively establishing a culture in which all participants feel responsible and empowered to act for the safety and well-being of other employees and contractors. In 2011, our employees voluntarily reported over 2 800 unsafe acts and situations. Instilling this culture requires additional training and hands-on leadership from managers and supervisors, to emphasise that all participants grasp their own key roles in achieving our health and safety goals.

Some R13 million (2010: R10 million) was invested in significantly increased safety and health-related training. This amounted to 138 different courses, 25 awareness interventions and over 74 111 training interventions – a total of 194 327 hours of training.

We have continued to build health and safety into our daily routines, and health and safety issues top the agenda at all meetings. General managers also hold monthly safety site meetings, attended by employees, contractors and union representatives.

Trade union participation Our working relationship with the trade unions is proactive and mature. Each quarter, the recognised unions engage with the Group Manager: Health and Safety, and a quarterly forum is held at each operation’s site for management and unions to discuss health and safety issues. The trade unions also participate in every incident investigation. Representatives from both recognised trade unions have permanent seats on the company Board’s SHE Committee.

Celebrating safety successesWe have traditionally focused on the disciplinary aspects of health and safety, but have realised that celebrating safety successes will motivate shared responsibility. We have therefore instituted a reward system that balances


four fatalities). During the last quarter of 2011, the complex dust catcher replacement project was completed without recording any injuries.

Saldanha WorksThis facility recorded only one LTI during 2011 and its LTIFR of 0.25 was a site record. This was a major improvement from the 2010 figures of 9 LTIs and an LTIFR of 2.29. The site completed its Corex tap-hole repair with no LTIs reported. A successful new safety initiative was the introduction of compulsory 10-minute safety stops in the morning and afternoon. During these stoppages, designated safety champions facilitated safety discussions and reviews of work being done.

Vereeniging WorksThe management team is taking action to accelerate a turnaround in its recent below-target safety performance (LTIFR of 1.63 in 2011 and 1.66 in 2010). Action plans have been formulated and are being put in place.

Coke and Chemicals Three LTIs were recorded during 2011. Due to the smaller size of this facility, injuries impact significantly on its LTIFR score (2.43 in 2011 and 3.75 in 2010). To prevent further injuries, management has embarked on a policy of visible shop floor leadership and proactively encouraging safety communication with employees.

Tubular ProductsThis area recorded a pleasing improvement in its safety performance, with its LTIFR reducing to 0.95 in 2011 (2010: 5.10 and 2009: 5.45). Although the site did not attain level 3 compliance on all the FPSs, it nevertheless showed significant improvements over past performance.

Pretoria Works and LogisticsThis operation continues to record a good performance, with no LTIs for more than a year.

Safety performance and actions by business unitVanderbijlpark WorksVanderbijlpark Works attained an LTIFR of 1.41 at the end of 2011 (2010: 1.45). This facility instituted short- and medium-term programmes to eliminate fatalities and to accelerate its safety performance further. These measures include:

Increasing the hours managers spend on the shop floorIntroducing a behaviour-based care programme to encourage shop floor employees to participate more fully in safety improvementsIntroducing a team to address contractor management concerns.

Newcastle WorksSafety performance has improved markedly in the two years since the unfortunate multiple fatalities of December 2009. No further fatalities have been recorded and the LTIFR has reduced to 0.94 and 10 LTIs (2010: 1.26 and 14 LTIs, and 2009: 3.50, 26 LTIs and



Since 2008, the company has been making headway against economic, market, environmental and circumstantial obstacles that have made the steel industry exceptionally challenging during this time. But we remain in good shape, thanks to our broad-based family of workers who expertly and willingly perform their roles every day.

Highlights The hiring freeze implemented in 2009 was lifted, and this opened doors for HR to resume with the implementation of critical people programmes, which significantly lifted employee morale.

Filling vacancies and advertising new posts enabled us to improve the diversity of our workforce significantly, particularly in the management and technical ranks. We avoided an industry-wide industrial strike by reaching a fair and equitable

Employee engagement and representationWe are committed to maintaining open and transparent dialogue with employees, particularly during difficult periods, and we engage constantly with employees and their chosen representatives through various channels and forums.

Around 85% of employees in the bargaining unit grades belong to the two trade unions officially recognised in terms of the numbers of employees that they represent. These are the National Union of Metal Workers of South Africa (NUMSA) and Solidarity. Union representatives have seats on various committees, including the SHE Committee and Employment Equity Committee. Our management holds monthly meetings with union

Steel manufacturing depends on complex technological processes that need a wide array of skilled and dedicated people to drive them. Our people are the heart of the company, and it is their motivation and energy that enables our business to succeed, year after year.

Legislative frameworkIn South Africa, HR practice within corporations is governed by human rights and labour legislation, which includes the Labour Relations Act, the Basic Conditions of Employment Act (BCEA), and the Employment Equity Act (EEA), the Occupational Health and Safety Act and the Bill of Rights in the South African constitution.

Copies of the BCEA are displayed in all work areas, and employees are introduced to the company’s grievance procedure and the disciplinary code during their induction. These are also made available on our intranet.

Workforce breakdownWorkforce profile as at 31 December 2011

Job level

African White Foreign nationals

TotalM F M F M F

Top management 1 1 6 0 2 0 10Senior management 22 7 107 7 2 0 145Professional 242 80 492 139 50 5 1 008Skilled 2 434 229 2 585 281 163 4 5 696Semi-skilled 2 141 152 257 98 5 3 2 656Unskilled 284 6 3 0 0 0 293

Total 5 124 475 3 450 525 222 12 9 808

two-year wage agreement with the trade unions.

We improved on staff morale, as measured by a culture survey. The attrition rate also slowed down, although technical and senior management categories remain a challenge.

ChallengesOur biggest challenge remains the shortage of technical skills in specific areas, such as coke-making and operating the blast furnaces.

This is compounded by the relative ageing of our technical and artisan workforce, in which about 9% of employees are eligible to retire within the next five years. The skills pipeline discussed elsewhere in this report is training new employees in these skills, but this is a process that takes time.

representatives, and annually negotiates on wages and conditions of service.

The 2011 wage negotiations were arduous and threatened to break down, with trade unions calling the workers at other steel companies out on strike. But our talks managed to stay at the negotiating table, and resulted in a two-year wage agreement in which an average wage increase of 7.1% per annum was awarded to bargaining unit employees. A 7% allocation was made to package employees.

Employee moraleEmployee morale remains fragile after the job and vacancy freeze that followed the 2008/09 global recession, accompanied by obvious belt-tightening throughout

Human resources strategy

Employee morale continues to rise as vacancies were filled, new remuneration policies implemented, and diversity improved


These adjustments will initially affect about 6% of the workforce.

Job design and internal pay equityOur workforce structure is built on a hierarchy of roles designed to add value and deliver critical processes. These jobs were scientifically designed before being categorised and sized into roles or levels based on required skills, applied competencies, outputs, responsibility, accountability and impact to the business. Identified positions include unskilled, semi-skilled, skilled, professional, specialist, management and executive roles. The job evaluation policy, its governance and compliance structures have been developed and implemented with the involvement of all relevant stakeholders, including management and trade unions.

The job evaluation system and our organisational hierarchy allocate positions and levels based on skill levels, qualifications and experience. Our company pay practice applies a blended approach of considering the complexity and size of the job against the applicant or holder, and their potential or real contributions. The pay governance structure involves a participative collaboration between line management and HR – line management make the final decisions in employee pay, within policy guidelines established by HR. These steps ensure that applications are fairly and equitably addressed without reference to gender and race.

