ArcelorMittal South Africa Factor Report...ArcelorMittal South Africa Factor report 05 1. Executive summary Corporate responsibility is at the core of ArcelorMittal South Africa's

ArcelorMittal South Africa

May 2014

Factor Report

ArcelorMittal South Africa Factor report 01

Acknowledgements

This report has been commissioned bythe Chairman of the Board and seniormanagement of ArcelorMittal South Africa.

The execution of theFactor project was led by a

dedicated team from's Corporate Affairs Division between

November 2013 to February 2014, underthe guidance of a steering committeeconsisting of the Executive Committee andselected members of the Board ofDirectors.

Data and insight was provided by aninternal working team made up of seniorArcelorMittal South Africa experts from a

ArcelorMittalSouth Africa

ArcelorMittal SouthAfrica

wide range of functional divisions.A team from the Boston Consulting

Group (BCG), including experts from BCG'sSustainability Group, provided externalexpertise and independent support forassessment of 'sfootprint. BCG is a global managementconsulting firm and a leading advisor onbusiness strategy.

The World Business Council forSustainable Development (WBCSD)sponsored the development of theMeasuring Impact Framework which wasused as a template to develop a tailoredmethodology for the


ArcelorMittal South

Africa


factor. The WBCSD is a CEO-ledglobal association of around 200 companiesdedicated to issues of sustainabledevelopment in business

We would like to thank all those whohave contributed to this company-wideassessment for their commitment toincrease transparency and awareness of

's footprint inSouth Africa.

SafetyCreating a safe environmentfor all to live and work in

Customer focusBuilding long term win-winpartnerships

CaringFostering authenticrelationships, valuingeveryone

CommitmentSolution focused, deliveringto our best


Index

1. Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3. Context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5. The ArcelorMittal South Africa Factor summary . . . . . . . . . . . . 14

6. The ArcelorMittal South Africa Factor report . . . . . . . . . . . . . . . 15


1. Executive summary

Corporate responsibility is at the core ofArcelorMittal South Africa's businessstrategy, with a focus on four key areas:

People investment.Making steel more sustainable.Enriching local communities.Ensuring transparent governance.

has undertakento measure and assess the social,environmental, and economic impact that ithas on South African society and tocommunicate these findings through the

factor report.Specifically, key objectives were to:



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Develop an actionable methodology formeasuring the social, environmental andeconomic impact of ArcelorMittal'soperations on South African society. Themethodology should be tailored toArcelorMittal specific context anddetailed into pragmatic and actionablesteps.Apply the full methodology (includingmeasuring actual impact) to all localoperations and generate sustainabilityoutcomes.Create a report outlining thesustainability findings for distribution tokey stakeholders.

The findings are presented in thisFactor report.

The Factoridentified six main pillars or areas ofinfluence for ,namely:

Economic growth engine.Employer, job creator, and skillsdeveloper.Impact on local communities.Environmental footprint.Enabler of South Africa’s developmentthrough supply of steel.Catalyst for change in South Africa.




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•••

•

R27bn (0.9 %)R11bn (0.4 %)

in directGDP andin indirect GDP contribution.

125PJ17.5bn litres

13.4m tonnes

of energyof

water abstracted andof raw

material consumed.

5m tonnes~60% o

of steel produced withf South African steel supplied

by ArcelorMittal South Africasupporting key domestic industries.

8 8191 667

received health& safety andreceived anti-corruption training.

Economic growthengine

Employer, job creatorand skills developer

Impact on localcommunities

Environmentalfootprint

Enabler of South Africa’sdevelopment throughsupply of steel

Catalyst for changein South Africa

R47m in economicvalue contribution in2013.

48% improvement in waterabstraction since 2005.Continuously improvingeffluents management.

3.5 formal jobs created

R1meconomy-wide for every

spent by ArcelorMittalSouth Africa.

11%57%

75%

female employ-ment, HDSAemployment and

unionisation.

R1.5bn in taxescontributed.

15.2m tonnesScope 1 and2 CO² emitted.

Developed local steel processingindustries through joint ventures.Export rebates of paid outto local companies in 2013.

R213m

ArcelorMittalSouth Africa atB-BBEE Level 7.

R2.0bn inprocurement spend onQSE and EME.

2.5kt23.5kt

of dustand ofSO emissionsper annum.

²

Open disclosureof financial,environmentaland socialindicators.

1.65m tonnes

290ha

by-products disposedof; of landunder restoration.

Voluntaryparticipants inseveral debatesat national level.

Note: All figures as of 2013Source: ArcelorMittal South Africa, internal data, BCG analysisFigure 1. ArcelorMittal South Africa Factor summary.

Over peoplein direct employmentdue to ArcelorMittalSouth Africa.

14 800 Over trainingseats provided with

invested intraining.

120 000

R138m

R42m invested intechnical training;Multiple global steelinnovations introducedto South Africa.

R25bn2000

spent on oversuppliers, but

more emphasis onsupplier developmentrequired.

70%

16m tonnes

of new recruitsemployed locally;

ofmaterial transportedon local road and rail.

40 local communityorganisations engagedin 2013, with outcomesdocumented.

24% (R5.9bn)

R1.0bn

spenton local suppliers ofwhich onQSE and EME.

R40m invested in localcommunities in 2013.

Mostly positive Positive and negative Mostly negative Economic Social Environmental

Each pillar was assessed under a number of impact areas, and both impact areas and pillars were classified as having either mostly positive,positive and negative or mostly negative impacts.

ArcelorMittal South Africa Factor report06

1.1 Economic growth engine

1.2 Employer, job creator and skills developer

1.3 Impact on local communities

Structural component of South Africa'seconomyArcelorMittal South Africa is South Africa'sleading steel producer and contributes toGDP mainly through its steel productionoperations. Indirect GDP contributionresults from activity related to erection ofsteel containing structures and steel basedmanufacturing as well as activities relatedto the supply of raw materials for steelmanufacturing.

Challenging market environment

Supporting national endeavours

Value contributed reflects the economicvalue contributed directly created byArcelorMittal South Africa and is equal tototal revenues less incurred expenses.Economic value contribute in 2013 wasR47m despite a challenging marketenvironment.

As a major corporation citizen ArcelorMittalSouth Africa is a major South Africantaxpayer. ArcelorMittal South Africa's share

of taxes contributed to SARS amounted toR1.5bn in 2013 including both corporateand employee taxes paid.

ArcelorMittal South Africa has a potentiallysignificant role to play in developing andsupporting economic activity among SouthAfricans. R2.0bn was spent on QSE andEME (7.9% of total spend) companies in2013.

Supporting broad-based economicactivity

Long term job provider

Focus on training and development

ArcelorMittal South Africa and itspredecessor Iscor have been providingemployment within South Africa for over85 years. In 2013, nearly 9 000 peoplewere directly employed by

, the majority of whom were inskilled jobs. Including indirect employees,total employment due to

amounted to over 14 800.

As a major player in a skills-based industry,recognises the

importance of training and development. In2013, providedover 120 000 seats in technical, health &





safety and administrative trainings. Inaddition,supported development of ~1 800 learnersand apprentices. In all a total investment ofR138m was made in training across alllevels, both within and without

.

As a part of a global multinationalleverages

innovations in steel from global operationsand introduces them to South Africa, thustransferring valuable new skills andexpertise e.g. pre-fabricated Arval steelproducts.

In 2013,





Promoting technical innovation

invested R42m in technical training ofengineers, artisans and apprentices toincrease the local technical skills base.

supports thelocal South African economy and createsjobs through its procurement spend. A totalof R25bn was spent on more than 2 000suppliers in 2013 of which R2.0bn was on1079 small and micro enterprises.However, opportunity exists to activelydevelop supplier skills and capabilitiesthrough Enterprise Developmentprogrammes..

Generating jobs through economiclinkagesArcelorMittal South Africa

Driver of local economy

Committed to improving communityengagement

ArcelorMittal South Africa is a focus ofeconomic activity at all its operationallocations.

The steel value chain creates a numberof direct and indirect jobs, many of whichare in local communities.

Local impact is not all positive.Transportation of raw materials and finishedgoods, while creating employment, alsocreates environmental and noise pollutionand in particular accidents.

transports 62% of all materialby rail thereby helping to reduce congestionon South Africa's roads.

recognises theneed for strong community relationships



and is continuously working to improve itscommunity engagement.

engagedwith 40 local community organisations in2013, with key concerns documented andresponse provided.

While a significant business partner,currently spends

24% of its procurement budget on localsuppliers (based in towns where

operates).Excluding state-owned companies and iron-ore suppliers, 34% of spend is on localbusinesses.

supportssmall local businesses with R1.0bn spent onQSEs and EMEs from local communities.





Moving towards increased spend withlocal suppliers

However, iscommitted to increasing this furtherthrough enterprise development.

's commitment tosupporting and developing its communitieshas long been in evidence.

iscommitted to providing education, health,social upliftment and employeevolunteering in the communities it serves. Itsupported two schools, three sciencecentres, and a health clinic and rehabilitated158 houses in 2013.

also provides its employees with localand international volunteering opportunitiesfor community projects.





Striving towards better social services


1.4 Environmental footprint

1.5 Enabler of South Africa’s developmentthrough the supply of steel

Intensive use of resources

Improving effluents management

Steel production is a resource intensiveindustry. ArcelorMittal South Africaconsumed a total of 125PJ of energy,abstracted 17.5bn litres of water and used13.4m tonnes of raw materials in 2013,making it one of South Africa's largestconsumers of key resources.

Since 2005, hasbeen able to reduce its water abstractionfor steel production by 48% and now has an

rate below average for globalsteel companies.

is alsocontinuously working towardsimprovements in effluent management incompliance with South Africanrequirements at each of its operating sites.


abstraction


CO² emissions

SO² and particulate emissions

CO² is a significant contributor to climatechange and a by-product of steelproduction. 's CO²emissions footprint is significant with15.2m tonnes of CO² emitted in 2013.

is working toimprove its dust and SO² based emissionsperformance. hasinvested R500m in dust extraction systemsresulting in a reduction in particulateemissions to 2.5kt.

SO² emissions in general increased,mainly due to the increased sulphur contentin the various coals used. Someimprovement is foreseen when the idlesulphur recovery plants at VanderbijlparkWorks and Newcastle Works reach stable




operating conditions after variousmaintenance problems are addressed.

generatessignificant by-product volumes with1.65m tonnes disposed in 2013.

Currently 39% of total by-product island filled. However, opportunities arecontinuously sought to recycle or sell by-products whenever possible.

Recycling is a key initiative atwith over

973 023 tonnes of scrap steel recycledannually.

To date, R220m has been invested inrehabilitation of 290ha at 6 historic wastedisposal sites and effluent storage facilities.

By-products disposal, recycling andrestorationArcelorMittal South Africa


Major provider of domestic steelSteel is at the heart of South Africa'sambitious plan to increase capitalexpenditure to 30% of GDP by 2030 as laidout in the National Development Plan(NDP). currentlyproduces 5m tonnes of steel annually,providing 57% of domestic steelrequirements in 2013 and can play a role inmeeting the increased demand of thefuture.

providessteel for a range of domestic industries withthe majority of supply (71%) going towardsconstruction, automotive, mining, energy,and chemical and water sectors. As a major



supplier to domestic industries,indirectly

supports 9.7% of GDP and 900 000 jobs.

The production of local steel is beneficial tothe domestic economy by adding value ofover R20bn in beneficiation over exportingraw materials; creating direct and indirectjobs, providing tax revenue for government(R294 per ton); and serving as a key factorin reducing supply lead times compared toimported steel.has a major role to play as the leadingproducer of South African steel.

Independent economic analysis



Benefits of local steel

calculates that 3.5 jobs are createdeconomy-wide for every R1 m finaldemand by the iron and steel industry.

The creation of downstream steel industriesis key to maximising beneficiation.

activelyparticipates in developing and supportingsecondary steel industries.

In 2013,paid out over R200m in export rebates tosupport financial sustainability of steelfabrication industries including pipes andtubes; forged products and automotivecomponents.

Supporter of domestic industries




1.6 Catalyst for change in South Africa

Leading the way in health & safety andanti-corruption

Employment equity and representation

In 2013 over 8 800 employees receivedhealth and safety training. ArcelorMittalSouth Africa achieved zero fatalities in2012 and 2013 with a lost-time injury rateof 0.56 which is below average for peerSouth African companies.

has also adopted several healthinitiatives to ensure employee well-being.

A robust anti-corruption trainingprogramme is in place with over 1 600employees trained in 2013 while auditsresulting in corrective action are regularlyconducted.

is makingimprovements in employment equity.Female workforce participation has risen to11% in 2013 from 9% in 2010 - belowSouth Africa mining companies but aboveaverage for global steel companies.HDSA comprise 57% of employees, lowerthan average for peer South African



companies. alsosupports worker's rights with a majority(75%) ofemployees unionised.

is certified at B-BBEE Level 7 based on efforts inmanagement control, preferentialprocurement and socio-economicdevelopment.

Key areas for improvement includeemployment equity and supplier &enterprise development. In 2013, 5.2% ofspend was with majority black owned andless than 9% on small and micro enterprises.

sets an examplefor good governance practice.Annual reports are published disclosingfinancial, environmental and socialindicators that are in line with GlobalReporting Initiative guidelines, and aresupplemented by periodic financial and





Supporting broad-based economicdevelopment

Transparency and following due process

other reports.As the subject of pending litigation,

is currentlyfollowing due process according to SouthAfrican law in four legal cases.

, as a keystrategic company, voluntarily participatesin multiple forums on matters of nationaland industrial significance. These include:

Economic Forum of the Reserve Bank.Manufacturing Circle.Advisory board to the Minister of HigherEducation.Working groups on environmental andsafety issues.Industry trade organisations such as SAISI(South African Iron and Steel Institute)and SEIFSA (Steel and EngineeringIndustries Federation of South Africa).Department of Water and EnvironmentalAffairs.



Participation in national strategicdebates

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2. Introduction

ArcelorMittal South Africa is proud of itsheritage in one of South Africa key strategicindustries. As the leading producer of steelin South Africa, isin the fairly unique position of facing boththe challenges of the global steel industry,as well as those specific to South Africa,and recognises that it has a responsibility toset an example through economic, socialand environmental impacting activities.

as such hasrecently undertaken a project to completethe Factorassessment. This project had three aims:

Develop a tailored, sustainable, andactionable methodology for measuringthe social, environmental, and economicimpact of 's





•

operations on South African society.Apply the methodology to localoperations and generate sustainabilityoutcomes.Create a report outlining thesustainability findings for distribution tokey stakeholders.

This report – theFactor report contains the results of theproject.

The project is an attempt to create anaccurate and balanced view of

's footprint on South Africafrom a social, economic, and environmentalperspective. This means identifying andrecognising positive contributions by

, but also seekingout priority areas where more work can and




•

•

should be done.This initial assessment is intended to be

a baseline. Not only has required data beencompiled to formulate the report, but asystematic and pragmatic approach hasbeen developed that can be leveraged onan ongoing periodic basis to generatefurther reports and assessment to trackongoing impact and measure progresstowards objective targets.

The aim is that the tools developed andreport produced will enable an improvedquality and level of engagement with

's numerousstakeholders and partners in a mutuallybeneficial and sustainable manner.



ArcelorMittal South Africa is the leadingsteel manufacturer in South Africa andAfrica, and part of the ArcelorMittal group,the largest steel making company in theworld with steelmaking and miningoperations on four continents.

ArcelorMittal South Africa operates

3. Context

3.1 Background on ArcelorMittal South Africa

Company Financials Products

The revolution of the company to finallybe called ArcelorMittal South Africa in2006, started in 1910.

is theleading steel producer in Africa with anannual capacity of 6.5m tonnes liquidsteel part of the global ArcelorMittalgroup.

has fiveplants in Vanderbijlpark, Vereeniging andPretoria in Gauteng, Saldanha inWestern Cape and Newcastle inKwazulu-Natal.



