The mining industry is facing significant challenges as a result of low iron ore prices, which is putting pressure on mining producers to run their assets as efficiently as possible. This month, ArcelorMittal Liberia is implementing a new operating model which operates at a lower cost base. This involves selling 3MT of DSO to the European market only, in order to reduce running costs. - ArcelorMittal Liberia
Buchanan, Grand Bassa County - ArcelorMittal Liberia has announced that it has taken what the company is describing as the difficult but necessary decision to reduce its workforce by 167 jobs as a result of continuing unfavorable market conditions and changes to the company's operating model.
Mittal says the mining industry is facing significant challenges as a result of low iron ore prices, which is putting pressure on mining producers to run their assets as efficiently as possible and the company said it is implementing a new operating model which operates at a lower cost base. The company said the model involves selling 3MT of DSO to the European market only, in order to reduce running costs.
The recent decision follows a statement issued by the company on 11 November, 2015 in which it announced its intention to reduce its workforce by up to 450 jobs related to the support infrastructure and operation, as well as some indirect contractor jobs associated with the mine. At the time the company said the size of the reduction was dependent on the outcome of negotiations with unions concerning changes to employment practices and the cost base of the operation. Following that announcement, the company reduced its expat workforce, repatriating 24 expat workers to their home countries.
Better than expected
In November Mittal announced that it would cut 450 jobs.
"As part of the cost reduction measures we have informed the local union today of our intention to reduce employment by up to 450 jobs. The jobs affected will principally be related to the support infrastructure and operation, as well as some contractor jobs. The size of the reduction is dependent on the outcome of our negotiations with the union on changes to employment practices and the cost base of the operation. Potential measures under discussion include salary reductions, changing working patterns and agreements, and multi-skilling our employees. If we reach agreement with the union to implement some of these measures, the number of job losses would be lower", Michel Prive, CEO Prive explained in his communication last November. But the company looks to have reduced the number with the recent announcement of 167 job losses, which is significantly less than originally anticipated, saying the impact on the individuals affected is deeply regrettable.
"The decision fully confirms with Liberian law and our wider obligations to employees and other stakeholders. In line with ArcelorMittal Liberia's Collective Bargaining Agreement, a one-month consultation process with the Workers Union has taken place. The company has also held discussions with the Government of Liberia and informed the Ministry of Labour", the Mittal statement indicated.
CEO Prive said: "We deeply regret that the current economic environment is not allowing us to maintain employment at current levels. Changing the operating model and further reducing costs is required to ensure the competitiveness of the operation. We understand that this is difficult news for the affected employees".
According to Prive, ArcelorMittal has a deep commitment to Liberia and its people. "We were the first international company to commit significant investment after the war, and we have led the way in the revitalization of the country's mining industry, creating thousands of jobs and boosting the economy. That commitment remains, despite the Ebola outbreak in 2014, the steep decline in iron ore prices and the challenging economic environment", he added. ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and an industrial footprint in 19 countries.
Mittal is the leading supplier of quality steel in the major global steel markets including automotive, construction, household appliances and packaging, with world-class research and development and outstanding distribution networks. The company is the world's fifth largest producer of iron ore and metallurgical coal and mining business is an essential part of the company growth strategy. With a geographically diversified portfolio of iron ore and coal assets, Mittal said it is strategically positioned to serve its network of steel plants and the external global market.
In 2014, ArcelorMittal had revenues of US$79.3 billion and crude steel production of 93.1 million tonnes, while own iron ore production reached 63.9 million tonnes. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
When Arcelor Mittal and the Liberian government signed the first Mineral Development Agreement (MDA) in 2005 and amended it in 2006, Liberians were optimistic about the country's investment potential after years of economic deprivation. The MDA was expected to enhance development and economic, social and environmental investments with an objective of ensuring Liberians benefit from the extraction of their natural resources. The MDA specified that the steel giant is to pay US$73 million to three counties: Nimba, Bong and Grand Bassa as well as provide other corporate social responsibilities.
Nine years after signing the agreement, reduction in work and changes in the working model are signs of serious decline in the potential of the company. In 2006, the companies projected that by 2012 it would ship four million tons of iron ore each year and increase the world's iron ore production to 100 million tons by this 2015. But job cuts continue to overshadow the acclaimed reputation of a company ranked as one the biggest in the world. In June this year, more than 250 workers were redundant due to what the company described as unfavorable market conditions. William Toublon, Mittal Workers Union Secretary General told FrontPageAfrica at the time said that the Union was planning to resist the job cut.
"We are going to pressure management to the fullest. Government will come in because it needs those taxes to be paid; We will pressure them to the fullest. If it will cause them to close, they will close", Toublon told FPA in November. With the current job cuts, some believe that the company has dashed the hopes of Liberians who thought that with the coming of one of the biggest steel companies in the world, the situation would have helped the country economically.