Market pay competitivenessAttracting and retaining the best talent in the market entails offering competitive remuneration packages. We conduct market benchmarking studies with relevant peer groups on an annual basis to determine our level of competitiveness. The company’s pay policy is benchmarked at different but relevant percentiles of the market, matched to the varied skills required by the business. Roles classified as critical to business success are benchmarked at the upper quartile of the market, while most other roles are benchmarked at the market median. Our market pay positioning is encapsulated in our employer value proposition (EVP) to showcase our holistic offering in pay, benefits, learning and growth opportunities to prospective employees.

Remuneration review processesThe remuneration of employees in package categories is reviewed annually in April. This remuneration review process is based on market pay movements, inflationary increases and business affordability, before being decided on by the Remuneration Committee of the Board. Pay adjustments of employees in the package category are mainly decided on employee performance reviews rather than on a cost-of-living basis.

Employees in the package category are also eligible for the in-band-pay adjustments process, which is conducted annually during October. However, this is dependent on budget availability. The value of each role is reassessed against employee performance when considering individuals for In-Band-Pay Adjustments. This process enables management to correct pay anomalies before they cause resignations or grievances.

Bargaining unit employees are assessed every six months (April and October) in terms of a competency pay adjustment policy. Employees are assessed on their skill acquisitions and proficiency tests. Based on their results, pay adjustments are made until employees reach the maximums of their respective pay bands.

Focused remuneration plans to address retention initiativesWe are presently revamping our Long-term Incentive Plan by replacing the current share option scheme with a conditional share scheme in the form of a Long-term Incentive Plan (LTIP). This policy change was initiated at international level by the ArcelorMittal Group as a global policy change, applicable to its senior management staff. The LTIP implementation will enhance our long-term incentives, as traditional share option schemes are considered archaic and under review in many larger corporations. Final share options were issued in November 2011 and the LTIP plan will be implemented in 2012 after approval at the Annual General Meeting of Shareholders in May 2012. This revamp will improve our market competitiveness and retention of senior management employees.

our business in response to falling steel demand and input cost pressures. Although our business operates in accordance with medium- and long-term strategic plans, the steel market over the past three years has been exceptionally volatile.

A spate of resignations in senior management also caused anxiety among employees, though we are pleased that the rate of resignations in technical (though still high) and operations ranks has continued to drop since 2007.

HR responded to the morale issue by stepping up the frequency of communications with our employees and their representatives. We believe that regular and transparent contact on events that impact on them reduces anxiety and motivates better responses to challenging times such as now.

In 2011, we built on the 2010 momentum, filling vacancies and advertising new positions. We also lifted the suspensions on long-service awards and employee recognition schemes (both financial and non-financial). Consequent employee climate surveys and focus groups have shown a substantial improvement in employee morale at all levels.

Remuneration policy framework Appropriate remuneration is a high-priority issue for both management and employees. In an industry that demands a constant supply of technical skills, offering competitive and market-related salaries is crucial to attracting and retaining the best people. At the same time, the company needs to work legacy issues out of the reward system that resulted in some employees’ remuneration being unaligned with value to company and their fellow workers. In 2009, HR conducted a detailed pay anomaly exercise with peer companies, which culminated in a three-year remuneration review strategy aimed at eliminating pay anomalies and making the company more competitive in attracting and retaining talent. The first phase was rolled out during April 2011, with further phases planned for April 2012 and 2013.


Human resources strategy continued

The Remuneration Committee approved a retention plan for scarce critical skills in the engineering and technical fields. This Medium-term Incentive Plan remunerates key specialists in a manner that locks them in for at least three consecutive years at a time, thereby retaining invaluable institutional knowledge. The Medium-term Incentive Plan also supports succession planning and business continuity.

Introducing a compulsory medical aidAlthough in the past we had offered membership of three selected medical aid schemes, many employees didn’t take these up and have relied on public medical facilities for healthcare. We found that this situation didn’t offer the

standards of health and disease management that we desire for our employees. Therefore, in 2009, we commenced negotiations in bargaining forums to migrate all employees onto a compulsory medical aid. After considerable consultation and the examining of required outcomes, this process is on track to be implemented fully in the first quarter of 2012.

Location and world-class trainingAlthough the company is recognised for offering competitive remuneration packages, we have needed to factor in that our plants are mainly sited in off-the-beaten-track locations. Although Vanderbijlpark and Vereeniging are within one hour’s drive from the Gauteng metropole, our Newcastle and Saldanha plants are hundreds of kilometres from major urban centres. Potential employees have to make definite lifestyle choices.

We attract many recruits through our reputation for providing the best training and skills development in South Africa’s steel industry. The challenge, then, is to retain this expertise, as other companies with lesser training budgets can afford to make compelling job offers. On the other hand, we can offer our employees stimulating work assignments at other group plants around the world.

EngagementThe results of the group-wide biannual climate survey, which tests the views of employees on the state of the company and also provides a measurement of the level of employee engagement, indicate a positive shift in a number of areas. The table below indicates the shift in employee perceptions related to the areas that were measured:

benefits philosophy, was enthusiastically accepted by management and employees alike. There is no doubt that this programme contributed greatly not only to the positive improvement in the results achieved in compensation and benefits in the 2011 climate survey, but also to the level of employee engagement in general.

Leadership development We have embarked on an extensive company-wide programme to develop the leadership skills of all our middle and executive management levels. This programme is executed by external consultants, and all employees in the middle and executive managerial levels attend an intensive two-day programme at the development centre. The outcome of these two days is an individual development plan unique to each assessed employee, based on the globally

recognised ArcelorMittal Leadership Competency Framework.

The programme was preceded by 360° measurement of all employees in the package category, and the results of the 360° measurement as well as the assessment results were integrated in the individual development plans of all middle and senior management employees.

During 2011, we presented 37 core management and leadership skills courses – a total capacity of 1 100 seats – as an initiative to improve management and leadership skills. Specific training was undertaken to improve the management skills and understanding of the new performance management system, of which the first phase will be implemented in 2012, with total implementation in 2013.

The above results indicate that specific actions that were taken to improve issues regarding compensation and benefits, professional development and deployment, and performance management yielded positive results.

To ensure further positive movement and to increase employee engagement, the above results were tested with focus groups. Based on the information obtained, specific actions will be implemented to improve the positive areas and to augment employee engagement. Specific actions will also be implemented to address the decline in organisational direction.

Our newly implemented recognition programme, which identifies employees whose outstanding performance contributes to superior business results and is part of our total rewards and


Improvement area

Results 2009

(%)

Results 2011

(%)

Compensation and benefits 25 39Professional development and deployment 45 56Performance management 53 57Organisational direction 52 47Leadership culture* N/A N/A

* Identified during the focus groups as an area that needs further analysis.


During the year, 12 occupational disease cases were diagnosed, resulting in a 2011 occupational disease frequency rate (ODFR) of 0.37 (2010: 0.42). Eight of these cases were noise-induced hearing losses, three were lung-related and one employee had liver complications.

We spent the year reviewing and enhancing our medical response capabilities. Despite facilities being widespread and many structures high off the ground, our aim is for medical personnel to reach any employee within 15 minutes of an alarm being raised at the medical station.