South Africa



is a largecompany employing almost 9000people directly with revenues of overR30bn annually.

However due to challengingmarket conditions,

has reported a net loss duringpast three years.

Revenue (R bn)




produces high quality steel for domesticuse and export.

supplies about 60% of SouthAfrica's steel, with the majority used inconstruction, automotive, mining andenergy industries.

produces flat and long steel productswith wide-ranging applications, and hasintroduced innovations in South Africato produce lighter, stronger and moreenvironmentally friendly steel.

Figure 2. Overview of ArcelorMittal South Africa

Vanderbijlpark Works

Pretoria Works

Vereeniging Works

Newcastle Works

Saldanha Works

50

25

02010 2011 2012 2013

30.2 31.5 32.3 32.4

five plants in South Africa and has a totalproduction capacity of 6.5m tonnes ofliquid steel per annum. Its products servicethe construction (roofing, cladding, andrainwater goods) and heavy engineeringsectors (mining equipment and heavycommercial vehicles), pipe and tube

manufacturers, the automotive market, aswell as the furniture and appliancemanufacturing industries, packaging,cabling, fencing, and fertiliser industries.


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Gauteng province.Two blast furnaces; three basicoxygen furnaces.Slabs, plates, hot-rolled, cold-rolled,electro-galvanised (EGL), tinplate,colour coated.3.0 mtpa.

Saldanha Works

••••

Western Cape province.Corex, Midrex continuous process.Hot rolled coil.1,3 mtpa.

Coke & Chemicals

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Pretoria, Newcastle andVanderbijlpark.Commercial coke production forferro-alloy industry; metallurgical andsteel by-products beneficiation,including coal tar.

Vereeniging Works

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Gauteng province.Two electric arc furnaces.Seamless tubes, profiles and forgedsteel.0.4 mtpa.

Newcastle Works

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Kwa-Zulu Natal province.One blast furnace; One ladle furnace;Two basic oxygen furnaces .Wire rod, profiles, billet rebar, andother.1.9 mtpa liquid steel capacity.


Source: ArcelorMittal South Africa website.Figure 3. ArcelorMittal South Africa operational sites

Operations include both steeloperations at four major facilities producingboth flat and long steel products, as well asa coke and chemicals business thatproduces market coke for the ferro-alloysindustry. ArcelorMittal South Africa alsooperates coke batteries and is responsiblefor the processing and beneficiation ofmetallurgical and steel by-products, such ascoal tar pitch. The company also holds a 6%stake in coal producer Coal of Africa as well

as the rights to high quality iron orereserves in mines in South Africa.

Most of 'ssteel is used locally, with domestic salesaccounting for 90% of ArcelorMittal SouthAfrica's revenues, with the remaining 10%derived from selective export markets,particularly in Africa.

is one ofSouth Africa's oldest industrial companies,dating back to its founding in 1928 as the



parastatal Iscor. Iscor's transition to theArcelorMittal group began in 2004 with themerger of Ispat International NV and LNMHoldings NV, the parent company of IspatIscor (as Iscor was known at the time). Thenew company operated under the newname of Mittal Steel South Africa Limitedand in 2006 became ArcelorMittal SouthAfrica following the merger of Arcelor andthe Mittal Steel Company.


1912 - 1952Beginnings of SA SteelIndustry

1912: Union steel Co. OpSouth Africa formed(Vereeniging).1916: Pretoria Workscommissioned; VereenigingWorks commissioned.Transvaal Blast FurnaceCompany Limited formed.1920: Newcastle workscommissioned; NewcastleIron and Steel Works,Limited formed.1928: Iscor founded as astatutory parastatal.1928: Iscor founded as astatutory parastatal.1942: Vanderbijlpark Worksfounded.1943: VanderbijlparkWorks plate millcommissioned to supportthe South African wareffort.1947: Iscor starts trading.1942 to 1952:Vanderbijlpark Worksdeveloped into a fullyfledged integratedsteelworks.

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1952 - 1980Expansion of productionfacilities

4 October 1952:Vanderbijlpark Worksofficially opened by theGov. Gen. Dr E.G. Jansen.1964 to 1969: Seconddevelopment phase ofVanderbijlpark Worksextends and modernise theolder plant.17 May 1969:Government approvesconstruction of third fullyintegrated steel works atNewcastle.

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1980 - 2000Privatisation and businessoptimisation

1980's: South Africangovernment commits toprivatisation of state runcompanies.Late 1980's: Capitalexpenditure aimed atproductivity and qualityimprovements.1989: Iscor is privatisedwith shares listed in theJohannesburg stockexchange.1990's: Multiple processand productivityimprovements across Iscorplants.1998: Saldanha Steel (jointventure with IDC)commissioned.1991: Iscor buys USCO'ssteel division.

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2000 - PresentFormation of moderncompany

2001: Iscor is unbundledinto Iscor and Kumba.2001: Business assistanceagreement signed withAnglo-Dutch steelproducer, LNM holdingsN.V.2003: LNM offers RI.8bnbuy-out.17 August 2004: Iscorrenamed Ispat Iscor limited.December 2004: IspatInternational acquires LNMholdings, Ispat Iscorbecomes Mittal Steel.company N.V.14 March 2005: Ispatbegins trading as MittalSteel South Africa.25 Jun 2006: Arcelor andMittal Steel companyannounce merger to formArcelorMittal Steelcompany.3 October 2006: MittalSteel South Africa beginstrading as ArcelorMittalSouth Africa.

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1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Source: ArcelorMittal South Africa website.Figure 4. History of Steel and ArcelorMittal South Africa in South Africa


4. Methodology

The approach adopted in the developmentof the Factorreport provides a template and guide forfuture iterations of the report. The basis forthe methodology is the frameworkdeveloped by the World Business Councilfor Sustainable Development


Key activities

••

•

•

•

•

•

•

•

•

•

••

••

Identify objective(s) for assessment.Define geographical scope ofassessment.Collect development contextinformation.Select business areas to be assessed.

Identify sources of impact for eachbusiness activity.Identify relevant indicators fordirect/indirect impacts.Measure impact.

Determine level of stakeholderengagement.Engage with stakeholders to prioritisedevelopment issues .Build hypothesis of businesscontribution to development.Test hypothesis with stakeholdersand refine overall assessment

1

1.

Identify priority issues for action.Consider possible managementresponses and preparerecommendations for management.Decide on way forward.Develop indicators to monitor wayforward.

Figure 5. WBCSD measuring impact framework methodology.Further details on the approach can be found in the appendix.

Step

1. Setboundaries

2. Measuredirect andindirectimpact

3. Assesscontributionto develop-ment

4. Prioritisemanage-mentresponse.

Four step framework underpins themethodology

Measure direct andindirect impact

“Measure yourcompany

footprint”

Set boundaries

“Define yourbusiness”

Prioritisemanagementresponse

“Make betterinformed decisions”

Assesscontribution

to development

“Understand yourfootprint in the

development context”

Stakeholderengagement

Step 1

Step

4

Step 3

Step 2

5. The ArcelorMittal Factor summary

Note: All figures as of 2013.Source: ArcelorMittal South Africa, BCG analysis.Figure 6. The ArcelorMittal South Africa Factor summary.

ArcelorMittal South Africa's impact onSouth Africa is summarized in six areas ofimpact covering social, environmental, andeconomic matters.

Each impact area is further broken


down into a number of themes and eachtheme and impact area has been evaluatedin terms of whether ArcelorMittal SouthAfrica's impact or performance is mostlypositive, a mix of both positive and

negative, or mostly negative.Each impact area is explored in detail in

the following pages.

R27bn (0.9 %)R11bn (0.4 %)

in directGDP andin indirect GDP contribution.

125PJ17.5bn litres

13.4m tonnes

of energyof

water abstracted andof raw

material consumed.

5m tonnes~60% o

of steel produced withf South African steel supplied

by ArcelorMittal South Africasupporting key domestic industries.

8 8191 667

received health& safety andreceived anti-corruption training.


Employer, job creatorand skills developer



Enabler of South Africa’sdevelopment throughsupply of steel

Catalyst for changein South Africa

R47m in economicvalue contribution in2013.

48% improvement in waterabstraction since 2005.Continuously improvingeffluents management.

3.5 formal jobs created

R1meconomy-wide for every

spent by ArcelorMittalSouth Africa.

11%57%

75%

female employ-ment, HDSAemployment and

unionisation.

R1.5bn in taxescontributed.

15.2m tonnesScope 1 and2 CO² emitted.

Developed local steel processingindustries through joint ventures.Export rebates of paid outto local companies in 2013.

R213m

ArcelorMittalSouth Africa atB-BBEE Level 7.

R2.0bn inprocurement spend onQSE and EME.

2.5kt23.5kt

of dustand ofSO emissionsper annum.

²

Open disclosureof financial,environmentaland socialindicators.

1.65m tonnes

290ha

by-products disposedof; of landunder restoration.

Voluntaryparticipants inseveral debatesat national level.

Over peoplein direct employmentdue to ArcelorMittalSouth Africa.

14 800 Over trainingseats provided with

invested intraining.

120 000

R138m

R42m invested intechnical training;Multiple global steelinnovations introducedto South Africa.

R25bn2000

spent on oversuppliers, but

more emphasis onsupplier developmentrequired.

70%

16m tonnes

of new recruitsemployed locally;

ofmaterial transportedon local road and rail.

40 local communityorganisations engagedin 2013, with outcomesdocumented.

24% (R5.9bn)

R1.0bn

spenton local suppliers ofwhich onQSE and EME.


Mostly positive Positive and negative Mostly negative Economic Social Environmental

Economic growth engine examinesArcelorMittal South Africa's most directcontribution to the South African economyin terms of its impact on GDP as well as aresult of the value added to the economyfrom capex, operations, and otheroperational expenditures; contributionthrough taxes to national revenue; andsupport for broad based economicdevelopment.

6. The ArcelorMittal South Africa Factor report

6.1 Economic growth engine

Structural componentsof South Africa’seconomy

ArcelorMittal South Africa isSouth Africa's leading steelproducer and contributes toGDP mainly through its steelproduction operations.Indirect GDP contributionresults from activity relatedto the erection of steelcontaining structures andsteel based manufacturing aswell as activities related tothe supply of raw materialsfor steel manufacturing.

Value add in achallenging marketenvironment

Value contribution reflectsthe economic value directlycreated by

and is equal tototal revenues less incurredexpenses . Economic valuecontribution in 2013 wasR47m which represents animprovement over 2012,despite a continuedchallenging marketenvironment.


Supporting nationalendeavours

As a major corporation,is a

major South African taxpayer.'s

share of taxes contributed toSARS amounted to R1.5bn in2013 including bothcorporate and employeetaxes.



Supporting broad-based economicactivity

ArcelorMittal South Africa hasa potentially significant role toplay in developing andsupporting economic activityamong South Africans.R2.0bn was spent on QSE andEME (7.9% of total spend)companies in 2013.

Note: All figures as of 2013.Source: 2013 Sustainability report, BCG analysis.Figure 7. Economic growth engine.

0.9% (R27bn)0.4% (R11bn)

in directGDP and inindirect GDP contribution.

R47m in economiccontribution added in 2013.

R2.0Bbn procurementspent on QSE and EME.

R1,5bn in taxescontributed.


6.1.1 Structural component of South Africa’s economy

As South Africa's leading steel producer,ArcelorMittal South Africa plays a vital rolein the economy. Direct GDP contributionreached R27bn or 0.9% . Thiscontribution is based on

's expenditure on raw materials,labour, capital expenditure, and servicestowards the production of steel at itsoperations throughout the country.

also has an

in 2013ArcelorMittal South

Africa


indirect impact on GDP. This is basically theincremental value generated within theSouth African economy for each Randderived from 'ssteel production. The indirect contributionresults from the GDP impact of the varioussuppliers, service providers, and otherbusiness that are supported by

, pays taxes andemployees, who in turn use their wages to



purchase goods and services. The SouthAfrican Institute of Steel Construction(SAISC) estimates that an additional R0.43are generated for each Rand due to themanufacture of steel. When this indirectcontribution is factored in total GDPcontribution rises by a further R11bn toR38bn or approximately 1.3% of GDP.

6.1.2 Challenging market environment

In terms of economic value contributed,contributed

R47m in 2013. Value contributed iscalculated as the revenue remaining afterdeducting all operational expenses cost of

ArcelorMittal South Africalabour, operations, and generaladministration has been deducted. Thisfigure while positive and reversing a recenttrend of negative value add, still trails thecontribution from prior years and reflects

the challenging market environment thatfound itself

operating in.ArcelorMittal South Africa

Both domestic andinternational factors havecontributed to low economicvalue contribution

Domestic factors

International factors

However, early signs indicate apotential increase in steel demand

Economic growth lower thananticipated in South Africa.Depressed building and constructionindustry.High electricity and raw materialscosts.

Influence of the Eurozone crisis.Slowdown in economic growth andreduced demand in China.

Vehicle sales rising.Increase in number of building planspassed.Increase in sales of construction andbuilding materials.

•

•

•

••

••

•

Economic value contribution returned to positive in 2013 but is stillbelow previous highs

Source: 2010-2013 Financial Statements, BCG analysis.Figure 8. Economic value add for ArcelorMittal South Africa was positive in 2013.

R (Billion)

34

32

30

2

0

-22010

2.15

0.30

-0.48

0.05

2011 2012 2013

12.8% 12.1% 10.0% 10.1%

Sales Expenses Economic value added

Weight average cost of capital (WACC)


6.1.3 Supporting national endeavours

6.1.4 Supporting broad based economic development

For 2013, ArcelorMittal South Africacontributed a total of R1.5bn in taxes.Approximately a third of this amount was inthe form of employee taxes paid, withanother third in taxes paid to municipalities,and the remainder in net VAT payments.This figure represents a slight increaserelative to 2012, due in part to the returnto profitability.

One of ArcelorMittal South Africa's keylevers for impacting economic developmentis its procurement spend. In 2013 over50% of 's totalprocurement spend - approximatelyR13 bn - was with suppliers rated


Breakdown of 2013 tax contribution

ArcelorMittal South Africa spending segmented by B-BBEE level and vendor size

Figure 9. ArcelorMittal South Africa 2013 tax contribution.Source: 2013 Sustainability Report

1. Using B-BBEE classification for vendor size based on annual turnover; Exempted Micro Enterprise (EME) <R5m, Qualifying Small Enterprise (QSE) between R5m and R35m andGeneric with >R35m 2. B-BBEE level for R356m QSE & EME spend not available and could not be disaggregatedSource: ArcelorMittal South Africa internal data, BCG analysisFigure 10. 52% of total procurement spend on B-BBEE Level 1-4.

R (Billion)

2 000

1 500

1 000

500220

Corporatetaxes

Municipalityincome and

taxes

Net VATpayment to

SARS

Employeetaxes paid

Totalcontribution

483

252

557 1 512

0

B-BBEE levels 1-4. While a portion of thisspend came from the historically mostdisadvantaged sectors of the community,there is scope to increase this amountsubstantially: Currently 7.6% ofprocurement spend is with majority black

owned enterprises (and 2.3% of spendon 30% or more black female ownedcompanies), and 9.3% with small andmicro enterprises.

