December 2014 - ArcelorMittal/media/Files/A/Arcelormittal-Prijedor/documents/...ration, ArcelorMittal Prijedor has invested more than 73 million KM in the deve-lopment of the open-pit

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December 2014

Editor: ArcelorMittal Prijedor • Production Team: Katarina Panić, Predrag Šorga, Tatjana Zorić • Texts: Katarina Panić, Predrag Šorga, Tatjana Zorić • Reviwer: WebbDowse tim • Photographies: Igor Bajić, Dragan Stojnić, ArcelorMittal Prijedor archive • Design firm: Grafit tim • Designer: Dragan Ivanković • Printed by: Grafit tim • Cover: “Kreativni centar, Igor Bajić (photo)

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We have not forgotten our beginnings and our first steps. In that first year in 2004, our trial production amounted to several thousand tonnes, followed by a tenfold increase in the next year. A year later, we recorded another 50% increase only to reach a record-high figure of two million iron ore concentrate produced in 2012. We successfully maintained this level of production in 2013 as well, and even in 2014, the year which we will soon bid farewell to and which demonstrably disfa-voured ore production, to say the least.

Over the course of ten years of its ope-ration, ArcelorMittal Prijedor has invested more than 73 million KM in the deve-lopment of the open-pit mine Buvač, in procurement of new equipment and facilities and in improvement of operatio-nal and technological processes. Average net salary in 2004 was 485 KM and now, ten years later, it is 1,122KM, three times the original. Each year, employees are paid annual leave encashment. More than 500 new employees were hired over the ten-year period and the current total number of employees is 854. We are in possession of ISO 9001:2008, 14001:2004 and 18001:2007 interna-tional certificates, and the company has put in place 11 internal standards: from fatality prevention, vehicle and driving safety, isolation, working in tight spaces, working at heights and subcontracting to risk assessment. This does not only imply success in attaining the desired

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quality, since it is a known fact that the standard is more difficult to maintain than to attain, but it implies that that anything can be tracked, measured and controlled. Today, we do business in compliance with the highest international standards and internal and external auditing is vital for our progress.

We are proud to have recorded positive financial results in all those ten years and to have regularly and timely settled all our obligations towards the state, our em-ployees and suppliers. On top of all, we are proud of the fact that we have been growing and maintaining reputation of a socially responsible company. We proudly take opportunity to help the local com-munity in which we operate. As part of our corporate responsibility (CR), we have made various donations in different fields to help our local community totalling three million KM. Most of it was in the afterma-th of this year’s flooding – at the time of the greatest hardship and need.

And all of it was feasible in one way only: as a team, as one big family. And those deserving for it are our employees and our immediate partners.

People we have worked with for the past ten years must not be forgotten, especi-ally Mr Murari Mukherjee who has made his indelible influence both on the com-pany and the town itself and to who we are indebted for many good deeds.

We have been awarded and recognized numerous times of which these stand out: Republika Srpska Chamber of Co-mmerce award for the most successful company in Republika Srpska in 2005, 2006 and 2007, but also the company was recognized for its contribution to the development of corporate social respon-sibility in 2009 and 2012. And certainly not less important are recognitions for standards achieved in the area of health and safety awarded by IRCA, internatio-nal company for audit and certification of health and safety standards.

We believe that our business activities and results achieved in the past ten years suf-ficiently demonstrate our commitment to the wellbeing of the community in which we live and operate. We also believe we have gained the trust of our employees and their families, of the state and its institutions, of the corporate community and the general public. We hope we have lived up to the expectations of our foun-ders and owners: ArcelorMittal and RŽR Ljubija Prijedor, and to have provided suffi-cient arguments for further achievements we are ready to pursue. We believe that this is only the first decade of our presen-ce in this part of the world and that it is in common interest, for those of us who participated in the revival of mining indu-stry since 2004, to make sure it endures. We express our willingness to jointly keep transforming tomorrow.

Mladen Jelača, Chief Executive Officer

This year, ArcelorMittal celebrates ten years since it started its operation in Prijedor. In the first decade since the foundation, we have achieved envious results in all areas of business: H&S, production and transportation of ore, quality of finished products, investments, employee standards, cooperation with local community and state authorities as well as environmental protec-tion and preservation.