All of our sites have begun implementing at least four of the 11 recently developed health standards. The plan is to implement a further four standards in 2012 and the balance in 2013.

We also hosted a successful Health and Wellness Week between 17 and 21 October 2011. Over 4 000 of our employees and contractors participated in diverse events including a fun walk, a race from our Vereeniging plant to Vanderbijlpark, various medical checks and other activities provided by external suppliers.

As mentioned in previous reports, questionnaires to assess the extent of entrenchment of our wellness strategy have been completed.

Many of our units completed projects to renovate and improve our employees’ and contractors’ showers, restrooms, dining rooms and canteens.

The photographs alongside indicate the upgraded facilities.

Health and wellnessDespite our production facilities being spread out and many high off the ground, we aim for medical assistance to reach any employee within 15 minutes of being notified


During the year, our Training department was highly active and conducted nearly 159 000 training interventions – meaning that, on average, every employee interacted with the department on more than seventeen occasions during the year.

Personal career development and maintaining a skills pipelineAs an industry that relies heavily on technology and the technical expertise of our workforce, we have dovetailed the twin needs of providing career development opportunities for our employees and the corporate requirement for a robust skills pipeline to ensure that a constant supply of these engineering, technical and artisan skills is available. On average, the company requires about 160 skilled artisans per annum, but the pipeline takes about 500 mainly previously disadvantaged and unemployed South Africans into artisan training each year, so it also provides an invaluable flow of skills into broader South African industry.

Competency mappingAll employees receive regular performance and career development reviews. An internal competency mapping system for workers in the bargaining unit is well established, enabling management to see at a glance which competencies individual employees need to build or courses to attend. Every job in the company is matched to a specific set of competencies or requirements that the individual in that job must have. The system automatically generates an individual development plan (IDP) for each employee, and flags which competencies they may need to be trained in to comply with the job specifications. The majority of the bargaining unit employees fall into the artisan or operator (“blue-collar”) job categories.

Package category (non-bargaining) employees are generally “white-collar” graduates, engineers or technicians, whose job specifications are drawn up in terms of their full-time contracts with the company. These employees are managed and assessed in terms of a global employee development programme (GEDP). Their skill/competencies are not yet recorded on the competency mapping system, but are maintained in their IDPs, which form part of their performance discussions.

In principle, we intend to integrate the skills and performance record-keeping of package category employees into the competency mapping system, to provide a genuine “single-glance” view of all employee competency profiles.

The competency mapping system is now well-proven, and is regarded as a benchmark for similar systems used by other companies in the broader ArcelorMittal Group.

Budget and activitiesAfter the skills development and training budget more than doubled in 2010, in 2011 it equalised more modestly to R154 million as the spate of new programmes were optimised. The bulk of the spending was directed at the skills pipeline, with the remainder devoted to the further development of existing staff.

Management of skills developmentThe Group Manager: Training, reporting to the General Manager: Human Resources, is responsible for skills development at the company. A Training and Skills Development Committee ensures that all stakeholders engage in skills development and training issues. This committee is made up of line management, training representatives, HR consultants and trade union representatives. It meets each month to review skills development needs, performance and ongoing strategy in accordance with an internal training and skills development policy and the Skills Development Act. Our decision-making is also informed by the dti Codes of Good Practice on Skills Development, particularly regarding the transformation of the workplace.

Workplace skills development planEach year, the company performs a skills audit and training needs analysis to highlight workforce skills gaps. These are supported by a workforce analysis to identify our long-term skills pipeline and succession planning needs. The results of these assessments inform a comprehensive workplace skills development plan. Our Training department is accredited by merSETA (the Manufacturing, Engineering and Related Services Sector Education and Training Authority) and submits its training plan to merSETA once a year.

Skills developmentWe have taken a two-pronged approach to skills development. Internal initiatives develop our people, while external projects develop and attract critical skills



– therefore, these are as much a resource to the nation as well as to us.

Besides the significant numbers of learners at our Science Centres, at any given time the company will have about 943 apprentices in training, as well as approximately 33 technicians at universities of technology and over 50 students studying engineering at university. We pay all their tuition and essential living costs.

Where necessary for specific reasons, the company will recruit graduates outside our pipeline – but only as a last resort, as we prefer the grounding they get through our pipeline system.

Although – under usual circumstances – the company only requires about 100 additional engineers and technicians per annum in terms of our six-year workforce forecast, we deliberately overstock the pipeline to cover unplanned-for contingencies and, at the same time, help alleviate the dire national and sector shortage of engineers and technicians.

Due to our critical need for engineering and technical expertise, our succession planning in these disciplines is rigorous, and depends on tight integration with our pipeline process and timing of throughput. Our experience shows that although our skills pipeline may appear to be oversized, it is actually more cost-effective to source our incoming skilled personnel from the pipeline than to recruit in the open market.

Ageing workforceIt has been long evident that the average age of our workforce is too high, and many of our most experienced employees are due to retire within the next five years. If this process is unmanaged, it could lead to an unsustainable loss of workplace skills and institutional memory. As a consequence, we carefully plan the introduction of new employees from the pipeline so that experience and institutional memory can be transferred before the older hands depart for well-earned retirements. Every year we perform a fresh workplace skills analysis that enables timely replacement, within the differing timelines of job categories ranging from engineers to operators.

At this time, our engineering corps is relatively young and the average age of our technical and artisan categories are considerably below the national average. The ageing issue lays primarily with the company’s production staff, of which 13% is due to retire. We have about 1 200 well-trained production learners in the pipeline to staff the remainder of the four team shift system and which also makes provision for the ageing workforce, as well as transferring on-the-job experience and skills.

We place great value in our production staff as the bedrock of our company, and have a policy that enabling education for our workers leads to a heightened sense of self-confidence and productivity. Accordingly, we encourage and support all our production staff to aspire to free NQF level 2 to 4 training programmes and qualify for higher pay bands on completion of NQF 4.

With a significant percentage of the company’s most experienced staff members scheduled to retire within the next five years, it is imperative that the skills pipeline will deliver sufficient and suitably prepared replacements.

Specific challengesLack of engineering and technical skillsThe global steel industry constantly has to manage a chronic lack of suitable engineering and technical skills. In South Africa, this problem is compounded by the generally low standard of maths and science teaching in our national education structure, which leads to a trickle of suitable graduates through our universities and technical colleges. We have adopted a multi-pronged approach to dealing with this problem, by engaging it at every phase of education until suitably skilled candidates emerge from our pipeline to take up positions in the workforce.

At the basic education stage, we have – in partnership with the national Department of Education – established Science Centres in Sebokeng near Vanderbijlpark Works, Saldanha and Madadeni near our Newcastle Works.