-R13.0 bn (52%)spent on 1.376 B-BBEELevel 1-4 companies

NA Large Generic QSE EME

Level 1-4

Level 5-8

Non-compliant

NAR2 500m

Vendor size1

R7m R61m R1 063m

R5 457m

R632m

R11 227m

R248m

R165m

R5 690m R356m²


B-BBEE level

ArcelorMittal South Africa spending segmented by % black women ownership and vendor size

1. Using B-BBEE classification for vendor size based on annual turnover; Exempted Micro Enterprise (EME) <R5m, Qualifying Small Enterprise (QSE) between R5m and R35m andGeneric with >R35m 2. Black ownership data for R356m of total QSE & EME spend not available and could not be disaggregated.Source: ArcelorMittal South Africa, BCG analysis.Figure 12. ArcelorMittal South Africa spent R585m (2.3% of total procurement) on companies with 30% or more black women ownership in 2013.

~585m (2.3%)spent on 82 black-women

owned enterprises


30%-100%

0.1-30%

0%

NA R2 500m

R145m

Vendor Size1

ArcelorMittal South Africa spending segmented by % black ownership and vendor size

1. Using B-BBEE classification for vendor size based on annual turnover; Exempted Micro Enterprise (EME) <R5m, Qualifying Small Enterprise (QSE) between R5m and R35m andGeneric with >R35m 2. Data for R356m QSE & EME spend not available to be disaggregated.Source: ArcelorMittal South Africa, BCG analysis.Figure 11. QSE, EME represent 9% of overall procurement spend while black owned enterprises account for 8%.

~R1.89 billion (7.6%)spent on 178 majority

Black owned enterprises


50-100%

0.1-49.9%

0%

NA R2 500m

R590m

R6 934m

R8 917m

R5 111m

Vendor Size1

% black ownership

% black womenownership

R236m

R5 364m R67m R6m

R11 248m

R5 556m

R1 097m

R171m R34m

R592m

R356m²

~R2.33 bn spent (9.3%)on 1,079 small andmicro enterprises

R997m R243m R64 m

R174m R14m

R922m

R356m²

R554m


6.2 Employer, job creator and skills developer

The employer, job creator, and skillsdeveloper impact area looks at the roleArcelorMittal South Africa plays as a sourceof direct and indirect employment, skillsdevelopment through training andeducation, and job creation through itssuppliers and partners.

Long term jobsprovider

ArcelorMittal South Africa andits predecessor Iscor havebeen providing employmentwithin South Africa for over85 years.

In 2013, nearly 9 000people were directlyemployed by

, the majority ofwhich were in skilled jobs.Including indirect employees,total employment due to

isover 14 900.



Focus on training anddevelopment

As a major player in a skills-based industry,

recognises theimportance of training anddevelopment.

In 2013,provided over

120 000 seats in technical,health & safety andadministrative training. Inaddition,

supported thedevelopment of ~1800learners and apprentices

In all a total investmentof R138m was made intraining across all levels, bothwithin and without

.





Promoting technicalinnovation

As a part of ArcelorMittal,

leverages innovations in steelfrom global operations andintroduces them to SouthAfrica, transferring valuablenew skills and expertise e.g.pre-fabricated Arval steel.

In 2013,invested R42m

for technical training ofengineers, artisans andapprentices to increase thelocal technical skill base.



Creating jobs througheconomic linkages

ArcelorMittal South Africasupports the local SouthAfrican economy and createsjobs through its procurementspend. A total of R25bn wasspent on more than 2 000suppliers in 2013 of whichR2.0bn was on 1 079 smalland micro enterprises.However, opportunity existsto actively develop supplierskills and capabilities throughEnterprise developmentprogrammes.

Note: All figures as of 2013Source: ArcelorMittal South Africa, BCG analysis.Figure 13. Employer, job creator and skills developer.

Over jobs in directemployment due to

.

14,900


Over trainingseats provided with

invested in training.

120,000

R138m

R25bn spent on over 2000suppliers, but moreemphasis on supplierdevelopment required.

R42m invested in technicaltraining.Multiple global steelinnovations introduced toSouth Africa.


6.2.1 Long term job provider

Since its founding in 1928, ArcelorMittalSouth Africa in various forms has been aprovider of South African employment.With multiple family generations oftenhaving worked atfacilities, it is in many ways a symbol ofstable long term employment. In 2013

provided a total



of 14 800 jobs at its various sites. Nearly9 000 of these positions are direct orpermanent employees, while just over6 000 are comprised of hired or labourcontractors. Black employees form thesingle largest employee group by race(49%) and the workforce is alsopredominately male (89%). 59% of

permanent employees are in skilled roles.However, transformation in professional andmanagement clusters is still lagging with70% of positions filled by white employees.Specific employment equity measures havebeen identified to reverse this situation andincrease HDSA representation.

1. Includes service contractors and hired labourers working on site.Note: Basic iron and steel multipliers for indirect employment is 0.82 jobs/R1m final demand and induced employment is 2.18 jobs/R1m final demand as estimated by QuantecResearch. Multipliers include formal employment only and final demand assumed to be AMSA's operating expenditure of R32 374m in 2013.Source: internal data, Quantec Industry Multipliers 2012, BCG analysis.Figure 14. ArcelorMittal South Africa directly employs - 15 000 workers - but creates up to 107 800 jobs overall employs-wide employment.


Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 15. Employee base is mostly male and permanent.

1. Includes servicecontractors and hiredlabourers working on site.

Note: Basic iron and steelmultipliers for indirectemployment is 0.82jobs/R1m final demandand induced employmentis 2.18 jobs/R1m finaldemand as estimated byQuantec Research.Multipliers include formalemployment only andfinal demand assumed tobe ArcelorMittal SouthAfrica’s operatingexpenditure of R3 274min 2013.Source: A

internaldata, Quantec IndustryMultipliers 2012, BCGanalysis .

rcelorMittalSouth Africa

Number of employees

Estimated numberof jobs created atdirect suppliers of


Estimated number of jobscreated by secondary suppliers

and private spending due toincome generated

Jobs createddirectly at


facilities

120 000

90 000

60 000

30 000

14 968

25 505 40 473

67 324 107 798

0Direct1 Indirect Total Direct and

IndirectInduced Economy-wide

impact

An estimated ~40 500 jobs created at ArcelorMittalSouth Africa and its suppliers as a result ofArcelorMittal South Africa activities

Workforce by gender Workforce by permanent vs contracted

89% 11%10 000 10 000

8 000 8 000

6 000 6 000

4 000 4 000

2 000 2 000

0

8 865 8 865

1 729

4 374

0Male PermanentFemale Hired labour Service contracts


1. Foreign nationals designated as White.Note: Temporary workers (n=102) excluded from analysis.Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 16. Transformation in leadership positions still lagging but measures to increase HDSA participation have been identified.

Employment impact, however, is not justlimited to the direct jobs that ArcelorMittalSouth Africa provides. Independenteconomics consulting firm Quantecestimates that 0.82 jobs in indirect and2.18 jobs in induced employment resultfrom every R1 m of steel demand. Thesejobs are found in the suppliers that support

(and other steelcompanies) directly, and in the services thatdevelop to serve these suppliers and theemployees that work for them. This meansthat in total, isdirectly or indirectly the source ofapproximately 107 800 jobs within SouthAfrica. If it is assumed that each job can



support a household of four, on average,the total population supported by

is around431 200.

's role as longterm employer is evidenced by an employeeretention rate that compares favourably,not only to fellow South African industrialcompanies but also to global steelcompanies.

Several factors contribute to lowturnover. First, as a long term communitycitizen is oftenregarded as a stable employer of choice. Inmany cases, loyalty is developed to

, with many





employees opting to stay till retirementage. also iswidely regarded as offering some of thebest training and career developmentopportunities within the communities inwhich it operates.

At the same time it should be notedthat some segments of the population areheavily desired within South Africa, and sochallenges exist in trying to retain themwithin the organisation. In particular skilledblack employees have a higher turnoverrate than the overall workforce andretention strategies need to be revised toensure essential skills that are developedremain within .



Top management

Senior management

Professional

Skilled

Semi-skilled

Unskilled

<0.1%

2%

10%

59%

27%

2%

African

49%

Coloured

5%

Indian

4%

White¹

43%

2 (18%)

19 (14%) 2 (1%) 6 (1%) 109 (80%)

9 (82%)

173 (19%)

1 984 (38%)

1 898 (81%)

203 (99%) 2 (1%)

500 employees

97 (4%) 37 (2%) 304 (13%)

267 (5%) 229 (4%) 2 706 (52%)

33 (4%) 72 (8%) 640 (70%)

•

•

Senior management and professionals70% white.Employment equity measures identifiedto increase HDSA participation.


Transformation in leadership is still lagging

ArcelorMittal South Africa employee turnover relatively low

Employee turnover (%)

Training spend (Rand/employee)

20

4.0

6.8 6.4

11.7

4.0

7.9

6.0

18.9

1.7

5.7

7.4

13.0

1.7

WorseAverage = 6.35

Better5.9

0.8

5.34.4

6.0 6.0

3.5

18

16

14

12

10

8

6

4

2

0


Perspective on low turnover

•

•

•

•

ArcelorMittal South Africa regardedas employer of choice providingstable jobs in local communities.Employees develop loyalty to

with manyopting to stay till retirement age.Provides one of the best training andcareer development opportunities intheir local communities.However, skilled black employeeshave higher turnover due to betterpay offers employee retentionprocess needs to be revised to retainessential skills or training effortsleveraged towards producing skilledblack employees.


South African Metals and Mining companies

Global steel companies

Note: Peer group companies selected include mining, metals and steel companies.Source: ArcelorMittal South Africa internal data, company sustainability reports, BCG analysis.Figure 17. ArcelorMittal South Africa's turnover rate is comparably low.

6.22 Focus on training and development

The production of steel requires specialisedskills that are not always in plentiful supplyin South Africa. ArcelorMittal South Africarecognises the need to develop skills withinthe labour force as vital to the sustainableproduction of steel and this is reflected inits commitment to skills and training, whichis above most comparable peers in SouthAfrica.

Note: Peer group companies selected include mining, metals and steel companies.Source: ArcelorMittal South Africa internal data, company sustainability reports, BCG analysis.Figure 18. ArcelorMittal South Africa with above average training spend per employee.

BetterAverage = R12 149

Worse


30,000

25,000

20,000

15,000

10,000

5,000

0

R15,253

R8,579

R23,244

R5,560

R9,404

R25,932

R20,062

R13,109

R7,461

R4,550R6,086 R6,637

South African metals and mining companies


In 2013 ArcelorMittal South Africaprovided 120,800 training opportunities ata total cost of R138.1m. Significant trainingand career development opportunities areafforded to employees, but also

provides trainingsupport at all stages in the learning andArcelorMittal South Africa

Science Centres

Additional maths andscience training for highschool students.

Local high schoolstudents.

ArcelorMittal South AfricaScience Centres.

24 800

N/A

12m

Bursaries

Sponsor talentedstudents to obtain skillsrelevant for ArcelorMittalSouth Africa.

University and technikonbursars.

South African Universitiesand Technikons.

137

N/A

19m

Learner pipeline

Nationally recognisedtraining for artisans andproduction workers.

Apprentices andproduction learners.

ArcelorMittal South Africatraining facility atVanderbijlpark Works.

1 455

42 748

62m

Employee training

Training on operations,leadership, health &safety, environment, IT.

Current employees.

Production plant andcorporate centre.

14 277

117 015

25m

Description

Target group

Training location

No. of people

No. of seats

Rand invested

1

1. Number of training seats calculated as a sum of attendees at all training sessions conducted for ArcelorMittal South Africa permanent or contract employeesSource: internal data.Figure 19. Overall ArcelorMittal South Africa with relatively strong commitment to training.



employee pipeline.A wide range of training programmes

are provided targeted at different audiencesand aimed at preparing a highly competentworkforce with a focus on achievingemployment equity. A significant portion oftrainees are comprised of HDSA groups.

Current employees are also exposed todifferent training programs tailoredspecifically to help them progress up thecareer ladder at ArcelorMittal South Africa.

Number ofpeople trained

1 000

800

600

400

200

0

813

574

240137

58

14 277

910

269

50 42 35 8 3

Production learnertraining

A three year programme inmetals manufacturing whereproduction learners areprepared to becomeproduction employees.

Production learners.•

Accelerated artisantraining programme

18 months apprenticeshipwhere an individual is trainedto become an artisan.

Apprentices.•

Candidateprogramme

One to two year internshipprogram for candidates toacquire practical experiencebefore becoming fullyqualified.

Candidate engineers.Candidate technicians.Candidate artisans.Graduate in training.Artisans.

•••••

Bursaries

A two or four year academicprogramme at a University toprepare technicians andengineers for ArcelorMittalSouth Africa.

University bursars.Technikon bursars.

••

Learner technicians

One year programme whereUniversity of Technologystudents obtain their practicalindustry training to qualify fortheir diploma.

Learner technicians.•

Description

Target groups

Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 20. ArcelorMittal South Africa training programs prepare a highly competent future workforce with focus on achieving employment equity.

Number ofpeople trained

1 000

14 200

14400

800

600

400

200

0Employee andcontractortraining

Regular trainingon operational,technical, health& safety,environment andanti-corruptionissues.

All employeesand contractors.

Core LeadershipandManagementSkills (CLMS)

Training to forexecutives todevelop theirArcelorMittalvalues andcompetencies.

Executives.

JuniorManagementProgramme

A compulsoryskills programmefor supervisorswith differentNQF exit levels.

Juniormanagement.

Virtual trainingArcelorMittalUniversity

Virtual classroomtraining includingenergy, steelmaking, BOF andrefractorytraining

Selectedemployees.

ArcelorMittalSouth Africacareerdevelopmentprogramme

Explore,Challenge andPioneerprogrammesprepare differentlevels of talentfor leadershippositions.

Selectedemployees.

ManagementAdvancedProgramme(MAP)

An one yearprogramme formiddle managerspresented byWits BusinessSchool.

Selectedspecialists.

Future FinanceLeadershipProgramme(FFLP)

An 18-monthprogramme totrain and developcapabilities infinance.

Financialemployees.

Women inleadership

Learningprogrammeconsisting of athree dayresidentialsession, projectsand networkingevents.

Selected femaleemployees.

Trainingdescription

Group training

Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 21. ArcelorMittal South Africa provides comprehensive training and career development opportunities for its employees.


~90% of candidates in training pipeline from HDSA groups

6.2.3 Promoting technical innovation

As part of the largest steel company in theworld, ArcelorMittal South Africa is uniquelypositioned to be able to draw on technicalinnovations and improvements developed inother markets and apply them to SouthAfrica. Several innovations have beenintroduced or are currently in developmentincluding improvements to the steelmanufacturing process, new materials, and

products that improve the strength,corrosion resistance, and durability of steelproduced in South Africa. This has resultedin a range of new products or applications,but has also reduced the energy andmaterial requirements (per ton of steel) inproduction as well as, in some cases, usage(e.g. automobiles).

has been particularly innovative inArcelorMittal South

Africa

the area of steel development for theautomotive industry. These developmentsalso make steel more competitive in certainapplications that have traditionally favouredaluminium. This matters because the energyrequired to make aluminium is significantlymore than that required to make the sameamount of steel.

Industry

Innovationsintroduced

Strongersteel

Lighter steel

Productvariety

Environ-mentallyfriendly

Energyefficient

Ben

efit

s

Mining

Agriculture

New products

Increased range ofproducts e.g. In mining bar& wire products.

Specialised products forspecific industries nowavailable in South Africa.

Beverage

Improved tin plate/DWI material

Lighter steel viablecompetitor to Al cans.

Cans with thinner wallspossible, reduces steelrequired per can.

Less steel means lessenergy required to produceeach can.

Construction

Automotive, other

Automotivetechnology

Higher strength steelincrease range ofautomotive applications.

Lighter steel competeswith aluminium.

Metals with less coatingare up to 4% lighter.

Overall less energy used inmanufacture and byvehicles.