Ten years may not be an impressive anniversary but we believe that our re-sults are indeed impressive. We have excavated 20 million tonnes of run-of-mine ore, removed 73 million tonnes of overburden and we have produced and shipped 15 million tonnes of iron ore concentrate. Most of it was shi-pped to ArcelorMittal Zenica steel factory /eight million tonnes/ and 7 million tonnes of ore was shipped to ArcelorMittal steel factories in Poland, Czech Republic and Romania.

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RŽR

„Ljubija” a.d.

Prijedor

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Excavation of iron ore and iron production in the region of Ljubija can be traced back to Iron Age. Five centuries BC, the Phoenicians had, in search for gold and silver, taken the road up along the Mediterranean coast and into the ore-rich area where they built first mines and metal foundries. Slag depo-sits and traces of ancient mining activities have been found in numerous sites across what is today Northwest Bosnia: Ka-mengrad, Sasina, Bronzani Majdan, Stari Majdan, Stara Rijeka, Briševo, Ljubija, Vidrenjak, Budimlić Japra, Čelopek, Blagaj, Tevanovići, Tomašica and Mrakodol.

Exploration of ore potential of the Ljubija region first started after the military occupation of Bosnia and Herzegovina by the Austro-Hungarian Empire in 1878 and later, following its annexation in 1908, when all mineral resources of B&H were proclaimed the property of the monarchy. It was estima-ted that the country had about 20 million tonnes of mineral resources and that ore excavated in Ljubija region had few harmful admixtures and was readily smelted in furnaces. In-dustrial production of ore started on the hill called Javornik in the vicinity of Ljubija in 1916, primarily for use in wars waged by Austro-Hungarian Empire.

The ore-rich area covers about 1,200 m2 and is estimated to have geological reserves amounting to 347 million tonnes of iron ore reserves and mineral raw materials such as: quartz sand, clay, limestone, dolomites, barite, fluorite, zinc and lead.

Introduction of mass exploitation and construction of iron production facilities greatly contributed to progress made by the industry in the mid-20th century. The central mining area accounted for 44,643,358 tonnes of iron ore excavated between 1916 and 1992. The annual production capacity is estimated at 1.2 million tonnes of ore. Eastern mining area accounted for 20,690,037 tonnes of iron ore in the period between 1965 and 2004. Omarska mine produced ore from 1986 to 1992 and was revitalised in 2004 when iron ore exploitation and production was initiated by a new company founded by RŽR Ljubija a.d. Prijedor (49% ownership) and today’s ArcelorMittal with 51% ownership.

In February 2014, the Government of Republika Srpska announced its decision to sell 64.9998% of its initial capital of RŽR Ljubija a.d. Prijedor. ArcelorMittal sent the Letter of Intent in November 2011 stating its interest for the purchase of this share package.

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Since its founding, the company grew and developed through series of strategic programs and acquisitions, the most important of which was the merger of Arcelor and Mittal Steel in 2006 into ArcelorMittal.

Driven by philosophy of safe and sustainable steel production, Ar-celorMittal is the lead supplier of quality steel on the global market, including automobile industry, construction and household appliances, with top research and development centres, outstanding distribution network and enormous base of raw materials.

ArcelorMittal is one of the world’s five largest producers of iron ore and metallurgical coal, with mining being an essential part of the

company’s growth strategy. With current geographical diversity of iron ore and coal reserves, the company strategically ensures the supply of its own network of iron foundries and the global market.

The three crucial values upheld by the company are: sustainability, quality and leadership aimed to ensure health, safety and wellbeing of its employees, contrac-tors and communities in which it operates. The com-pany is en route to become the safest steel and mining company in the world with a target of achieving zero injuries, zero occupational health problems and zero fatalities.

The essence of the steel and mining industry is inno-vation and considerable investments in research and development. We have more than 1,400 researchers and 11 laboratories around the world, primarily within our research centres in France, Spain and the United

States of America. We put the expertise of our researchers into the development of as clear and safe production technology as possible in order to reduce not only the company’s ecological footprint but also the consumers’ footprint.

For ArcelorMittal, steel is the fabric of life and it is at the heart of the modern world, from railways and cars and household appliances. Steel is highly adaptable and endlessly recyclable material. In line with its belief that the steel plays a vital role in the modern times and that the company should develop with the next generations of people in mind, ArcelorMittal’s motto is transforming tomorrow.