At tertiary education level, the company selects previously disadvantaged students with potential – from our science centres or elsewhere – to be sent to university or to training institutions with merSETA accreditation. The company alone sponsors over 16% of all apprentices who obtain merSETA qualifications per annum

The spend for the last three years is depicted in the table below:

2009 2010 2011

Training expenditure R92 788 982 R172 565 265 R154 236 764


Programmes include the following:

Bursaries University bursaries: there are currently 115 bursars on our university bursary programme spread over the four years at university, all of whom are studying towards qualifications in the engineering field. At the beginning of the year, 41 bursars enrolled at various universities and we awarded 40 new bursaries for students embarking on degrees in 2012. Around 60% of our bursars are from historically disadvantaged groups, compared to 56% of the 2010 intake. Technician bursaries: our technician training approach reverted to the old model, which alternates six-month tranches of technical college and on-site training. With the help of CSI funding, we managed to add 14 bursars – identified through our science centres – to the 15 whom we had already funded for the year. We have awarded 116 technician bursaries for 2012 to meet our growing demand for these skills. Apprentices: we dropped our intake of apprentices slightly from 419 in 2010 to 396 this year, to make provision for the reduction in bursary allocation in the 2011 budget. These trainees are undergoing our accelerated artisan training programme, which provides six months of institutional training complemented by 12 months on-site mentored practical training to ensure that artisans are both qualified and competent. A total of 447 artisans completed the programme during the year, of which 80% come from historically disadvantaged groups. Production learners: we slightly increased our production learner intake during the year to 553, which brought the total number of production learners in the pipeline to 1 232. These learners will provide a critical production skills

pipeline to fill the gap that will be caused by the attrition of current production employees who are retiring and the remainder of the four team shift system implementation.

Internal programmes to develop technical skills

Internship programme: this two-year programme employs university graduates with BCom/BA degrees (GIT) and graduates with engineering degrees and engineering diplomas to provide them with hands-on work experience before they are absorbed into the company full-time. Six GITs were employed during 2010, 19 in 2011, and a further two are due to start in 2012. Of the 25 GITs employed, 21 are black. The engineering graduates come through the university supported programmes that we sponsor. Forty-one graduates with engineering degrees and 43 graduates with engineering diplomas started in our pipeline during 2011.Artisan-to-technician conversion programme: this programme, run in partnership with the Vaal University of Technology, currently has 99 seasoned artisans in the pipeline who are converting their qualifications to those of technicians. As the Saldanha and the Newcastle sites do not have universities in their vicinities, we have implemented “virtual classroom” learning, in which lecturers remotely teach these students through digital screens and “smart” whiteboards. Virtual classrooms: the virtual classroom at Newcastle Works continues to deliver outstanding results, with artisan-to-technician conversion students achieving pass rates of between 90% and 100%. In September 2010, the ArcelorMittal University in Luxembourg began conducting virtual classroom training, which enables world-class training in remote locations at a fraction

Skills development continued

Recruiting and training scarce black engineersAll categories – including engineering – in the company’s skills pipeline are currently filled by an average of 88% learners, students and graduates from previously disadvantaged population groups. Through diligent recruitment over the past years, the company has a constant stream of black engineers moving through our pipeline into the workforce. Nevertheless, some difficulty is encountered in the most senior engineering posts, as few black engineers have yet gained the 20 years or more industry experience required at these levels.

Another issue is that capable black engineers are highly sought-after in all South Africa’s manufacturing sectors, and can be tempted away by lucrative job offers. We counter this problem by packaging an employer value proposition (EVP) that includes invaluable industry experience and career development, financial and non-financial rewards, mentoring and international mobility through exchange programmes with other plants in the global ArcelorMittal Group.

Initiatives to address skills challengesOur response to the skills development challenge remains two-pronged. Internal initiatives help to develop and train our own people, while external projects focus on growing, developing and attracting critical skills.



the teacher-in-service programme, run by the International Institute for Electrical and Electronic Engineers. This programme helps school educators make the link between the maths and science principles taught in the classroom and their practical application in the field of engineering. School career guidance: plans are in place for the development of a career guidance DVD that will showcase the various career options in the engineering field to secondary-school learners. We plan to distribute this DVD to schools, career expos and at our science centres. University and further education and training (FET) college industry partnerships: we continue to work closely with universities and FET colleges, advising them on how to align their curricula with the real needs of industry. We are investigating the

possibility of an exchange programme with FET colleges, whereby we will host their lecturers at our plants on six-month sabbatical programmes to provide them with further hands-on insight into the industry. In turn, our employees will get the opportunity to lecture certain courses, offering students the industry perspective. In future, we would like to increase funding for research at universities, particularly for our bursars, into projects that would benefit our business.

of the usual cost. The Future Finance Leadership Programme started during 2011 with nine candidates enrolled. Sixty-one courses are scheduled and the programme will conclude in 2012.Registration as an ArcelorMittal Corporate University: the virtual classroom concept opened the door for the Vanderbijlpark training facility to be the first educational institution outside of Luxembourg to be recognised as an ArcelorMittal Corporate University. Our example has motivated other ArcelorMittal plants around the world to establish similar academies, based on digital links to the Luxembourg-based ArcelorMittal University.

External programmes to improve the quality of skills from schools, colleges and universities

Teacher-in-service programme: we continue to volunteer our services to


Enriching our communities

Value added statementSteel contributes significantly to the South Africa economy by providing sustainable full-time employment and investing in the development of people through training and skills development, and by the provision of public goods and services through taxes paid. Sourcing products locally wherever possible further stimulates economic activity.

2011 Rm

2010 Rm

Revenue 31 453 30 224Purchased material and services (29 116) (24 576)Finance income 29 9Investment income 52 128

Value added 2 418 5 785

Distributed to: Employees 3 164 2 951 Providers of equity capital 221 602 Providers of debt 719 459 Government 243 653 Community investment 47 29 Reinvested in the group 1 264 1 834

Total distributed 5 658 6 528

In both 2011 and 2010 more cash was distributed than value added to the amounts of R3 240 million and R743 million respectively. These distributions were made from cash reserves.

TransformationBroad-based black economic empowerment (B-BBEE) is an integrated and coherent socio-economic process at the heart of the country’s national transformation programmes. We are committed to transforming the company in line with broad developments in the South African economic and social landscape. In this regard, several projects have been initiated to help us achieve our transformation objectives, guided by an internal transformation policy and transformation targets.

In July 2011, the company’s progress against the B-BBEE Scorecard was externally audited by an accredited verification agency for the first time. This agency awarded the company a level 7 BEE status rating, which is slightly improved from the level 8 status assigned in previous years. Our target is to be awarded a level 5 status, or better, by 2014.

Ownership Despite the cancellation of our proposed B-BBEE transaction in 2011, concluding an equitable B-BBEE transaction remains a priority. Our top management and Board is committed to concluding a transaction that will truly benefit our staff members and local communities and substantially improve our BEE rating.

Enterprise developmentIn 2010, we identified enterprise development as a priority area that requires focused attention. Considerable time in 2011 was spent on refining our policies and strategies for developing a sustainable ED programme. A key aspect was studying existing private sector development programmes against our own pilot project, initiated in 2009.

Numerous lessons from this exercise were incorporated into the company’s new preferential procurement policy, which will inform the delivery action plan to be rolled out in 2012.


B-BBEE shareholding

The Board is committed to concluding a viable B-BBEE transaction that will truly benefit our staff and local communities


to be 17.4 points (this figure is subject to an external verification audit). We have set a target of 18 points to be achieved in 2012.

Socio-economic development In 2011, the accredited BEE rating agency Honeycomb awarded a 5 points score for our efforts in 2010. The company has continued with its focus of improving the lives of communities surrounding its operations. We focus our intervention in the key areas of health, education and community development.

Employment equity The Board has approved the current employment equity (EE) plan, which was aligned with our current business strategy and is being implemented.

Some 2011 highlights include our positive Department of Labour assessment and a finalised hiring plan, improved external recruiting for suitable EE candidates, and the pleasing number of EE coaches brought into the newly implemented coaching plan.