Less energy required toproduce steel vsaluminium.

Automotive

New coatingmaterials

Increased resistance tocorrosion especially incoastal areas.

Lighter coating metallayers make steel up to4 % lighter.

Metals with less coatingare up to 4% lighter.

Chrome free organiccoating are more eco-friendly.

Thinner layers require lesselectricity to deposit.

Construction

Arval steel

Less pre-fabricated steelrequired in constructiondue to higher strength.

Steel is also lightertherefore less required.

Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 22. is continuously improving its products through product and process innovations.ArcelorMittal South Africa

ArcelorMittal South Africa has also investedover R70m toward technical training, todevelop the skills required to innovate insteel production locally.


6.2.4 Creating jobs through economic linkages

ArcelorMittal South Africa's commercialrelationships with suppliers is a furthersource of jobs, skills development, andongoing employment. In 2013, a total of25bn was spent on more than 2 000suppliers, of which R2.0bn was spent onover 1 000 small and micro enterprises.These suppliers represent a fraction of




's database of3,367 registered suppliers, meaning that

's influence hasextended even further over the years.

Most of this impact results from directprocurement spend by

. On the other hand potential exists toincrease the impact even further through

efforts aimed specifically at supplierdevelopment - to improve the skills andcapabilities of its suppliers. The benefitscould be mutual as they could lead toenhanced productivity, reduced costs ofbusiness and greater quality, among otherthings.

Number ofcompanies

Total procurementspend

Total number of suppliers

2,500

2,000

1,500

1,000

500

0

R0.06bn R1.34bn R0.63bn R16.85bn R6.05bn R24.93bn

6 638 441 950 NA 2 035

Large QSE EME Generic Unknown

Vendor size

Non-compliant

4 11

15

180

443 441 484

1. Using B-BBEE classification for vendor size based on annual turnover; Exempted Micro Enterprise (EME) <R5m, Qualifying Small Enterprise (QSE) between R5m and R35m andGeneric with >R35m.Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 23. ArcelorMittal South Africa’s procurement spend with suppliers.

Level 5-8

Level 1-4


6.3 Impact on local communities

Steel making as a large resource-intensiveindustry can have significant impact, bothpositive and negative, on the localcommunity. ArcelorMittal South Africa has asignificant presence in all the localcommunities where its plants are located,acting as a driver of local economy byproviding local employment and spending

Long term jobprovider

ArcelorMittal South Africa is afocus of economic activity atall its operational locations.

The steel value chaincreates a number of directand indirect jobs, many ofwhich are in localcommunities.

Local impact is not allpositive. Transportation ofraw materials and finishedgoods, while creatingemployment, also createsenvironmental and noisepollution and in particularaccidents. ArcelorMittal SouthAfrica transports 62% of allmaterial by rail therebyreducing congestion on SouthAfrica’s roads.

Committed toimproving communityengagement

ArcelorMittal South Africarecognises the need forstrong communityrelationships and iscontinuously working toimprove its communityengagement.

ArcelorMittal SouthAfrica engaged with 40 localcommunity organisations in2013, with key concernsdocumented and responseprovided.

Increasing spendwith local suppliers

While a significant businesspartner, ArcelorMittal SouthAfrica currently spends 24%of its procurement budget onlocal suppliers (based intowns where ArcelorMittalSouth Africa is operates).Excluding state-ownedcompanies and iron-oresuppliers, 34% of spend is onlocal businesses.

ArcelorMittal SouthAfrica supports small localbusinesses with R1.0bn spendon QSE and EME’s from localcommunities. However,ArcelorMittal South Africa iscommitted to increase thisfurther through enterprisedevelopment.

Striving towards bettersocial services

ArcelorMittal South Africa’scommitment to supportingand developing itscommunities has long been inevidence.

ArcelorMittal SouthAfrica is committed toproviding upliftment andemployee volunteering in thecommunities it serves. It hassupported two schools andthree science centres, ahealth clinic and rehabilitated158 houses in 2013.ArcelorMittal South Africaalso provides its employeeswith local and internationalvolunteering opportunities.

Note: All figures as of 2013 Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 24. Impact on Local Communities

70% of new employeesrecruited locally; 16mtonnes of materialtransported on local roadand rail.

40 local communityorganisations engaged in2013, with key concernsrecorded and responseprovided.


24% spend (R5,9bn) onlocal content suppliers withR1,0bn on local QSE’s andEME’s.

on local suppliers.engages with local communities

through various forums and is committed toproviding better social services such ashealth, education, and housing.

Local communities are defined as thoselocated close toplants in Vanderbijlpark, Vereeniging,



Newcastle, Saldanha, and Pretoria, usuallywithin a radius of 30km. These include,aside from the major hubs themselves,communities such as Sebokeng, Evaton,Vredenburg, Osizweni, Sharpeville,Sasolburg, and others.


6.3.1 Driver of local economy

ArcelorMittal South Africa is an importantcentre of economic activity in the localcommunities where its operations arelocated. Out of 692 recruits in 2013, 70%or 480 people were directly employed fromlocal communities. A key factor constraininglocal employment is the lack of technicalskills required for steel making; therefore

is committed toArcelorMittal South Africa

changing this by providing training andbursaries for artisans, production staff,technicians, and engineers.

operationshave other impacts on the community, notall of which are positive. As a resourceintensive company,

transports over 16m tonnes ofmaterial a year, causing environmental and



noise pollution in the local communities aswell as traffic congestion on roads andpotentially accidents. The logisticsrequirement is an unavoidable negativeimpact of a large and distributedmanufacturing operation, but

has mitigated this wherepossible by transporting the majority of itsmaterial (62%) by rail.


6.3.2 Increasing spend on local suppliers

Procurement spend is an important leverthat can be used to develop localbusinesses by providing sustainable revenueand employment and enabling skillsdevelopment. ArcelorMittal South Africaspent R25bn in 2013 on purchasing of rawmaterials, capital goods, electricity,logistics, and other operating expenses.Overall, spent24% of total procurement spend, or


R5.9bn, on 659 businesses located in localcommunities, representing 32% of all of

's suppliers.However, a large proportion of procurementis spent on iron ore and state-ownedcompanies such as Eskom and Transnet thatprovide electricity and logistics. Localbusinesses cannot provide such services asthere are no iron ore reserves in the localarea or they lack investment capability and


resources required to provide electricity andrail service which require a nationalinfrastructure system. Excluding thesepurchases, about a third (34%) of remainingspend was with local companies. R1.0bn ofprocurement was spent on local small (QSE)and micro (EME) enterprises or 52% of thetotal QSE/EME spend.

70% (480) of 2013 recruits from localcommunities around ArcelorMittalSouth Africa steel plants

Geographic distribution of new recruits

800

600

400

200

0

692

Others

Pretoria

Saldanha

Newcastle

Vanderbijlpark andVereeniging.

480 recruits fromlocal communities

212

70

270

46

94

Pretoria Works

JohannesburgVanderbijlpark Works

Newcastle Works

Vereeniging WorksSwaziland

Lesotho

Durban

Saldanha Works

Port ElizabethCape Town

Number of employees

Number of results 1-9

10-24

25-49

50>

Note: Local communities are defined as those located close to ArcelorMittal South Africa plants in Vanderbijlpark, Vereeniging, Newcastle, Saldanha and Pretoria, usually within aradius of 30km. These include, together with major towns themselves, communities such as Sebokeng, Evaton, Vredenburg, Osizweni, Sharpeville, Sasolburg and others.Source: internal data, BCG analysis.Figure 25. Most of ArcelorMittal South Africa’s 2013 recruits came from communities surrounding its operations.



Local procurement spend in minority ... ... but spend must be put in perspective

1. Excludes Eskom, Transnet, National Ports Authority and iron ore suppliers.Note: Local communities are defined as those located close to ArcelorMittal South Africa plants in Vanderbijlpark, Vereeniging, Newcastle, Saldanha and Pretoria, usually within aradius of 30km. These include, together with the major towns themselves, communities such as Sebokeng, Evaton, Vredenburg, Osizweni, Sharpeville, Sasolburg and others.Source: internal data, BCG analysis.Figure 26. Procurement spend in local communities.


ArcelorMittal South Africa's total procurement spend wasR24.9bn in 2013.

24% (R5.9bn) of spend on businesses in local communitiesaround plants.

Large portion of spend on state owned companies or supplyof iron ore is difficult to localise.However, excluding these, total local spend is still 34%.

Local spend on micro enterprises is significant.Local spend accounts for 52% (or R1.0bn) of all spend onQSE’s and EME’s.ArcelorMittal South Africa is committed to increasinglocalisation even further through Enterprise development plan.

•

•

Other suppliers

Local suppliersSpend (Rand Mil.)

30 000

24 939 13 387

Iron oreand

others

11 552

1 971

25 000

20 000

15 000

10 000

5 000

0

Total spend Iron ore andSoC spend

Spend excludingiron ore and

SoC1

QSE/EME

Over R13 bn spenton iron ore andstate-owned

companies

32% of ArcelorMittal South Africa's suppliers in2013 were from local communities

Geographic distribution of suppliers

2 500

2 000

1 500

1 000

500

0

2039

Others

Pretoria

Saldanha

Newcastle

Vanderbijlpark andVereeniging.

659 suppliers(32%) are local

1 380

89

380

87

103

Pretoria Works

JohannesburgVanderbijlpark Works

Vereeniging WorksSwaziland

Lesotho

Durban

Saldanha Works

Port ElizabethCape Town

Number of suppliers

Number of recruits 1-9

10-24

25-49

50>

Note: Local communities are defined as those located close to ArcelorMittal South Africa plants in Vanderbijlpark, Vereeniging, Newcastle, Saldanha and Pretoria, usually within aradius of 30km. These include, together with the major towns themselves, communities such as Sebokeng, Evaton, Vredenburg, Osizweni, Sharpeville, Sasolburg and others.Source: internal data, BCG analysis.Figure 27. 32% of all ArcelorMittal South Africa 2013 suppliers were local to operational facilities.


76%

24%

Iron ore+ others

66%

34% 48%52%


6.3.3. Committed to increasing local community engagement

Engagement is important to ensure thatlocal community organisations have a forumto express their concerns with andcomplaints about ArcelorMittal South Africaand to receive feedback on issues raised.

regularlyinteracts with the different communityArcelorMittal South Africa

organisations in annual forums ranging frommunicipality, local environmental groups,local businesses representatives, and specialinterest groups. In total,

engaged with 40 local organisationsin 2013 up from 30 in 2012. All issuesraised by the local community are recorded


with actions and responses developed.will continue

to keep working with local communities toidentify areas to further improveengagement.


Detail

Training of NGO’s and youth to tackleenvironmental challenges in their communitieswith ArcelorMittal South Africa.

Access to information on metrics, challengesand progress on key environmental issues.

Involve local NGO’s during procurement ofsolutions to environmental challenges.

Improve communications strategy andawareness of programs at

. Policies and procedures to be welldefined online.

Continue current good work. Provide morelibraries and increase roofing.

Build local SMME capacity to accessprocurement and CSI opportunities.

little or noenterprise development and black-ownedcompanies not supported to enter the steelmarket. Benchmark enterprise development ofother large companies.

Improve access to vendor registration forblack owned business. Significant barriersmake it difficult for black owned companies toparticipate.


ArcelorMittal South Africa,

•

•

•

•

•

•

•

•

Actions

Partnership with North WestUniversity to train 20 people for sixmonths to build local NGO capacity.

Two Environmental Open Days to beheld at Vanderbijlpark focused on AirEmissions.

To be addressed through EnterpriseDevelopment programme.

Communication strategy will berevised and improved in 2014. Regularstakeholder engagement to providefeedback.

100 houses planned for re-roofing inBoipatong, two mobile libraries to bedonated, 11 houses to be built inNewcastle.


To be addressed through EnterpriseDevelopment program.


•

•

•

•

•

•

•

•

Key issues

Capacity building

Access toinformation

Procurement ofsolutions

Improvecommunicationsstrategy

Increased CSIintervention

Skillsdevelopment

Enterprisedevelopment

Access to Vendorregistration

Envi

ronm

enta

lSo

cial

res

pons

ibili

tyEc

onom

ic d

evel

opm

ent

Source: ArcelorMittal South Africa internal data.Figure 28. Key issues identified by community engagement.


6.3.4 Striving towards better social service

ArcelorMittal South Africa has consistentlyinvested in the well-being of its localcommunities with over R40m spentannually for the past three years. The mainfocus of 'scorporate social investment has been in theareas of education, health, and housing. Ineducation, two schools have been builtrecently, Meetse-a-Bophelo in Mamelodiand Mandela Park Primary School inUmtata, which supported 2 887 students in2013. has alsofunded and operates three Science Centresin Vanderbijlpark, Saldanha, and Newcastle



which have served over 24 800 students,increasing interest in mathematics andscience education in local communities. Thescience centres are also a strategicinvestment by inorder to build the necessary science andengineering talent so that more of theskilled future workforce will come from localcommunities. This has already startedpaying dividends as a number of thestudents who have passed through thescience centres during the past few yearshave now joinedas trainees.






has alsofunded various health projects, the mainbeing a R13m Wellness Centre in Sebokengwhich has a capacity to treat 67 000patients annually.has also contributed to construction ofseven new houses and re-roofing of 150houses which affects approximately 900people. Aside from contributing financiallyto various projects,

also actively encourages itsemployees to volunteer in social impactprojects in their local communities as wellas internationally.

ScienceCentres

Schools

Employeevolunteering

Universitybursaries

Technicaltraining

Health clinic

Over 24 800students participated

in Science Centres

948 people benefitfrom new and

re-roofed housing

574 apprentices and813 productionlearners trained

2 887 schoolstudents supported

Built health clinic,able to treat

~67 000 patientsannually1

95 artisans entered CAinternship

137 university/technikon bursaries

145 graduatetrainees given

work experience

1. ArcelorMittal South Africa sponsored construction of Sebokeng clinic handed over in November 2013. Patient output estimated based on capacity as actual data not yetavailable.Source: internal data.Figure 29. ArcelorMittal South Africa has invested in multiple aspects of social and community development.



Lesego Kobue

About Lesego

Education

Newly appointed learner technician at ArcelorMittal SouthAfrica.Born in Parys, Free State.

Attended North Primary School.Completed Matric at Suncrest High school focusing onMathematics and Science.Studied mechanical engineering at Vaal University ofTechnology.

"I am full of gratitude to God who pulled me through my studies,ArcelorMittal South Africa for granting me this opportunity andto my parents for their support and guidance up to where I amright now”.

"With ArcelorMittal being a big contributor to the communityand the world as a whole, my contribution to the company givesoff to the community".

•

•

••

•

Shirley Moloi

About Shirley

Education

Support from ArcelorMittal South Africa

Candidate Technician (aged 20) at Vanderbijlpark Works.Born and raised Sebokeng Zone 11 by grandparents and asingle mother who passed on when she was 12 years old.

One of the top 40 learners in District 8, Sebokeng in Grade 10.Excelled in Matric, obtaining four distinctions.Studied for a diploma in Chemical Engineering at the VaalUniversity of Technology where she excelled again and finishedher studies in record time.

Classes at the ArcelorMittal South Africa, Science Centre inSebokeng together with the mobile laboratory supported herdaily lessons with practical experiments and helped develop akeen interest in Chemistry and Human Sciences.She attributes the Science Centre with helping her achievesuccess with activities such as monthly “meet ups” withScience Centre staff.Excellent Matric performance earned her bursary fromArcelorMittal South Africa to study for an engineering diplomaat Vaal University of Technology.While at university, she also received mentoring and tutoringfrom ETA, a volunteer group formed by ArcelorMittalCandidate Engineers in Training. Shirley continues to give backby volunteering in her community.

“I am very content and motivated to be here, I did not dream in amillion years that I would be working at ArcelorMittal SouthAfrica, at the age of 20. I cannot wait to prove people wrong: Iam not just a pretty face. I would love to showcase mycapabilities and add value to the success of this Company. I amproud of women like Maggie Mopedi and Charlotte Mthimkuluwho inspired me to want to be more and do more."

••

•••

•

•

•

•

Source: ArcelorMittal South Africa internal data.Figure 30. Investment in community is paying off for both ArcelorMittal South Africa and community members.


Science Centre success stories

6.4 ArcelorMittal South Africa’s environmental footprint

The environmental footprint examinesArcelorMittal South Africa's impact from anenvironmental perspective, in terms ofresources utilised such as energy, water,

and other raw materials; management ofeffluents, solid waste, and air borneemissions-particularly dust, CO², and SO²emissions; and efforts aimed at the

management of by-products, recycling, andenvironmental restoration.

Intensive use ofresources

Steel production is aresource intensiveindustry. ArcelorMittalSouth Africa consumeda total of 125 PJ ofenergy, 13.4m tonnesof raw materials andabstracted 17.5bnlitres of water in 2013,making it one of SouthAfrica's largestconsumers of keyresources.

Improved waterand effluentsmanagement

Since 2005

has been able toreduce its water intakefor steel production by48% and now has anintake rate belowaverage for global steelcompanies.

is alsocontinuously workingtowards improvementsin effluentmanagement incompliance with SouthAfrican requirements ateach of its operatingsites.



CO² emissions

CO² is a significantcontributor to climatechange and a majorby-product of steelproduction.

's CO² emissionsfootprint is significantwith 15.2m tonnes ofCO² (Scope 1 andScope 2) emitted in2013.


SO² andparticulateemissions

ArcelorMittal SouthAfrica is working toimprove its dust andSO² based emissionsperformance.ArcelorMittal SouthAfrica has investedR500m in dustextraction systemsresulting in a reductionin particulate emissionsto 2.5kt per annum asof 2013.

SO² emissionsincreased from 2012to 2013 and due tothe quality of coal usedin processing.

By-productsdisposal,restoration andrecycling



generatessignificant by-productvolumes of which1.65m tonnes disposedof in 2013.

Currently 39% oftotal by-product is landfilled. However,opportunities arecontinuously sought torecycle or sell by-products whereverpossible.

Recycling is a keyinitiative at

with over 0.97mtonnes of scrap steelrecycled annually

To date, R220mhas been invested inrehabilitation of 290haat six waste disposalsites as well as effluentstorage areas.

125 PJ of energy17.5bn litres of waterabstracted and 13.4mtonnes of raw materialconsumed.

48% improvement inwater abstraction since2005. Continuouslyimproving effluentsmanagement.

15.2m tonnes of(Scope 1 and

Scope 2).

CO²emitted

2.5kt of dust and23.5kt of SOemissions per annum.

²

1.65m tonnes by-productsdisposed; 290ha ofland under restoration.

Note: All figures as of 2013Source: 2013 Sustainability Report, internal data, BCG analysis.Figure 31. Environmental footprint.


6.4.1 Use of resources

Steel fabrication is by nature a carbon-intensive business that makes intensive useof natural resources and therefore has someeffect on the environment. The inputs tothe steel making process are iron ore, coke,water, limestone and dolomite, andelectricity or energy. Both coal and coke –used in furnaces and iron ore – which ischemically reduced to form the steel, areobtained via mining. In 2013, ArcelorMittalSouth Africa consumed 125 PJ of energy,and 13.4m tonnes of raw material. Inaddition, 17.5bn litres of water wereabstracted to produce steel. These aresubstantial amounts of some of SouthAfrica's most strategic resources - inparticular water, for which there is chronicshortage within South Africa. While the useof these resources cannot be completelyeliminated, efficient and innovativeprocesses and management can minimiseamounts that are required to fabricate steel.

M tonnes

8

6

6.61

4.46

0.83 0.970.58

4

2

0Iron ore Coal Lime Scrap Dolomite

Source: 2013 Sustainability Report, BCG analysis.Figure 32. 13.4m tonnes of raw material consumed in 2013 - iron ore and coal are primary inputs.


Raw materials consumption

6.4.2 Improved water and effluent management

ArcelorMittal South Africa has beencontinuously working to improve the waterefficiency of its steel making process andalso the management of resultant effluents.Since 2005 water abstracted for use in thesteel making process has been reduced by48%. More recently water intake rates perton of steel have reduced slightly. Ingeneral, ArcelorMittal South Africa waterintake rates per ton of steel are lowcompared to some other large steel makersacross the globe based on publicallyavailable data (benchmark only comparesoverall company performance for waterintake per ton of steel irrespective of theproduction method used).

Water intake and abstraction rates reduced in2013 ...

... and remain relatively low compared to globalpeers

M litres Water intake ( /ton liquid steel)kilolitrekilolitre/ton liquid steel

25

20

15

10

5

0

4

3

2

1

0

2011 2012 2013

Water abstraction rate

Water abstraction

3.44

10.0

7.5

5.0

2.5

0.0

4.32

3.56

8.00

4.87

5.83

4.96

1.371.99


WorseAverage = 4.26

Better


Note: Peer group companies selected include mining, metals and steel companies. Tracking and calculation methodology of reported water intake per tonne may differ betweencompanies.Source: 2013 Sustainability Report, company sustainability reports, BCG analysis.Figure 33. Water intake decreased in 2013 and remains below average for comparable global peers improvements in the management of waterborne pollutants have also beenmade, are in progress or are being planned.


6.4.3 Carbon emissions

One of the most significant by-products ofthe steel production process is carbondioxide. In 2013 ArcelorMittal South Africaemitted a total of 15.2mt of Scope 1 andScope 2 CO². Carbon emissions were thus

slightly reduced from previous years inabsolute terms and on a per ton of steelbasis. This reflects the challenges andlimited opportunities available to directlyreduce CO² emissions in the steel making

process. This is an issue thattakes very seriously, and

continues to engage on by participating inthe national debate in related topics such asthe imposition of a carbon tax.


Total CO² emissions CO² produced per tonne of liquid steel

Tonnes/tonne liquid steelMillion tonnes of CO² emissions

20

15

10

5

0

3

2

1

0

2011 2012 2013 2011 2012 2013

Scope 1 CO² Scope 1 CO²

Note: Scope 1 emissions are direct CO² emissions produced by ArcelorMittal South Africa, including coke production, vehicular emissions or other direct sources. Scope 2 emissionsresult from the generation of purchased electricity.Source: 2013 Sustainability Report, BCG analysis.Figure 34. Total amount of CO² lower in 2013 but only slight improvement in emissions per tonne of steel produced.

Scope 2 CO² Scope 2 CO²

6.4.4 Carbon tax legislation (Callout)

A policy paper put forward by the NationalTreasury in May 2013 proposes that aCarbon tax of R120 per tonne of CO²emitted be introduced from 1January2015; with a proposed 10% per annumincrease. The aim of the tax would be todrive change in the behaviour of significantproducers of carbon dioxide by forcingthem to adopt more carbon efficient

operations.This could have significant implications

for steel manufacturing along with othercarbon intensive industries within SouthAfrica. The tax not only represents an addedcost of doing business, but in the case ofthe steel industry, there is limited scope forreduction of carbon emissions as there areno existing or new technologies for the

production process that are significantlymore carbon efficient.

ArcelorMittal South Africa is activelyengaged in the debate about the design andimplementation of carbon legislation inSouth Africa, given the potentially seriousoperational and economic consequences forboth and itscustomers.



Note: In February 2014, the Minister of Finance announced in his Budget Speech that the implementation of the proposed Tax is delayed until 2016.

6.4.5 SO² and particulate emissions

Particulate emissions are one of the mostsignificant emissions resulting fromArcelorMittal South Africa's operations.Significant effort has been taken to reduceemissions, with over R500m invested dust

extraction systems in the past years. As aresult, particulate emissions have reducedfrom 0.78kg per tonne of liquid steel in2012 to 0.50 in 2013.

S0² emissions show an increase from

2012 to 2013 and this can be attributed tothe quality of coal used in the process, afactor that is often beyond the control of

.ArcelorMittal South Africa

Particular emissions S0² emissions

Kilotonnes

5

4

3

2

1

0

2011

4.24.0

2.5

21 2223

2012 2013

Source: 2013 Sustainability Report, BCG analysis.Figure 35. Particulate emissions have decreased through 2013, though SO² emissions have increased.

Dust emissions

Kilotonnes

25

20

15

10

5

0

2011 2012 2013

S0² emissions

6.4.6 By-products disposal, restoration and recycling

One major benefit of steel is its enormouscapacity for recycling. According to theAmerican Institute of Steel Construction,steel is the most recycled material on earth- today's structural steel can consist of95% recycled product, is fully recyclable inthe future and can be reused withoutfurther processing.

Similarly, steelmaking produces variousby-products, many of which can be used,sold or recycled, although ultimately, some

will remain which do not have anycommercial value and must be disposed ofas waste. By-products include steel and ironslag, metallurgical dusts, and sludges.

In 2013, ArcelorMittal South Africagenerated 4.3m tonnes of by-products.39% of this was disposed of as waste, 17%was recycled and 45% was sold.

by-productstypically find application in the cementindustry, construction sector, and certain


other niche applications. Slag is also highlydesirable as a road-building aggregate as itsstrength and acoustic qualities oftenoutperform mined aggregates. The abilityto sell slag for construction andinfrastructure applications is heavilydependent on the strength of theunderlying construction industry, which inSouth Africa, has contracted substantiallyover the past few years.


Particulate emissions have decreased through 2013, though SO² emissions have increased.

By product generation By-product land-filled

Million tonnes

5

4

3

2

1

0

2011

4.14.2

4.3

1.91.7 1.7

2012 2013

Source: ArcelorMittal South Africa internal data.Figure 36. Around 4m tonnes of by-product are produced a year; around 1.7 tonnes of this is currently land filled.

Million tonnes land filled

2.0

1.5

1.0

0.5

0

2011 2012 2013

Landfill usage could be reduced by increased sale of by-products

For the by-products that are disposed of aswaste on landfills, significant efforts havebeen taken to ensure that waste disposalsites are managed properly.

2013 saw major progress at threerehabilitation sites.

Newcastle Works

Remediation of the old legacy GSB site atNewcastle was completed at a cost ofR15m. All 20 hectares of this landfill havebeen rehabilitated.


Two-thirds of old slag area have beenremediated together with remediation ofDam 10. Current work focuses onremediating other disused maturationponds and Dams 1-4.

Source: ArcelorMittal South Africa internal dataFigure 37. Significant rehabilitation progress at key ArcelorMittal South Africa sites in 2013.


Around 4m tonnes of by-product are produced a year; around 1.7 tonnes of this is currently land filled

Significant progress in rehabilitation of landfill sites

Limiting environmental impact is takenseriously at ArcelorMittal South Africa.Investments in recent initiatives havetotalled over R850m dating back to 2010.

A key challenge remains in identifyingsources of capital, particularly given thecurrent market difficulties within the steelindustry.

In addition to ongoing rehabilitation,R220m have been invested in therehabilitation of 290Ha across six historicalwaste disposal sites.

Emissions reduction

A number of projects aimed at reducingamount of particulate emissions havebeen completed recently:

Vanderbijlpark Works coke batteriestightness project.Newcastle Works Meltshop roofemission.Vanderbijlpark Works Sinter abatementproject.Vereeniging Works EAF dust extractionsystem.

•

•

•

•

Water treatment

Vanderbijlpark Coal Water Project to treatwater from coke making operations.

Disposal site rehabilitation

Significant rehabilitation of old legacydisposal landfills and maturation ponds.

Vanderbijlpark Works slag disposal site.Remediation of Dam 10.GSB Disposal site at Newcastle Works.

•••

Source: ArcelorMittal South Africa internal data.Figure 38. Over R850m in investments towards environmental management between 2010 and 2013.

R630m R28m R200m

6.4.7 ArcelorMittal South Africa proactive plant closures

ArcelorMittal South Africa's ageing facilitieswhich were inherited from Iscor, especiallyat Vanderbijlpark Works and VereenigingWorks, have required considerable upgradesdue to new environmental legislation. Overthe past three years, over R850m has beenspent in controlling emissions, watertreatment and landfill rehabilitation with alarge portion of this spent on old legacysites which have not been used since

assumed controlof operations.

However some older facilities were notupgraded as the financial return on thesedid not justify the investment required.

took a proactive



decision to decommission specific olderfacilities to ensure compliance with newenvironmental legislation.

Coke Battery 3 at Vanderbijlpark Workswas decommissioned in January 2013 asthe plant had reached its end of life andwould not comply with new Air QualityAct. Investment required to meetcompliance was not financially feasibleThree Electric Arc Furnaces (EAF) atVanderbijlpark Works weredecommissioned in October 2012 as theinstallation of a secondary dustextraction system was not feasible andtherefore the furnaces no longer

•

•

complied with the Atmospheric EmissionLicence issued. The EAF’s were restartedfor six weeks in May 2013 tocompensate for capacity loss due to BasicOxygen Furnace fire. A special short-term authorisation was given and EAF’swere then promptly shut down after sixweeks.


6.5 Enabler of South African development through the supply of steel

Steel is an integral part of any economy, atthe core of infrastructure development anda key input in machinery, automobiles,appliances and packaging. ArcelorMittalSouth Africa is the leading supplier of steelin South Africa and therefore plays anessential role in the country's development.

Major provider of domesticsteel

Steel is at the heart of South Africa'sambitious plan to increase capitalexpenditure to 30% of GDP by 2030 aslaid out in the NDP. ArcelorMittal SouthAfrica currently produces 5m tonnes ofsteel annually, providing 57%¹ ofdomestic steel requirements in 2013and can play an even greater role inmeeting the increased demand of thefuture.

providessteel for a range of domestic industrieswith the majority of supply (71%) goingtowards construction, automotive,mining, energy, chemical and watersectors. As a major supplier to domesticindustries,indirectly supports 9.7% of GDP and900 000 jobs.



Benefits of local steel

The production of local steel is beneficialto the domestic economy by adding valueof over R20bn in beneficiation overexporting raw materials, creating directand indirect jobs, providing tax revenuesfor government (R294 per tonne²) andserving as a key factor in reducing supplylead times compared to imported steel.

has a majorrole to play as the leading producer ofSouth African steel.

Independent economic analysiscalculates that 3.5 jobs are createdeconomy-wide for every R1m finaldemand by the iron and steel industry.


Supporter of domesticindustries

Creation of downstream steel industriesis key to maximising beneficiation.

activelyparticipates in developing and supportingsecondary steel industries through jointventures. Examples include CWI, Collect-a-Can and TTSAP.

contributed R45m in strategicrebates for developing new marketopportunities.

In 2013,paid out over R200m in export rebates tosupport financial sustainability of steelfabrication industries including pipes andtubes; forged products and automotivecomponents.




5m tonnes of steel produced with ~60 %of South African steel supplied by

supporting keydomestic industries.ArcelorMittal South Africa

3.5 formal jobs created economy-widefor every R1m spent by

.ArcelorMittal

South Africa

Developed local steel processingindustries through joint ventures.Export rebates of R213m paid out tolocal companies in 2013.

1. Calculated using World Steel Association estimates for SA consumption 2. Includes corporate tax, municipal taxes, VAT and Employee PAYE taxes. Total steel production at5.096m tonnes. 3. Quantec multipliers.Note: All figures as of 2013 Source: WorldSteel organization, ArcelorMittal South Africa internal data, BCG analysis.Figure 39. Enabler of SA development through the supply of steel.