We have identified focus areas for building momentum in our EE transformation. These include:

Regular training of line managers to drive the diversity agendaFollowing up on succession planning to uncover hidden EE talentImproving our efforts to retain EE appointeesStrong governance and consequence managementIntegration of diversity in the make-up of all teamsAppointing females into technical positions.

Management control The company recently suffered some setbacks when it lost some senior managers to other industries within the South African economy. However, our planned EE mix at management levels

improved by 13.6% in 2011, which is a significantly greater improvement than the previous three years combined (2008–2010: 3.9%). This broadens the pool from which to select senior management, though mentoring and succession planning will be vital.

We remain on course to meet our 2012 EE targets for management positions at all levels.

Skills development On average, the company requires about 160 skilled artisans per annum, but the pipeline takes about 500 mainly previously disadvantaged and unemployed South Africans into artisan training each year, so it also provides an invaluable flow of skills into the broader South African economy. The accredited BEE rating agency awarded an 11 points score for our skills development programme in 2010.

Transformation continued

Our programme for small- and medium-sized enterprises fully accords with the qualifying criteria and guidelines of the dti’s Codes of Good Practice.

The programme aims to achieve the following objectives:

Business competitiveness of qualifying beneficiariesBusiness sustainability and effectiveness of the qualifying beneficiariesUpgrading the safety, health, environmental and quality management systems of qualifying beneficiaries to meet the required SABS standards.

Preferential procurementThe company continues to face challenges in procuring critical services and raw material such as coking coal and iron ore from previously disadvantaged vendors, thus making it difficult to make significant improvement on this level of the BEE Scorecard. These mentioned services are either provided from foreign markets or from partially empowered companies or BEE-compliant vendors who are not necessarily entirely (or significantly) black-owned.

In 2011, our preferential procurement spend was about R17 billion, but this figure includes money spent with entities such as big institutions as Eskom, Exxaro and Transnet, which are BEE-compliant but not necessarily entirely black-owned. Our spend with small to medium BEE-compliant companies was R1.9 billion during the year – a slight improvement on the R1.3 billion spent during 2010. We expect this figure to improve significantly in the future as we roll out our enterprise support programme.

Our preferential procurement score on the dti’s Code of Governance has been improving over the last few years. The 2010 score for preferential procurement was 15.5 points, while 2011 is estimated

Enriching our communities continued


technology to public sector infrastructure. The pilot project was the Meetse-A-Bophelo school in Mamelodi, which was seriously dilapidated. To date this project has won three awards – the 2010 SAISA award for best community development; a 2011 Pretoria Institute of Architects award and a 2011 ArcelorMittal Performance Excellence award.

The second school – the Nelson Mandela Primary School in Mthatha – is under construction at an estimated cost of R46 million. The school is due to be handed over towards the end of 2012. It is anticipated that construction activities will provide 80 job opportunities for unskilled labour from the local community over the eight-month project duration.

Science centres projectThe company is helping tackle the national shortage of mathematics and science skills by establishing dedicated science centres in communities near our major operations. The Foundation has entered into agreements with provincial departments of education in Gauteng, KwaZulu-Natal and the Western Cape. The three science centres are located in Sebokeng (Vanderbijlpark), Madadeni (Newcastle) and Saldanha (Western Cape).

These centres train younger children through “edutainment” by enabling them to play with science exhibits, before assisting them to progress up to Grade 12. We are actively supported by the Department of Science and Technology (DST), which has donated three mobile science laboratories to the centres. The DST also financed the appointments of nine interns to assist with operations, and provided financial assistance for National Science Week activities. Particular programmes are the School of Excellence Programme for science, mathematics and life science support, as well as a computer literacy programme aimed at unemployed youth in local communities.

The science centres help raise the provincial mathematics and science pass rate, and also help to develop a pool of learners to enter the company pipeline as potential artisans, technicians or engineers.

Sebokeng Science CentreThe R7 million Sebokeng Science Centre currently hosts 600 learners from 22 high schools in the Vaal Triangle. It was the first of the three operating centres to be established. This centre is already showing excellent results and is providing us with a skills pipeline. Since the beginning of 2011, there are 47 engineering technician students at the Vaal University of Technology. These Vaal University of Technology students are being mentored by working technicians.

To date, 1 691 community members have graduated from the computer skills programme. The centre has also introduced an early childhood development (ECD) programme, piloted at the Saldanha Centre, which is aimed at developing mathematics, science and English for grade R to grade 3. This is proving to be a valuable community resource for children who would otherwise not have access to computers.

We also donated school shoes to the value of R26 450 to 181 needy children, who the centre identified through the outreach programme.

Newcastle Science CentreRenovations for the science centre in Madadeni, near our Newcastle plant, were completed during 2011. In partnership with the Department of Education for the Majuba district, the centre provides extracurricular training in mathematics, science and English for grade 9 and 10 learners from 16 schools in the area, as well as providing financial support for the Winter School for grade 12 learners. This centre is planned to be fully operational in 2012, when the Winter School will also be relocated there.

Saldanha Science CentreThis centre has been operational for three years and provides extracurricular support in mathematics, science, English and life sciences to learners from 18 primary schools and five high schools. During 2011, the Foundation spent a further R3.2 million on the operational costs towards the centre.

Our corporate citizenship and social investment strategy focuses on the communities surrounding our steel business units at Vanderbijlpark, Newcastle, Saldanha and Vereeniging. The company’s corporate citizenship initiatives are primarily channelled through the ArcelorMittal South Africa Foundation, which as a matter of course is allocated over 1% of company profit after tax to support social development projects. Current Foundation policy is to prioritise the critical areas of education, health and community development. Although we support many beneficiaries and favour projects with the potential to become self-sustainable, we also partner with government departments to develop national infrastructure. We presently have two agreements with the Ministry of Education. The first is to build schools using low-cost, “green” steel technologies, while the second is to promote mathematics and science education at science centres established by ourselves. We also have an agreement with the Department of Health to build a clinic in Sebokeng for HIV/Aids support.

Foundation projects in educationBuilding schools across South AfricaAs South Africa’s major steel producer, we accept that our circle of stakeholders is broader than the communities with which we directly engage.

As mentioned earlier, we have entered into a ground-breaking agreement with the national Department of Education to introduce an innovative steel construction

Social investment and community affairsPrioritising education, health, national infrastructure and community, we support projects able to become self-sustainable, while partnering with government on national infrastructure


for the NGO to provide adequate home-based care services to the local community. The Foundation also donated a minibus to facilitate all-weather service delivery, as the caregivers currently walk between the homes of their patients. The Montana Psychiatric Home cares for physically and mentally disabled adults, and is situated close to Vanderbijlpark Works. It was housed in a dilapidated building that was renovated by the Foundation at a cost of R195 000 during 2011.

Foundation projects in infrastructure development Many of the Foundation’s projects overlap. For example, the HIV/Aids and wellness centre at the Sebokeng District Hospital is both a health project and an infrastructure development project. The following projects support community and municipal needs in line with the Foundation’s focus.

Re-roofing projectIn 2010, we partnered with the Emfuleni Municipality to replace the roofs of approximately 3 000 asbestos-roofed houses in Boipatong and Bophelong. By the end of 2011, some 2 200 houses had been re-roofed, with approximately 800 to be done in 2012. The Boipatong community showed its appreciation by presenting ArcelorMittal South Africa with an award in 2011.