6.5.1 Major provider of domestic steel

ArcelorMittal South Africa is the leadingsteel producer in South Africa, with aproduction capacity of 6.5m tonnes of steelper year (however due to reduced demandonly 5.1m tonnes were produced in 2013).

also supplied themajority of domestic steel in South Africaproviding 57% or 3.1m tonnes of thedomestic market (long-term average is~65% of domestic market, lower in 2013due to shutdown of Vanderbijlpark Works).This was estimated from South Africa'sapparent consumption of finished steelproducts of around 5.4m tonnes as perestimates from the World Steel Association


Year Book 2013.mainly caters for the domestic steel marketwith 74% of allproduced steel sold in South Africa.

only exports26% or 1.1m tonnes per year of its steel.

Steel plays a vital role in a number ofkey South African industries: the threelargest of these are construction,automotive, and mining, water and energy,which collectively account for 17% ofSouth Africa's GDP. The majority of

steel -approximately 70% - is supplied to theseindustries. has






also introduced a number of innovations insteel, developed by the global ArcelorMittalR&D or ArcelorMittal sister companiesworldwide, which enable it to moreeffectively support these industries.Examples include light high-strength steelfor use in cars, more corrosion resistantsteel for use in coastal areas and pre-fabricated steel for the constructionindustry. Collectively,

steel is indirectly responsible forsupporting approximately 900 000 jobsand 10% of the GDP.


71% of ArcelorMittal SouthAfrica steel used in three keyindustrial sectors...

...which together account for 17% of GDP and 1.6m jobs

2013

71%

29%

100

80

60

40

20

0

% of ArcelorMittal South Africa production

Construction

Energy, mining,chemicals and

water

Automotive

...meaning ArcelorMittal South Africa indirectly accounts for nearly10% of South Africa’s GDP and 900k jobs

x57%¹

3%

7%

7% 17%

Construc-tion

Energymining,water

Automo-tive²

% of GDP

820

548 200 1 568

Construc-tion

Energy,mining,water

Automo-tive²

Number of employees( '000)

ArcelorMittal South Africashare of domestic steel market

20

10

0

2 000

1 000

0Total Total

9.7% of GDP ~900 000 formal jobs

1. Estimated at average 57% of domestic market share using estimated consumption data from World Steel Association Year Book 2013 2. Estimated by the Automotive IndustryExport Council, figures for 2012.Source: StatsSA, Automotive Industry Export Council, World Steel Association Year Book 2013, ArcelorMittal South Africa internal data, BCG analysis.Figure 40. ArcelorMittal South Africa provides the majority of steel for the largest applications in South Africa.

As a result of its capacity, ArcelorMittalSouth Africa has a strategic role to play inany plans involving the future structuraldevelopment of South Africa. ConsiderSouth Africa's National Development Plan(NDP): this calls for, among other things anincreased GDP growth rate, training andskills development and expanded outputthrough research and development.

The NDP also calls for an increase incapital expenditure from 17% to 30% ofGDP by 2030 and in public infrastructurespend from 8% to 10%, along with thecreation of 11m new jobs. What might thismean in terms of amount of steel required?

First of all, additional steel would berequired simply due to the long term

average growth of the economy which isestimated by independent economists EIUto be on average over 4% until 2030. Asthe economy grows, more steel will berequired for infrastructure development,products, etc. In addition, however, theNDP aims to accelerate development abovethe projected GDP linked growth throughincreased fixed capital formation. Thiswould increase steel demand even furtherassuming that it grows with fixed capitalformation. This means that to achieve theambitious NDP plan, South Africa willrequire a significant increase in domesticsteel with an estimated 8.3m additionaltons of steel in total required.

Much of this increased demand couldbe met by local suppliers, led by

. For instance,based on current production levels,

has reservecapacity of 2.3m which could meet nearly27% of the projected additional demand –requiring more employees and skillsdevelopment for these employees. On theother hand, all the new steel required couldbe supplied by through imports. Thescenario that plays out could depend on theindividual actions of various companies, butthese will in large part be determined by thedecisions and level of support of thegovernment.




Potential 2030 South African steel supply-demand scenario ArcelorMittal South Africa andother local steel companiescould help meet addeddemand

ArcelorMittal South Africa could lead localsuppliers in providing the additional 8.3mtonnes a one year required by 2030 tosupport the NDP.

withcapacity to supply 27% or 2.3m tonnes ayear of added demand.

Current production below full capacitydue to low domestic demand andcompetition from cheap imports e.g.India and China.

6.0m tonnes could be supplied byimports OR increased local productionresulting in local jobs and skills

Eventual supply scenario will depend onchoices made by the South Africangovernment.


•

1. Based on NDP target of fixed capital formation at 30% of GDP, BCG Steel Demand model 2. Quantec Research multipliers for Iron and steel industry 3. 2013 Annual Financialreport 4. Calculated by subtracting ArcelorMittal South Africa production and imports from current steel demand 5. Current imports from SA Customs and Excise (Jan – Nov2013) extrapolated for 12 months 6. Reserve capacity estimated based on current capacity utilisation of 76%.Source: National Development plan, ArcelorMittal South Africa internal data, SA Customs and Excise data on primary steel imports, Quantec Research, BCG analysis.Figure 41. ArcelorMittal South Africa can play a key role in meeting the additional steel demand called for by the NDP.

Steel (kilotons)

20 000

15 000

10 000

5 000

0Current

steeldemand

Additionaldemand by

2030¹

NDP2030target

AMSAdomestic

supply(2013)³

Otherlocalsteel

products4

Currentimports5

Remaininggap

Additionalsupply6

5 500

8 314

13 814

3 126

7921 582

8 314

Demand Supply

6 044

2 270

ArcelorMittal South Africareserve capacity

ArcelorMittal South Africa capacity

Remaining gap


6.5.2 Benefits of local steel

Steel in South Africa is either manufactureddomestically or imported from foreignsources. In 2013, based on estimates fromthe World Steel Association, 70% of SouthAfrica steel was produced locally and 30%was imported. However, producing steellocally has a number of benefits overimporting foreign steel.

Firstly, producing steel locally supportsSouth Africa's development agenda byadding significant value throughbeneficiation of its mineral wealth. SouthAfrica derives substantially more value fromthe steel it produces than if the underlyingraw materials were simply to be extractedand exported. For 2013 the additional value

from processing these inputs (iron ore,coke, limestone, etc.) into steel amountedto about R20bn. This takes the form of jobsand services consumed and taxes paid, all ofwhich add to the economy, in addition tothe direct value add from ArcelorMittalSouth Africa itself.

NDP targets include GDPgrowth, new jobs and skillsdevelopment

South Africa's National DevelopmentPlan targets for 2030 include:

Growing GDP by 2.7 times at a rate of5.4% pa

Creating 11m new jobs

Increasing capital expenditure to 30%of GDP from current 17%.Increasing public infrastructure spendfrom 8% to 10% of GDP.

Encouraging training and skillsdevelopment.Expanding innovation output throughresearch and development.Enabling capacity expansion capacityfor further mineral beneficiation.

•

•

•

•

•

ArcelorMittal South Africa will enable NDP by creating valuethrough converting raw material to steel

1. Raw materials considered are iron ore and coking coal (excludes limestone and dolomite), export parity price as per 2013 average estimates as reported by IMF (Iron Ore) andWorld Bank (South African export coal) 2. 2013 ArcelorMittal South Africa Annual ReportSource: Steel Index at IMF, World Bank, internal data, BCG analysis.Figure 42. By beneficiating raw materials to produce steel, supports key objectives of the NDP.

rcelorMittal South AfricaArcelorMittal South Africa

ArcelorMittal South Africa inputs of iron ore and coal if exported would be worthR13.27 at export parity prices

However, by converting raw material to steel, adds afurther R20 of value by creating direct and indirect local jobs; operating expenditureon electricity, logistics, capital expenditure and profit.

bn

bnArcelorMittal South Africa

Value (Rmil.)

40 000

30 000

20 000

10 000

0Iron ore(ExportParity)¹

Coal(ExportParity)¹

ArcelorMittalSouth Africasteel value

add

Value offinished steel(ArcelorMittalSouth Africa

Rev.)²

9 253

3 009

20 112

32 374

Another advantage is that steel productionprovides employment and skillsdevelopment and in ArcelorMittal SouthAfrica's case the majority of jobs createdand people trained are in local communities.Estimates suggest up to 3.5 formal jobs arecreated economy wide for every R1m ofspend in the iron and steel industry. Thismakes a significant contribution towardsthe NDP targets of creating 11m new jobsby 2030. Other benefits include reducingthe lead time taken from ordering of steelto delivery, a key benefit for the

construction industry. Furthermore,domestic steel production generatessignificant revenue for government fromcorporate tax, municipal taxes, VAT andemployee PAYE’s amounting toapproximately R290/tonnes.

However,continually encounters challenges to itscontinued ability to be able to produce steelaffordably, and competitively, threateningthe contribution that it makes to SouthAfrica.

In 2013



faced considerable pressure on its domesticpricing. steelprices increased by 7% or slightly aboveinflation. This was driven in part by inputprices, many of which increased much moredramatically – including scrap steel, naturalgas, electricity and most notably for ironore (due to revised long term pricingcontracts with Sishen and Thabazimbimines). Only import coal prices, used for itsreducing properties, decreased significantlyby 18%.



Domestic steel price increaselower than input costincreases

Domestic steel prices increased by 7%on average in 2013

Cost of iron ore and pellets, the mainraw material input, increased between23% - 49%

Price increases of other key inputsequal to or above domestic steel priceincrease

Price increase slightly above inflation of5.7%.

Resulting from pricing review of long-term contracts with Shishen andThabazimbi mines.

Energy inputs of electricity and naturalgas up by 12% and 13% respectively.7% increase in scrap steel prices.Prices of import coal deceased by 18%.

•

•

•

••

Source: Annual Financial results 2013, StatsSA, BCG analysis.Figure 43. 's ability to control prices and produce steel economically is impacted by significant variations in input prices.

ArcelorMittal South AfricaArcelorMittal South Africa

Comparison of increase in ArcelorMittal South Africa steel priceand major inputs

SA inflation

ArcelorMittal South Africadomestic steel price

Scrap steel

Natural gas

Electricity

Iron ore (Shishen)

Iron ore (Thabazimbi)

Metallurgical coal

5.7%

7.0%

7.0%

12.0%

13.0%

23.0%

48.0%5.7%

-18.0%

Primary rawmaterial input

-20 0 20 40 60

% price increase

Unrestricted imports of foreign steel, whichdo not incur import duty and therefore donot provide the government with anyrevenue, also have an impact onArcelorMittal South Africa's ability tocompete in the market.


Other measures such as the proposedcarbon tax, threaten to make the cost ofsteel production prohibitive given limitedalternatives to reduce carbon consumption.

The benefits of local steel consumptionmust be carefully weighed against the

perceived costs, especially given thestrategic agenda of South Africa.

6.5.3 Supporter of domestic industries

Primary steel is beneficiated further bydownstream fabrication industries thatproduce higher value finished steelproducts. Typical examples include wirefencing, construction frames, steel bucketsand so on from primary flat and long steelproducts that are produced by ArcelorMittalSouth Africa. Apart from creating additionalvalue, these industries also create jobs andskills in the country.

is actively and directly involved indeveloping and supporting local steelfabrication industries through strategicinvestments, export rebates and skillsdevelopment.

, andpreviously Iscor, have created a number ofcompanies in steel processing, trading andrecycling through strategic joint ventures.



CWI, a South African producer of wireproducts, is a joint venture between

and AngloAmerican with over 500 permanentemployees. CWI produces high qualityproducts such as mesh, wire fences andpackaging material for domestic use as wellas exports to countries in Africa, Europe,Middle East, Australia and Canada. TheToyota Tsusho South Africa Processingcompany is a JV between Toyota and

to processprimary steel into components for theautomotive industry. This not onlybeneficiates primary steel further but willalso provide up to 100 jobs.

Another company, Collect-a-Can Ltdwas started as a not-for-profit venturewith Nampak in order to increase the



recovery rate of metal cans, primarilybeverage cans, which can be 100%recycled. Collect-a-Can has been highlysuccessful, contributing to an increase inSouth Africa's recovery rate of metal cansfrom 18% in 1993 when it was started to72% currently. This greatly reduces theamount of waste sent to landfills. Collect-a-Can also pays out R20m annually tocollectors, many of whom are unemployed.

also providesstrategic rebates for promising new marketopportunities, promoting the developmentof these industries such as renewableenergy projects. A total of R45m in rebateswas given to these strategic industries in2013.


Toyota Tsusho SAProcessing (TTSAP)

Consolidated WireIndustries (CWI) Collect-a-Can Ltd

A R147m joint venture betweenToyota and ArcelorMittal South Africato create a steel processing companybased in Durban for automotivecomponents to serve domesticindustry.

Up to 100 new jobs created.Downstream value add to steelthrough processing.Domestic components replaceimported parts.

••

•

Co-owned byand Anglo American and

started by Iscor in 1950's. Producesnails, fencing, wire mesh andpackaging material. Products useddomestically and exported globally.

More than 500 permanentemployees.Provide export revenue.Value added to primary steelthrough processing.


•

••

Co-owned byand Nampak. A not-for-profit

company involved with recovery andrecycling of used metal cans. HelpedSA achieve best-in-class metal canrecovery rate of 72%.

More than R20 0m paid annuallyto estimated 100 000 cancollectors.Reduces waste – South Africa withone of leading metal can recoveryrates at 72%.


•

•

Description

Benefits

Note: Only selected examples shownSource: ArcelorMittal South Africa internal data, TTSAP Press release 8 November 2007Figure 44. has supported or invested in a number of domestic companies.ArcelorMittal South Africa


Collect-a-Can is a not-for-profit company established in 1993 dealing with recovery of used metalcans mainly from the beverage industry but also aerosol, food, oil and paint cans. It is a joint-venturebetween ArcelorMittal South Africa (60%) and Nampak (40%), established to ensure that steel canshave minimum impact on the environment. Since its formation 20 years ago, Collect-a-Can hasbecome a highly successful operation, a prime example of how industry can contribute to corporatesocial responsibility in a sustainable manner.

Reducing waste from metal cans in landfills. Estimates indicate that metal can share of litter hasdecreased from 8% of total waste to less than 1%.Beverage can recovery rate is 72% currently,which is on par with reported rates from developed countries.Paid over R20m to an estimated 100 000 collectors, most of whom have no other source ofincome.Raising awareness and creating a culture of recycling. Collect-a-Can organises a school recyclingcompetition with 300-500 parliament schools annually reaching 250 000 students.

A Guinness World record for most cans collected in one month with over 2.5m cans in October2010.Mail & Guardian Greening the Future Award for Best Environmental Practice and SustainabilityWWF Green Trust Corporate Conservation Award.

Collect-a-Can has returned considerable value by:

Collect-a-Can has received a number of awards and recognition over the years including:

•

•

•

•

••

Source: Company website.Figure 45. Collect-a-Can has received global recognition for its efforts in steel can recycling.

ArcelorMittal South Africa supports SouthAfrican exports by providing strategicrebates to its customers who exportfabricated steel products in order toimprove their global competitiveness. In2013, spentR213m in providing export rebates to localcompanies supporting key downstreamindustries such as pipes and tubes, forgedproducts and automotive components.


ArcelorMittal South Africa is the only flatsteel producer in South Africa to offer theserebates. Export rebates are very importantto small local industries and in some casesessential for their financial sustainability.Local demand for primary and fabricatedsteel products cannot meet currentcapacity of these products thereforeincreasing exports is one way to absorb theexcess capacity. By providing export

rebates,improves the ability of local companies tooffer competitive fabricated steel productsfor exports and therefore increasing theirvolume of sales and revenue. Increaseddemand for its steel also benefits

as utilisation ofits steel plants can be improved resulting inreduced cost per ton due to scale effects.



...with over R200 million paid out in 2013ArcelorMittal South Africa is the only domestic flatsteel manufacturer to offer export rebates...

Export rebates stimulate local secondary steel industries andincreases global competitiveness.

Industries such as pipes and tubes, wire rods and forgeproducts and automotive components are highly reliant onexport rebates.

Rebates are paid back to domestic industries on exportedprocessed steel products.Rebates are offered directly by ArcelorMittal South Africa orthrough Committee of Secondary Manufacture (COSM) Trustat South African Iron and Steel Institute (SAISI).

Limited infrastructure development has erodedcompetitiveness of these industries.

•

•

•

Source: ArcelorMittal South AfricaFigure 46.

Rebate amount(Rand m)

2013

213

50

163

250

200

150

100

50

0

COSM (through SAISI)

ArcelorMittal South Africaexport rebates


6.6 Catalyst for change in South Africa

As the leading company in a key industry inSouth Africa, ArcelorMittal South Africasets an example in important social issuesand can act as a catalyst of change towardsbetter corporate governance andcitizenship.

Leading the wayin health & safetyand anti-corruption

In 2013 over 8 800employees receivedhealth and safetytraining. ArcelorMittalSouth Africa achievedzero fatalities in 2012and 2013 with a lost-time injury rate of0.561 which is belowaverage for peer SouthAfrican companies.

has also adoptedseveral healthinitiatives to ensureemployee well-being.

A robust anti-corruption trainingprogram is in place withover 1600 employeestrained in 2013.Regular audits areconducted and actionsare recorded.


Employmentequity andrepresentation

ArcelorMittal SouthAfrica is makingimprovements inemployment equity.Female workforceparticipation has risento 11% in 2013 from9% in 2010 - belowSouth African miningcompanies but aboveaverage for globalsteel companies.HDSA comprise 57% ofemployees, still lowerthan the average forpeer South Africancompanies.

ArcelorMittalSouth Africa alsosupports workers’rights with a majority(75%) of ArcelorMittalSouth Africaemployees unionised.

Supportingbroad-basedeconomicdevelopment

ArcelorMittal SouthAfrica is certified at B-BBEE Level 7 based onefforts in managementcontrol, preferentialprocurement andsocio-economicdevelopment.

Key areas forimprovement includeemployment equityand supplier andenterprisedevelopment. In 2013,5.2% of spend waswith majority blackowned and less than9% on small and microenterprises.

Transparencyand followingdue process

ArcelorMittal SouthAfrica sets an examplefor good governancepractice.

Annual reportspublished disclosingfinancial, environmentaland social indicatorsare in line with GlobalReporting Initiativeguidelines, and aresupplemented byperiodic financial andother reports.

As the subject ofpending litigation,ArcelorMittal SouthAfrica is currentlyfollowing due processaccording to SouthAfrican law in 4 legalcases.

Participation innational strategicdebates

ArcelorMittal SouthAfrica, as a keystrategic company,voluntarily participatesin multiple forums onmatters of national andindustrial significance.These include:

Economic Forum ofthe Reserve Bank.Manufacturing Circle.Advisory board to theMinister of HigherEducation.Working groups onenvironmental andsafety issues.Industry tradeorganisations SAISIand SEIFSA.

•

••

•

•

8 819 received health& safety and 1 667received anti-corruption training.

11% femaleemployment,57% HDSA and75% unionisation.

B-BBEE Level 7. Open disclosure offinancial, environmentaland social indicators.

Voluntary participant inseveral debates atnational level.

1. Lost time injury frequency rate defined as the number of injuries resulting in loss of one shift per 1,000,000 hours worked.Note: All figures as of 2013 Source: ArcelorMittal South Africa internal data, BCG analysis.Figure 47. Catalyst for change in South Africa.


6.6.1 Leading the way in health and safety andanti-corruption training

ArcelorMittal South Africa has placed greatemphasis on eliminating injuries andfatalities in their plants as steel making is aninherently risky industry. This is donethrough a combination of initiatives such asemployee training, behaviour-based care(BBC), fatality prevention standardstogether with proactive management bytracking and managing of key safetyindicators. Each incident is carefullyexamined and recorded with learnings

shared to avoid repeat of similar accidents.All employees and contractors are givenhealth and safety trainings prior tocommencing work at any

plant as well as periodicrefresher trainings.

In 2013, over 8 800 people receivedhealth and safety training. These measureshave paid off with

achieving a target of zero fatalities inboth 2012 and 2013.



ArcelorMittal South

Africa


has also managed a reduction in lost-time injury rate (LTIFR— the number ofinjuries that cause an employee to miss oneshift or more per 1,000,000 hours worked)from 1.64 in 2010 to a record 0.57 in2013, a 65% reduction. This equates to areduction in 50 injuries per year from 77 (in2010) to 27 (in 2013).

's LTIFR is far below the averagecompared to other large metals and miningcompanies in South Africa.

Fatality preventionstandards

A series of standardisedoperating procedures aimedat reducing fatalities andinjuries from activities suchas working at heights, drivingvehicles, cranes, etc.Processes are audited at eachsite against standards byexternal safety experts andareas of improvementidentified.

Behaviour based care(BBC) Programme

The BBC programme aims toimprove safety by reinforcinggood safety behaviourthrough observation, leadingby example and effectivecommunication. BBC isimplemented through safetytalks before each shift andincreasing managementinvolvement in coaching onsafety.

Proactivemanagementapproach

SHE management includes aboard-level committee withemployee representatives

Safety, Health & Wellnessis supported by the highestlevels of management such asthe CEO, Group ManagerSafety, COO and GM’s ofeach site.

Safety committees at thesite level deal with day-to-day safety issues.

Tracking andmanaging keyindicators

Rigorous tracking andreporting of key safetyindicators such as fatalities;lost time injury frequency rate(LTIFR); severity rate; fatalityprevention audit system; andfatality prevention standard.Targets of zero fatalities and areduction in LTIFR have beenset and monitored.

Source: ArcelorMittal South Africa internal dataFigure 48. ArcelorMittal South Africa initiatives cover standards, behaviour and management, and tracking.


1. Lost time Injury Frequency Rate (LTIFR) is defined as the number of occurrences resulting in fatality or loss of at least one working day/shift per 1,000,000 million hours workedNote: Peer group companies selected include mining, metals and steel companies.Source: 2013 Sustainability Report, company sustainability reports BCG analysis .Figure 49. Lost-time injury frequency rate compares well against domestic and international industrial peers.ArcelorMittal South Africa

ArcelorMittal South Africa is committed toimproving the health of its employeesparticularly with respect to HIV/AIDSprevention and treatment. A number of

initiatives, such as voluntary HIV counsellingand testing facilities and treatment areprovided for employees to raise awarenessof this deadly disease. ArcelorMittal South

Africa has also recently donated a clinic tothe Sebokeng community which providesHIV counselling and testing amongst otherservices.

HIV counselling& Testing (HCT)

Providing free HCTservices for employees– 2 705 employeestested in 2013.

Know-your-status campaign

Campaign toencourage HIV testing– 3X increase in HCTattendance withregular repeat testing.

ARV access foremployees

42 employeescurrently on HIVSupport Programmeprovided with anti-retrovirals (ARV).

Health Week -HIV/AIDSeducation

Global ArcelorMittalinitiative to raiseawareness –employees given timeto attend informationsessions and healthtest.

HCT in localcommunities

Donation of a clinic inSebokeng with HIVcounselling and testingfacilities.

Source: ArcelorMittal South Africa internal data.Figure 50. provides multiple tools for employees to combat HIV/AIDS.ArcelorMittal South Africa

ArcelorMittal South Africa also contributesto the fight against corruption by providingemployees in key positions such asmanagement and procurement with anti-

corruption training, regular audits andrecording all reported incidents ofcorruption with actions steps taken toaddress these incidents. Anti-corruption

training was provided to 1 667 employeesand 51 audits were conducted in 2013.

WorseAverage = 4.26

Better


0.56 0.60 0.50

1.45 1.40

6.46

1.701.35

2.40

4.21

1.53

7.29

1.65

0.12 0.090.27

2.23

1.50

2.69

0.510.20

1.56 1.60

Lost-time injuryfrequency rate (LTIFR)¹

8

7

6

5

4

3

2

1

0

World SteelAssoc. avg




6.6.2 Employment equity and representation

Achieving employment equity in theworkplace is a key initiative forArcelorMittal South Africa which isstrategically managed through anemployment equity plan. This plan coversthe entire employment value chain from the

training pipeline all the way to topmanagement with overall target is for

to reflect thedemographics of South Africa.

Currently,has a female employment of 11% in 2013



which has been steadily rising (in 2010 itwas 9%). This is lower compared tobenchmarked South African mining andmetals companies but is still above that ofother global steel companies.

Note: Peer group companies selected include mining, metals and steel companies.Source: , Company sustainability reports, BCG analysis.Figure 51. % women in workforce.


Percentage females in workforce

57% of ArcelorMittal South Africa'sworkforce is made up of historicallydisadvantaged South Africans (HDSA)which is below that of other South Africanmining and metal companies benchmarked.One factor for this is the relatively high skilllevel required for employment within the

steel industry coupled with a generalshortage of technical and engineering skills.In order to help reach employment targets,

investsconsiderably in its training pipeline whereover 90% are HDSA’s are trained. Still thesteel industry requires a high proportion of


skilled employees which takes many yearsto develop. Therefore over time, as thetraining pipeline develops into the futureworkforce at , itwill reflect a greater percentage of HDSA’scloser to the national demographics.


Source: ArcelorMittal South Africa, company sustainability reports, BCG analysis.Figure 52. HDSA employment rate.



11.00

15.00

12.78

16.14 16.00

8.70

22.00

17.00

14.80 15.0014.20

12.00

13.9012.80

3.98

13.80

3.454.80

2.404.13

3.00

BetterSA Mining &Metals avg.

14.5%


11%

Global Steelavg. -6.6%

Worse



100

90

80

70

60

50

40

30

20

10

0

57%

81% 81%74%

64%

81%85%

64%

92%

BetterAverage = 75%

Worse

Employment equity is a key strategic targetfor ArcelorMittal South Africa and thereforea number of objectives and initiatives havebeen developed to achieve this. The overallobjective is to ensure that

's workforce is representativeof the demographics of South Africa'seconomically active population at all levels.This will require significant investment to


develop skills and retain talented employeesfrom designated groups especially toimprove representation in leadership roles.It will go together with improving theunderstanding of B-BBEE legislation as wellas fostering a company culture thatsupports transformation. Several initiativeshave therefore been identified to accelerateemployment equity aimed at different

stages such as succession planning;recruitment targeted at designated groups,particularly African, Indian, and colouredmales and females, and people withdisability; skills development aimed atbuilding capability and capacity atmanagement levels; talent management;and retention.

Employment equity objectives

•

•

•••

•

Improve demographic representation in line with nationaleconomically active population and B-BBEE scorecard.Improve representation of employment equity designatedgroups at skilled level and above.Retain HDSA employees including people with disabilities.Develop skills to prepare and promote designated groups.Drive the understanding and implications of employment equityand BBBEE legislation.Foster a culture which supports transformation.

Source: ArcelorMittal South Africa internal data.Figure 53. ArcelorMittal South Africa is developing initiatives aimed at increasing.

Initiatives to reach objectives

Targeted recruitment strategy

Talent Management strategy with succession planning

Skills Development Strategy geared towards producing more

Retention of HDSA at management levels

Establishment a Transformation unit

Developing a resource plan with defined Employment Equitytargets.Roadshows to create awareness of potential careers atArcelorMittal South Africa.

Identifying high potential HDSA employees for succession tomanagement roles.Ensuring appropriate skills transfer from retiring employees.

HDSA with required skills.Ensuring training pipeline with priority towards HDSA especially.female for skilled and professional roles – on track as currently.91% of pipeline is HDSA.

Robust career management path with training programmes andincentives.Identifying best-practice retention strategies at other SouthAfrican companies and implementing at

Tasked with employment equity and transformation initiatives.Creating awareness among employees of employment equitytargets and initiatives.

ArcelorMittal SouthAfrica.

•

•

•

•

••

•

•

••

ArcelorMittal South Africa also recognisesthe right of its employees to form unionsand currently 75% of its workforce isunionised.


6.6.3 Supporting broad based economic development

One of the key objectives of South Africa'sNational Development Plan is thetransformation of South African society andcreating unity by reducing poverty andinequality through economic inclusion;

education and skills access and redressmeasures. B-BBEE policy is viewed as amajor tool for effecting this change.

ArcelorMittal South Africa currentlyhas a level seven procurement rating,

secured through management control, skillsdevelopment, preferential procurement,and socio-economic development.

Current B-BBEE level 7 Generic scorecard

Source: ArcelorMittal South Africa internal dataFigure 54. ArcelorMittal South Africa's current B-BBEE level is 7.

ArcelorMittal South Africa's current statusreflects some progress but also a number ofareas where improvement is needed. In2013 over 50% of total procurementspend or approximately R13bn was with

suppliers rated B-BBEE level 1–4. While aportion of this spend came from thehistorically most disadvantaged sectors ofthe community, there is scope to increasethis substantially, as currently 7.6% of this

spend is with majority black ownedenterprises, and 9.3% with small andmicro enterprises.


Equity ownership

Management control

Employment equity

Skills development

Preferential procurement

Supplier and enterprisedevelopment

Socio-economic development

Total

0.00

8.93

0.00

12.00

16.94

0.00

5.00

42.87

100% of target score >80% of target score <50% of target score

1. Using B-BBEE classification for vendor size based on annual turnover; Exempted Micro Enterprise (EME) <R5m, Qualifying Small Enterprises (QSE) between R5m and R35m andgeneric with >R35m. 2. B-BBEE level for R356m QSE & EME spend not available and could not be disaggregated.Source: ArcelorMittal South Africa internal data.Figure 55. > 50% of 's procurement from high ranking B-BBEE companies.ArcelorMittal South Africa

Several initiatives and programme atArcelorMittal South Africa are helping toimprove overall B-BBEE contribution.Significant investments are made each yearin training in order to improve skillsdevelopment. Where possible and where itsupports strategic and operationalobjectives, procurement from high ranking

B-BBEE companies (thus black and minorityowned and small and micro enterprises) isprioritized. Finally, through the ArcelorMittalfoundation and other programmes, thereare numerous activities aimed at socio-economic development, particularly ofcommunities near

operational sites.ArcelorMittal South

Africa

More strategically, a co-ordinated approachis being developed into

's Enterprise Development Plan inanticipation of the recent amendments andpotential enactment into law of the B-BBEEcodes.


6.6.4 Transparency and following due process

ArcelorMittal South Africa is a publicly listedcompany and as such is required to publishits financial records.

currently publishes a total of eightreports annually including quarterly reports,interim reports, an annual financialstatement, and an integrated annual reportwhich contains financial and sustainabilityinformation. 's



sustainability report, published annually, isfully compliant with the Global ReportingInitiative (GRI) standards and reports on themain socio-economic and environmentalindicators. 's aimis to be transparent in reporting (except formarket sensitive information) so that localcommunities and stakeholders are keptinformed of 's



performance. These efforts have beenrecognised globally as

was one of three nominees for WorldSteel Council's Steelie Award for Excellencein sustainability reporting in 2012.

also fullydiscloses all litigation that it is currentlyfacing and in 2013 there were four on-going cases with Competition Commission.