Habitat for Humanity (Protea) housing projectIn 2011, the Foundation entered into a partnership with Habitat for Humanity to build 12 houses per annum in Newcastle over a three-year period. The project is anticipated to be extended to Diepsloot. It utilises the Protea steel low-cost housing technology, which consists of steel sandwich panels with polyurethane filling for the insulation of the walls and the roof. Two show houses were built during 2011 in Osizweni, a rural township situated outside Newcastle that severely lacks infrastructure and services. Foundation projects in community developmentWinter Warm projectThis project raises funds every year to buy warm winter clothes for children living in

various children’s homes in the Vaal Triangle area. An annual company drive also enables our employees to donate either clothes or money. Well over 1 000 children benefit from this project each year, at a cost of R50 000.

Wish Upon a Star projectThe Foundation assists the Lusa Community Chest in the Vaal Triangle to raise funds to buy Christmas gifts for children residing in various orphanages in the area.

The spirit of volunteerism Volunteering is one of the many ways that ArcelorMittal as a group contributes to the celebration of volunteerism. Our employees are encouraged to give back to their communities in their respective areas by volunteering for Foundation projects throughout the year. Over the last three years, over 2 000 employees volunteered for the projects that follow.

Habitat for Humanity house-building project in Orange FarmThe ArcelorMittal Group Foundation (Group Foundation) channels group corporate citizenship across the world, and entered into an agreement with Habitat for Humanity to build houses in various countries, including South Africa. The Group Foundation has funded the construction of 26 houses over the last three years, with 600 employees per annum participating in the project. Habitat for Humanity uses this funding to build houses in the Orange Farm informal settlement near Johannesburg. Our local Foundation provides logistical support and funds the costs relating to our employees lending a hand during Volunteer Week. In early 2011, eight houses were built by more than 600 employees – of which nine were ArcelorMittal employees from other parts of the world (France, Brazil, Spain, Czech Republic, the USA, the UK and Argentina). Five more houses were built in Orange Farm in October 2011, bringing the total number of houses built since 2009 to 26. Our volunteers draw their motivation from Mahatma Gandhi’s famous quote: “Be the change you want to see in the world.” Volunteer work inculcates a culture of giving, and strengthens the relationships between our employees and the communities in which they live.

Social investment and community affairs continued

Foundation projects in healthCommunity engagement with the Bophelong and Boipatong communities identified HIV/Aids as a key priority, which prompted the company to set up two flagship projects aimed at this need.

Sebokeng Hospital Wellness CentreThe first is a wellness centre at the Sebokeng District Hospital, which will provide services for HIV/Aids and TB patients. This is the second project to be constructed using our lightweight steel technology. The skills required to build using this steel construction modality are being transferred to a local black contractor. It is anticipated that the wellness centre, which is being built at a cost of R9 million, will be handed over during 2012.

The Foundation supports an initiative by the Sebokeng Hospital Board and HIV outpatients, who together formed a support group to establish vegetable tunnels for improving the nutrition of needy patients on ARV treatment. We donated R60 000 to this project.

HIV/Aids programme support For the past three years, we have donated R1 million per year to support orphans and vulnerable children in the Majuba district in Newcastle. This partnership with Noah (Nurturing Orphans of Aids for Humanity) assists five “Noah’s Arks”, which are based at local schools.

The Ndlovu 24-hour clinic in KwaThemba in Mpumalanga also received a donation of R1 million, which was needed to ensure that the clinic was kept open during 2011.

Hands of Hope is an NGO that provides support to 187 patients with chronic diseases in the Sebokeng and Boipatong areas. Caregivers take it upon themselves to provide daily support to sick members of the community. This Foundation – and Department of Social Development – supported project is housed on our premises at Vanderbijlpark Works. We renovated the property, and bought furniture and other equipment required

Enriching our communities continued


by the Foundation. The Solidarity Holidays programme enables our employees to experience international volunteering for people in need, while also learning about various cultures.

Adopt-A-Learner Our graduate engineers-in-training launched an initiative in which each engineer adopts a first-year ArcelorMittal South Africa engineering bursary student. The objective of this programme is to mentor students for success during their first year of tertiary study.

Impilo social grants The Impilo social grants project, funded by the Foundation, allows any employee to request financial support for NGO projects for which they already volunteer. In 2011, employees actively involved in community projects accessed funding of R454 882 to support a range of qualifying projects, some of which have already been mentioned. Below are projects benefiting from the Impilo social grants:

Solidarity Holidays volunteering programmeThe Group Foundation has launched a global Solidarity Holidays programme. This new programme gives ArcelorMittal Group employees the opportunity to dedicate 10 days of their annual leave to volunteering in an ArcelorMittal Group Foundation project in another country. Since 2010, four of our local employees have volunteered for humanitarian projects in Brazil, Senegal, Haiti and Macedonia. All costs for these international volunteer trips are borne

Name of project/activity Brief description of activityValue (Rand)

Bel Porto Foundation School for the Disabled

Educational assistance for the Bel Porto Foundation, which supports disabled children in the Western Cape

100 000

West Coast HIV/Aids InitiativeHIV/Aids programmes in Saldanha In collaboration with NGOs in addressing health and societal issues

affecting the communities of Saldanha100 000

West Coast Business Development CentreSmall-Medium Enterprise (SME) Development Programme

To develop and enhance the growth of small, medium and micro enterprises (SMMEs) in the West Coast region through the delivery of quality and cost-competitive services.

150 000

Mini grantsThe Group Foundation has introduced mini grants that employees can apply for on behalf of projects in which they are involved. Once the funding is approved, these employees are required to convince fellow employees to participate in these projects. The aim of these grants is to encourage employees to assist NGOs in their communities. In 2011, R97 500 was granted to four NGOs in the Saldanha and Gauteng areas.

NGO NGO activitiesGrant value

(Rand)

Akani Diepsloot Akani provides preschool and crèche facilities, as well as after-school care, for children in the Diepsloot community (north of Johannesburg).

R8 580

Lebohang Centre for the Mentally Disabled

A home for mentally disabled orphans and vulnerable children. R29 640

Eljada Mission This is a resource centre caring for victims of abuse, homeless people and orphaned children.

R29 640

Fakkel School School for mildly intellectually disabled learners. R29 640


A heat reflective pigment has been developed for our colour coated product range that has the potential to decrease room temperature by up to eight degrees, without the temperature dropping past ambient. The product was developed as a contribution to environmentally friendly building initiatives.

Ultra high tensile hot rolled coil was developed to assist in the drive towards localisation. Quenchable/hardening steel, which is new to South Africa, has been developed in hot rolled and cold rolled coils, primarily for use in the ever-growing automotive sector.

Newcastle is developing a higher strength rebar in line with international standards, to be used in the construction of nuclear power stations. The application thereof will contribute to reduced civil engineering cost as less steel can be used for the same performance criteria.

Other product developments are also being researched in an effort to meet international standards, such as the potential down gauging of the tin plate material used in beverage cans.

Our Department of State Owned Enterprises is taking our involvement in government projects to new heights in its drive to support localisation. Current developments involve contracts with Eskom, and renewable energy projects such as wind tower and solar panel construction. Moving forward, we are looking to establish similar relationships with Transnet, and the Department of Water Affairs.

Recycling of productsThere is an environmental cost when iron ore is processed to create iron and steel, but thereafter these metals retain their intrinsic values and are, in practice, recycled time and again with minimal impact on the environment. Scrap metal is collected assiduously in African countries, and about 20% of the steel currently produced by us is from scrap metal reprocessed in our electric arc furnaces.

We currently partner with Nampak, South Africa’s leading packaging manufacturer, to support Collect-a-Can, a non-profit organisation that collects tinplate and cans for recycling. Since its founding in 1993, Collect-a-Can has grown the national recovery rate of cans from 18% to 70% in 2010. This organisation creates work worth between R11 and R15 million for an estimated 160 000 collectors, of whom the majority have no other source of income. The company is working with Collect-a-Can to raise recycling rates further.

Customer satisfactionSatisfied customers are the key to a sustainable business. Every year we commission customer satisfaction surveys, alternating from year to year between surveys conducted in-house and surveys conducted on our behalf by external service providers. As our 2010 survey was performed by a service provider, the 2011 edition was conducted by our Sales department. These survey results will become available early in the first quarter of 2012.

Service delivery initiativesThese initiatives are aimed at reducing lead times, reliability of supply and improved service delivery through improved quality and administration. The main focus areas are production reliability and improved production planning. Unfortunately, our efforts were severely hampered by the plant failures at Newcastle Works. These resulted in the marketing being put on allocation for a large part of the year, negatively impacting service delivery.

Innovation in products We constantly seek to reduce the costs of production and packaging, which can be passed on to our clients. We are also examining means of producing stronger and lighter steels that will reduce the mass that clients will need for their projects. A report published by the McKinsey Global Institute and the McKinsey Sustainability and Resource Productivity practice noted that “although the economics of adopting higher strength steel are favourable… there is a lack of awareness about the usefulness of this product among the many fragmented buyers of construction steel in emerging markets” (The Economist, 25 November 2011).

Among our various product development initiatives, we have a few key projects which we feel will be immensely beneficial to the industry, with a focus on improving local content.

As a founding member of Southern African Light Steel Frame Building Association we are making headway in the development of products for the light steel frame housing market. Light steel frame houses have the benefit of being a faster, more cost effective and environmentally friendly method of building, without compromising on the strength and stability of the structure.

Recognising the strategic role of steel in the development of South Africa’s infrastructure and economy, we endeavour to supply high-quality products to our customers at competitive prices, notwithstanding the pressures of uncontrollable cost inputs

Responsible management of products and customers


approvals and evaluations. These are done in accordance with updated evaluation criteria in the annual supplier performance monitoring system, which are assessed alongside their BEE credentials and with commercial factors such as price and quality.

We are presently implementing the third phase, which is to coach and communicate with our suppliers through online training, case studies, practical tools and opportunities to share knowledge and experience. We are also introducing internal “responsible sourcing champions” for each category of purchasing. They will help embed these principles into existing procurement systems.

In the fourth phase, we will introduce a supplier added value excellence programme that sets up collaborative partnerships with suppliers to establish mutual benefits in key areas. These may include technology improvements, energy

efficiency, health and safety, and the recycling of waste. Such initiatives should realise significant cost savings and deliver environmental and social benefits.

In the fifth and final phase, we will implement a range of internal performance indicators to review progress and report against clear benchmarks. These will be publicised to internal and external stakeholders. Progress has already been made in identifying key performance indicators such as the number of buyers trained on responsible sourcing, the number of suppliers to acknowledge the Code and the total that have completed the evaluation process.

We’ve already embedded sustainability principles into our general contracts, and set out clear expectations in the areas of safety, health, social dialogue and environment. We also require our suppliers to comply with all relevant laws and regulations.

Our social and environmental responsibilities extend beyond our own operations to that of our suppliers. Their behaviour reflects on us and, where necessary, we should positively influence their environmental and social conduct.

In December 2010, the global ArcelorMittal Group launched a formal responsible sourcing programme to introduce our standards of health and safety, human rights, ethics and environmental responsibilities to our suppliers.

This programme comprises five elements, of which the first phase is to establish a Code for Responsible Sourcing. This was done in collaboration with customers, suppliers, peer companies and NGOs. The code stipulates minimum standards with which we expect our suppliers to comply.

The second step involves integrating responsible sourcing into all procurement processes such as tenders, new supplier

Responsible sourcing of products


receiving detailed training on the implications of the policy, either online or face-to-face. To date, 6 252 employees have been trained.

Our HR department is responsible for monitoring that each senior employee completes a declaration form of outside interest each year. Other employees submit a declaration form of outside interest only when the situation arises, as prescribed by the Code of Business Conduct. Our gift policy requires that any gift that is received or offered to an employee be recorded in a gift register and approved by an EXCO member. These approved documents are retained for audit purposes.

Companies worldwide are faced with an ever-changing economic landscape, compounding the problem of fraud and corruption. We are not immune to such threats. Fraud is a common risk that should not be ignored. The significance of the fraud risk is uncertain; however, there is evidence that the risk may be on the increase – as evidenced by the increase in forensic cases being reported to the whistle-blowing line year on year. Fraud awareness throughout the company is developed through appropriate training of employees and communities, conducting employee surveys to assess levels of fraud awareness within the organisation, posting relevant articles on the website and in newsletters, and ongoing partnering with local media to highlight the problem of fraud. To highlight fraud even further, an annual Fraud Awareness Week is hosted as an awareness-raising campaign. To date, fraud awareness training has been provided to 2 456 employees. A fraud risk profile, developed in-house, is used to identify potential fraud red flags in various company business processes.

We also have an in-house anti-fraud hotline, which is available on a 24/7 basis. Over the past year, 51 ethics-related incidences were reported. On average, 60% of substantiated cases pertained to dishonesty, with the remaining incidences a range of allegations including kickbacks and contractual breaches. A formal process is in place to track, report and

ensure that recommendations are fully implemented by management. These cases are reported monthly to the EXCO, and all significant and sensitive forensic matters are reported to the Audit and Risk Committee. The company has a zero tolerance policy for the commission or concealment of fraudulent and illegal acts, as defined in our company anti-fraud policy. Actions taken as a consequence of investigations include disciplinary hearings, termination of employment of employees, criminal and/or civil action and the cancellation of contracts, in the case of suppliers and contractors. Blacklisting of suppliers and employees also applies.

Competition Commission mattersThe Competition Commission (“the Commission”) is formally investigating the following five cases against the company:

Scrap metal investigationArising out of an immunity application from the Commission’s 2008 scrap metal industry investigation, it alleges that we contravened the Competition Act in our dealings with a major scrap supplier, by substantially lessening and/or preventing competition in the scrap market.

Price fixing of flat steel productsFollowing a complaint, the Commission summoned us to provide it with information regarding an investigation into the allegation that during the period 1 January 2005 to the present time, we and another major flat steel producer in South Africa engaged in price fixing.

Tinplate investigationThe Commission alleges that we charged excessive prices for our local tinplate, and gave special rebates to large tinplate customers.

Investigation into wire rod, flat products and fencing standardsThe Commission is investigating allegations of preferential pricing to a large long steel products customer between the period September 2000 and December 2008, and differential pricing strategies for flat and long steel products to customers with respect to transport of the affected products.

Transparent governance At the date of signing of this report we have 11 members on our Board of Directors, of whom 9 are non-executive directors and 5 are independent non-executive directors. Our Chief Executive Officer and Chief Financial Officer are the two executive directors.