ArcelorMittal South Africa spending segmented by B-BBEE level and vendor size

~R13.0 bn (52%)spent on 1375 B-BEEELevel 1-4 companies


Level 1-4

Level 5-8

Non-compliant

NA R2 500m

R7m

R11 227m

R61m

Vendor size1

B-BBEE level

R1 063m R632m

R5 457m

R357m²R5 690m

R248m

R165m


6.6.5 Participation in national strategic debates

ArcelorMittal South Africa voluntarilyparticipates in various national debates andcommissions where it provides input onimportant strategic initiatives such asimpact of monetary, industry, and tradepolicy on industries in South Africa;employment and skills development andenvironmental policy. As a large strategicindustry where government policy couldsignificantly impact its ability to provide

steel for South Africa,voluntary commits its expertise to

provide industry perspective which willeventually contribute to robust governmentpolicies.

is currentlyinvolved in forums such as:

Economic Forum of the Reserve Bank ofSouth Africa



•

••

•

•

Manufacturing circle.Industry trade organizations includingSAISI (South African Iron and SteelInstitute) and SEIFSA (Steel andEngineering Industries Federation ofSouth Africa).Advisory Board to the Minister of HigherEducation.Working groups on environmental andhealth and safety issues.

6.7 Supporting the National Development Plan

ArcelorMittal South Africa is committed tosupporting the national developmentagenda set by the South Africangovernment. The National DevelopmentPlan (NDP) has certain key targets that are

supported byactivities, the key being a secure domesticsupply of steel required to execute NDP'sambitious infrastructure plans. There areother social and environmental targets

ArcelorMittal South Africa wherecontributes positively or where it couldimprove its contribution.




6.7.1 The National Development Agenda

The South African government recognisesthe need for a focused developmentagenda, involving public as well as privateenterprise and the efforts of individualSouth Africans. The National Development

The ArcelorMittal South Africa Factorshines light on the ways that

is already contributing to thedevelopment agenda, and steps being takento further its contribution.

is



Transitioning toa low-carboneconomy

Promoting a lowcarbon economyincluding carbon budgeting and pricing,encouraging energy efficiency andincreased usage of renewable energy,domestic energy usage reduction andindependent power production.

Providingquality health-care

Improving healthcaremanagement,increasing the number of quality ofhealth care professionals; improvingpatient information systems andfocusing on maternal and infant healthcare.

Transformingsociety anduniting thenation

Reducing poverty andinequality through economic induction’educational and skills access.

Fostering a sense of national and civicduty and responsibility.

Expandinginfrastructure

Prioritisinginvestments toupgrade informalsettlements; in publictransport infrastructure, in key logisticssystems.

Improvingeducation andtraining

Improving earlychildhood educationaccess rates to >90%, improvingliteracy and numeracy competitiveness,supporting higher education andfostering a system of innovation.

Fightingcorruption andenhancingaccountability

Taking measures to deter,prevent and educating on corruption

Creating jobsand livelihood

Creating anadditional 11m jobwhile reducingunemployment to 24 m.

Transformingurban andrural spaces

Improving linkagesfor rural communitiesincluding in education, employment,healthcare, transport and other basicservices, as well as the development ofviable rural based industry.

Building acapable state

Enhancing socialprotection andwelfare systems andimproving public serviceswith the participation of communitiesto enhance general safety and security.

Source: National Development PlanFigure 56. The National Development Plan (NDP) lays out South Africa’s ambition across nine key areas.

Agenda articulates the key strategicobjectives for South Africa and providesguidance on how companies and otherSouth African citizens can and arecontributing to this development agenda.

committed to supporting the nationaldevelopment agenda set by the SouthAfrican government. The NationalDevelopment Plan (NDP) has certain keytargets that are supported by

activities, the key being aArcelorMittal

South Africa

secure domestic supply of steel required toexecute NDP's ambitious infrastructure plans.There are other social and environmentaltargets wherecontributes positively or where it couldimprove its contribution.


Source: National Development Plan.Figure 57. ArcelorMittal South activities support implementation of specific NDP targets across all six pillars.


6.7.2 National Development Plan (NDP)

Source ofimpact

Key targets of plan ArcelorMittal South Africacontribution to plan


1

3

4

5

6

2

•

•

Impact on GDP.

Net Exports

+

+

ArcelorMittal South Africa contributes 1.3% of GDP.ArcelorMittal South Africa revenue not growingsignificantly.

Export of R6.7bn in 2013.

-••

•

Increase GDP by 2.7 times by 2030.Increase GDP growth to 5.4%.

Promoting exports and competitiveness. Exports to grow by6% a year to 2030.

Employer, jobcreator and skillsdeveloper

•

•

•

•

•

Direct Employment.

Training.

Investment in Communitycap development.

Development into skilledpositions.

Investment in Innovation.

+

++

+

+++

+

Provides employment to 14 874 people.No increase in number of people employed.

Spent R138m on training in 2010.Training to produce artisans >750 artisans.

70 % employed locally in 2010.

137 university bursaries in 2010.Local community education via science centres.Promotes science via science centres.

Introduction of technical innovations, with lighter,stronger and environmentally friendly steel.

-••

••

•

••

•

•

Increase number of jobs by 61 %. 11 m more jobs by 2030.Reduce unemployment to 6 %. No. of employed to rise to 24m.

Encourage training and skills development.Produce 30 000 artisans a year.

More people living closer to their places of work.

Increase university enrolment by 70%.Provide 1m learning opportunities through communityeducation.Increase students eligible for maths and science degrees.

Expand innovation output by increasing research anddevelopment.


•

•

Human settlementdevelopment

New schools built.

+++++

+

Steel required for construction of houses.Built two schools and clinic for community.R40m for community development.Steel for construction of electric. distribution.Built schools, science centres and re-roofing ofhouses in local communities.Safety audits for employees only.

Built two schools for community.

-

•••••

•

•

Upgrade all informal settlements on suitable land by 2030.Universal access to basic services, health care, education.Universal access to clean and potable water.Electricity access to at least 90% of households.Improving public services and spaces, integrated housing andsports facilities.Safety audits done for all communities.

Eradicate school infrastructure backlog by 2030.


•

•

••

•

Total CO²Environmentalmanagement and Std.

Total water withdrawal.CO² emissions reduction.

Recycled material use.

-

-

-

CO² per tonne of steel unchanged.

Investments prioritised to ensure compliance.

Reduced water abstraction ~40 % in 8 years.Do not support carbon pricing for steel.

Optimisation of by-products a priority.

+

+

•

•

••

•

Reduce carbon footprint.

Ensure compliance with environmental regulations.

Reduce water demand by 15% below business as usual.By 2030, carbon price should be entrenched.

Reductions in the total volume of waste disposed to landfill.

Enabler of S.A.developmentthrough supply ofsteel

• Total steel contribution. ++

Provides 57% of domestic steelSteel from ArcelorMittal South Africa critical for NDPinfrastructure projects.

•••

••

Increase capital expenditure to 30% of GDP.Increase public infrastructure spending to10% of GDP.Invest in large infrastructure projects in Health, Education,Energy and Transport.Increase Durban port capacity from 3m to 20m containers.Better quality public transport.

Catalyst forchange inSouth Africa

•

•

•

•

•

Employment equity.

Safety & Health hazards.

Employee Wellness.

External reporting.

Anti-corruption.

-

-

57% HDSA employed, no sig. increaseTargets to reflect national racial distribution.

Occupational disease frequency not significantlyreduced.Injury rate reduced >50% over last two years.

Sponsored clinic in local community.

Publishes award winning annual sustainability reportwith environmental indicators.

Corrupt practices monitored and reported.

+

+

+

+

+

••

••

•

•

•

Effective redress by creating employment equity.Clear targets set for expanding economic participation.

Reduce prevalence of non-communicable chronic diseases.Reduce injury, accidents and violence by 50%.

Deploy primary healthcare teams to provide care.

A set of indicators for natural resources and publication ofannual reports.

Corruption is reported on and monitored.

IndexIn support of plan.Currently does not support plan.

+-


6.8 Future ArcelorMittal South Africa Factor updates

ArcelorMittal South Africa has developed acustomised methodology based on theWBCSD framework to objectively assess itscontribution to South Africa. Using thismethodology,aims to publish a Factor report periodicallyto reflect internally on its progress as wellas to keep external stakeholders informed.This regular assessment will therefore allow

to constantlyidentify key areas where performance canbe improved and to develop actionmeasures.



This Factor report has been developedby ArcelorMittal South Africa to

communicate its socio-economic andenvironmental footprint to the wider public.ArcelorMittal South Africa set out toobjectively evaluate its business activitiesand present a fair assessment of itsperformance, both positive and negative.Overall, ArcelorMittal South Africa isconsidered to have a mainly positive impacton economic pillars as it makes a significantcontribution to GDP, is important as a jobcreator and skills developer and supportsdevelopment of South Africa by providingsteel. Social pillars have a mix of positiveand negative impacts where ArcelorMittalSouth Africa invests in funding social

projects such as schools and housing, has aleading safety record but can still improve inareas such as enterprise development andprocurement with black and black femaleowned businesses. Steel making is aninherently resource intensive industry thatproduces large amounts of greenhousegases, dust and waste. ArcelorMittal SouthAfrica acknowledges its negativecontribution on environmental indicatorsbut however continuously strives to makeimprovements. Examples include reducingwater abstraction by 48% since 2005 andinvestments in CO² and particulate emissionreduction equipment.

6.9 Appendix

Developing the ArcelorMittal South Africa Factor reportThe ArcelorMittal South Africa Factor report was developed based on the WBCSD sustainability impact framework.

Key activities

••

•

•

•

•

•

•

•

•

•

••

••

Identify objective(s) for assessment.Define geographical scope ofassessment.Collect development contextinformation.Select business areas to be assessed.

Identify sources of impact for eachbusiness activity.Identify relevant indicators fordirect/indirect impacts.Measure impact.

Determine level of stakeholderengagement.Engage with stakeholders to prioritisedevelopment issues .Build hypothesis of businesscontribution to development.Test hypothesis with stakeholdersand refine overall assessment

1

1.

Identify priority issues for action.Consider possible managementresponses and preparerecommendations for management.Decide on way forward.Develop indicators to monitor wayforward.

Figure 58. WBCSD Framework for sustainability assessment.

Step

1. Setboundaries

2. Measuredirect andindirectimpact

3. Assesscontributionto develop-ment

4. Prioritisemanage-mentresponse.

Four step framework underpins themethodology

Measure direct andindirect impact

“Measure yourcompany

footprint”

Set boundaries

“Define yourbusiness”

Prioritisemanagementresponse

“Make betterinformed decisions”

Assesscontribution

to development

“Understand yourfootprint in the

development context”

Stakeholderengagement

Step 1

Step

4

Step 3

Step 2

6.9.1 The WBCSD framework consists of four steps

1.The first step in the approach is to setthe scope of the overall assessment.This includes clarifying objectives,defining the geographical andeconomic scope, identifying relevantbusiness areas, and other factors forinclusion.

For the ArcelorMittal South AfricaFactor, the geographic scope waslimited to 'sSouth African operations and marketwhere operations and the vast majorityof its sales occur. Most of theassessment focused on

's direct operations, butwhere possible data from sources,upstream and downstream of

wereconsidered as well. This includedinformation from

communities surrounding theoperational locations and downstreammanufacturing and fabricationactivities of

's suppliers.

2.This involves identifying the sources ofimpact for each business activity andcollecting the relevant data to measurethe impact. A total of approximately160 indicators in an initial 33 areas ofimpact were considered for use in thereport. These data indicators werebased on internally collected andreported information. The mostimpactful and communicative 100were ultimately selected for use in thereport and consolidated across 24impact areas, but it is envisaged thatfuture reports will be based on an evengreater selection of data.Other data sources were also included,measured and assessed as part of thereport. These included benchmarksbased on leading South Africanindustrial companies as well as globalsteel companies; information derivedfrom media publications; South Africandevelopment agendas as outlined inthe national development plan andinformation on the positions of

's variousinternal and external stakeholders withrespect to key issues.

3.

After the data has been collected andmeasured, the third step is to assessthe impact to development.

Set boundaries

Measure direct and indirect impact:

Assess the contribution todevelopment:







Hypotheses are formulated on thenature of the impact (positive,negative, or both positive andnegative) for each impact area usingthe various data sources andcombinations of different aspects ofoperations and parts of the value chainbeyond 'soperations different aspects fromoperations. Each impact is placed incontext and tested from theperspective of various stakeholders toidentify the most meaningful,balanced, and communicativerepresentation for that impact.

For theFactor report, six areas or pillars ofinfluence were chosen under which thefinal 23 impact areas were grouped:

Economic growth engine.Employer, job creator, and skillsdeveloper.Impact on local communities.Environmental footprint.Enabler of South Africa developmentthrough the supply of steel .Catalyst for change in South Africa.

Five different perspectives wereconsidered in assessing each impact:

The internal data available, includingtrends over the last few yearsComparison between ArcelorMittalSouth Africa and local South Africanand international companybenchmarksAlignment between

's operational objectivesand strategies and the developmentstrategies and policies for SouthAfrica as outlined in the NationalDevelopment PlanAn analysis of the variousstakeholder views of

performance of thegiven impactsAssessment on the public view ofthe 'sperformance as indicated by themedia.

Additional context was developed byexamining some of the details behindthe current performance within eachimpact area, including mitigatingfactors, planned improvement, priorityareas for development, etc.

Finally each impact wascategorised as having mostly positive,negative, or both negative and positiveimpacts from a socio-economic






••

•••

•

•

•

•

•

•

environment and environmentalcontext. This in turn developed theassessment for overall pillar.

Once the data has been analysed andassessed appropriate responses to thefindings can be developed. Highpriority action areas can be developedand action plans devised to changeperformance in once area or another.Long term strategic goals can also beset. Best practice from one area ofoperations can be leveraged forimplementation in another.

Many areas of impact are todaycarefully considered before criticaldecisions affecting

's operations are made –for example any changes or decisionsthat impact on environmental and legalcompliance. Current and futureversions of the report will be animportant tool in ensuring that

'sperformance in these dimensions is asdesired. In addition the report will bekey in identifying additional priorityareas or opportunities for improving

's footprint,and understanding how to includethese in the company's strategic andoperational plans.

4. Prioritise management response





Figure 59. Five perspectives used to assess impact


Data collectionassessment/follow up•

•

What current internal data is availablefor given impact?What is the indicator trend over thepast three years?

Development strategies andpolicies• To what extent are ArcelorMittal South

Africa's performance and objectives forthe indicator aligned with relevantdevelopment agenda?

Benchmarks• How does ArcelorMittal South Africa's

performance compare with local, andinternational peers

Media• What does media say about

'sperformance with respect to therelevant indicator?


Stakeholders• To what extent are ArcelorMittal South

Africa's performance and objectives forthe indicator aligned with relevantdevelopment agenda?

6.9.2 Data sources

•

•

•

••••

••••••••

2010-2013 ArcelorMittal South AfricaAnnual Financial Results.2010-2013Sustainability Reports.

internal data(HR, Procurement and Logistics, Legal,Marketing, Environment, InvestorRelations, Safety).BCG analysis.Quantec Research.StatsSA.Sustainability reports (multiplecompanies).World Steel Assoc. Yearbook 2013.SA Customs and Excise.Automotive Industry Expert Council.IMF.World Bank.CWI.Collect-a-can.National Development Plan.




For more on ArcelorMittal South Africa visit our websitewww.arcelormittal.com/southafrica/

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SafetyCreating a safe environmentfor all to live and work in

Customer focusBuilding long term win-winpartnerships

CaringFostering authenticrelationships, valuingeveryone

CommitmentSolution focused, deliveringto our best

ArcelorMittal South Africa Factor Report...ArcelorMittal South Africa Factor report 05 1. Executive summary Corporate responsibility is at the core of ArcelorMittal South Africa's

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