The Board has various subcommittees, of which the SHE Committee and the Social and Ethics Committee have been mandated to assist the Board in ensuring the sound management of SHE matters and monitoring our relationships with all stakeholders – such as the communities in which we operate, our employees and the environment.

The operational direction of the company is the responsibility of the EXCO, which is chaired by the CEO and consists of 17 key company senior managers.

Ethical standardsFair and ethical business practices are at the heart of our values. These principles are entrenched in our Code of Business Conduct and are reinforced by specific policies and training programmes on issues such as anti-trust, anti-corruption, insider dealing, outside interest and non-discrimination.

Ethics training and monitoringTraining in business conduct and anti-corruption policies is monitored by the Legal department. To date, 2 695 out of a total of 3 860 employees requiring anti-corruption training have been trained. Code of Business Conduct training was completed by 5 815 employees during the year.

The global ArcelorMittal Group human rights policy is an integral part of our compliance programme, and it applies to all our employees. All employees are

Fair and ethical business practices are at the heart of our values

Governance, ethics and human rights


Commission to the Competition Tribunal (“the Tribunal”).

Matters that have been referred by the Commission to the Tribunal have been disclosed as contingent liabilities in the notes to the annual financial statements, as fully described in the financial report.

“Basket of goods” pricing for flat steelThe Commission alleges ongoing unhappiness with our “basket of goods” pricing methodology in that this pricing does not reflect the economic value of the goods and thus constitutes excessive pricing. This complaint relates to flat steel pricing for the period 1 January 2006 to July 2011. It is also alleged that the SIOC surcharge arrangement constituted unilateral conduct of abuse of dominant position on our part.

We are cooperating fully with the Commission in these investigations, and have delivered all the requested documentation to the Commission. None of these matters has been referred by the


Key performance indicators Key areas Key performance indicator Unit 2011 2010 2009 DefinitionsMaking steel more sustainable

Percentage of operations certified to the Environmental Management System Standard, ISO 14001

% 100 100 100 ISO 14001 is an international standard for environmental management systems.

Greenhouse gases Direct carbon dioxide (CO2) – Scope 1

mt 10.96 11.85 10.11 All direct carbon carrying materials into the production of steel

Indirect carbon dioxide (CO2) – Scope 2

mt 4.49 4.44 4.35 Electricity from Utility derived from coal

Total greenhouse gas (CO2 equivalent Scope 1 and Scope 2 emissions)

mt 15.44 16.29 14.45

Atmospheric emissions Sulphur dioxides (SO2) Tonnes 24 842 15 042 17 327Particulates from point sources Tonnes 4 729 4 081 3 591By-productsBy-products generated mt 4.09 4.05 3.52By-products disposed `(% of total)

% 45 39 44

Energy use Electricity (purchased) TW h 4.38 4.31 4.20Total energy consumption PJ 127 130 115Material useIron ore Tonnes 6 767 817 8 343 622 7 459 417

Coal Tonnes 3 984 744 4 418 984 3 685 385Dolomite Tonnes 521 707 573 095 553 024Limestone Tonnes 518 691 455 143 506 615Scrap Tonnes 1 207 658 1 090 715 1 067 658 Scrap metal excluding by-products that

contain FeWaterFresh water intake kℓ 20 231 422 20 554 392 17 822 203

Investing in our people

Employee numbers Number 9 886 9 261 8 993

Employee and contractor fatalities

Number 5 0 5

Lost time injury frequency rate (LTIFR)

(per million hours

worked)

1.24 1.64 2.6 LTIFR is the number of injuries that have resulted in an employee or contractor being away from work for at least one day after the day the accident occurred, per million hours worked.

Restricted work day cases rate (RWDCR)

(per million hours

worked)

1.38 2.17 1.63 Restricted work day cases per million hours worked. A restricted work day case (RWDC) is an injury that results in no time lost but the employee is not able to perform all of his/her normal pre-injury work or is assigned to other more suitable work until he/she can perform all his/her pre-injury work without restrictions.

Total injury frequency rate (TIFR)

(per million hours

worked)

19.27 23.05 25.28 All injuries (fatalities, RWDC, lost time injuries, medical aid and first aid injuries) in one million hours worked.

Occupation disease frequency rate (ODFR)

(per 10 000

hours worked)

0.37 0.42 0.39 Occupational diseases (work-related ailments) per 10 000 hours worked.

Percentage of operations certified to the health and safety management system standard, OHSAS 18001

% 100 100 100 OHSAS 18001 is an international standard for health and safety management systems.

Performance data


Key areas Key performance indicator Unit 2011 2010 2009 DefinitionsNumber of hours of full-time package category employee training

Number 30 676 27 473 8 077 Number of hours of full-time package category employee training. This excludes health and safety training and on-the-job training.

Number of hours of full-time bargaining unit category employee training

Number 358 279 278 520 281 570 Number of hours of full-time bargaining unit category employee training. This excludes health and safety training and on-the-job training.

Investment in employee training and development

Rm 154.2 172.6 92.8

Proportion of above focused on black employees

% 88 85 84

Investment in bursary scheme Rm 138.9 151.9 77Graduates in training intake Number 19 6 0Production learner intake Number 553 421 200Apprentice intake Number 396 419 512Artisan to technician conversion programme intake

Number 25 0 0

Attrition rate % 9 7 6Investment in South African universities

Number 115 100 108

Enriching our communities

Value added statementRevenue Rm 31 453 30 224 25 598Purchased materials and services

Rm (29 116) (24 576) (18 745)

Finance income Rm 29 9 199Investment income Rm 52 128 91Value added Rm 2 418 5 785 7 143Distributed to:Employees Rm 3 164 2 951 2 640Providers of equity capital Rm 221 602 5 545Providers of debt Rm 719 459 279Government Rm 243 653 934Community investment Rm 47 29 36Reinvested in group Rm 1 264 1 834 1 438

Production performance

Flat Liquid steel ’000

tonnes

4 060 3 814 3 428

Long Liquid steel ’000

tonnes

1 393 1 860 1 879

Total production Liquid steel ’000

tonnes

5 453 5 674 5 307

Transparent governance

Percentage of employees receiving trainingCode of Business Conduct % 59 70

Notmeasured

The Code of Business Conduct covers all our dealings with companies, suppliers and individuals, and addresses specific compliance issues such as anti-trust, anti-corruption, insider dealing, conflicts of interest, non-discrimination, health and safety and environmental performance. The training applies to all employees.

Anti-corruption % 70 70 Notmeasured

Fines, penalties and settlements

Number 0 0 0 All incidents of and fines for non-compliance with all laws and regulations associated with safety, health and environmental issues.

Fines, penalties and settlements

Rm 0 0 0 Payments include fines due to non-compliance with all laws and regulations and permits. The payments do not include levies or costs for lawyers and product liabilities.


Themba Hlengani Hennie VermeulenManager, Corporate Communication and Branding Manager, Investor Relations and Special ProjectsTel: 016 889 2425 Tel: 016 889 2352Fax: 016 889 4538 Fax: 016 889 3337

Disclaimer: forward looking statementsCertain statements in this document constitute “forward looking statements”. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements.

These forward looking statements speak only as of the date of this document. The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document, or to reflect the occurrence of anticipated events.

Key contacts

BASTION GRAPHICS

www.arcelormittal.com/southafrica

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