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ArcelorMittal

ArcelorMittal is the leading steel and mining company in the global mar-ket, with presence in more than 60 countries with an industrial footprint in more than 20 countries – making it the only company of its kind in the world. Headed by its President Mr Lakshmi Mittal, the company ge-nerates 119 million tonnes of steel every year and employs 232,000 people.

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Health and Safety First priority

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Since the foundation of the joint venture, attention was largely paid to areas such as health and safety

and environmental protection, and the major changes were brought

about after the merger of Arcelor and Mittal Steel. In majority ca-

ses the company complies with its internal standards as well as with

local law regulations. All standards applied by the company must be

followed by the subcontractors which ArcelorMittal engages. At the time when the company was facing

a challenge, along with the rest of the global economy, the only se-gment of its business operations

where no savings and no compro-mises were allowed was health and safety. In this way, we showed our

employees what the true priority of our company is.

changing the acquired and stubborn habits. Because, as we all know, habits are stronger than love. People resist changes, both consciously and subconsciously. ‘Why change something that has served me well for the past twenty or thirty years?’ they say. It appears to be a point of no importance but it is, actually, the essence. By accepting all protective measures, one is automatically protected. By hiring younger work force, more susceptible to changes than older generations, by providing continuous education in various fields of protection, amendments to regulations, introduction of new equipment etc., we have managed to go 1,000 days straight without injuries at work, with zero injuries being the overall objective of the company. We have no registered occupational diseases and it can be said that we are on a good way to achieve the highest value in the business activity which is characterised by high risk level and that is: to live to enjoy one’s retirement in full health. We have introduced fatality prevention standards and we expect to complete the training by the end of the year and to introduce new company standard called Courageous leadership,” says Milan Šicar, head of H&S and environmental protection Department.

“Our accomplishments in the past decade are impressive. It was a long, slow and strenuous process, but the resulting progress was enormous. One must bear in mind that the value system was in complete disorder. For this reason, people’s awareness of the importance of their own lives and their attitude to their own health required change. The hardest of all was

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Environmental

protection

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Environmental protection is one of the major fields impacted by the actions of employees working for ArcelorMittal Prijedor. Envi-ronmental assessment study defined the as-pects of impact which Omarska mine has on the environment i.e. water, air and soil. Accor-dingly, the company regularly monitors noise levels, dust emissions, wastewater generation and seismic impact. Wastewater analysis is carried out on a monthly basis i.e. 12 times a year. Noise and dust levels are monitored twice a year, once during winter and once in summer. Seismic impact is measured each time mines are planted. All monitoring ac-tivities and frequency of measurement are specified in the environmental permit. A de-dusting system was installed on the tertiary facility along with a protective fence, in order to supress dust emissions. A protective green area was arranged and PB1 track was closed. An open-pit mine Buvač has a trial dew-po-int control system installed with the goal to reduce dust lifted by machinery. Reclamation of the landfill site Luke has been started and 88,038 seedlings have been planted so far. A total of 168,570 seedlings should be planted on 67ha area envisaged for biological recla-mation by the spring of 2015.

“We intend to organise education courses on the significance of environmental protection and to include all employees in these activi-ties just like in the area of health and safety. We plan to mark all potential environmental polluters and maintain a register of such po-lluters and also to install a dew-point control system in the open-pit mine with the aim of suppressing dust. We shall also improve our cooperation with all organisational units within the company when it comes to environmental protection and reporting on actions taken and we intend to mark the Međeđa dam-break propagation wave,” announces ArcelorMittal Prijedor.

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Production and technology centre

Vision for the future

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Duško Vlačina, technical director of ArcelorMittal Prijedor has had a rare opportunity to revive one mine two times in his professional ca-reer. Since 1979, he was engaged in the opening of Omarska mine and was responsible for its reaching annual production capacity of 1,650,000 tonnes of iron ore concentrate. Since 2004, he has been in charge of revitalisation of a system that had been idle for 12 years. He was the chief negotiator concerning the technical aspects of the contract concluded between the RŽR Ljubija, Government of Repu-blika Srpska and the foreign buyer and raised the mine from the as-hes with the assistance of his colleagues - engineers: Nedeljko Vujičić, Milan Vlačina, Milan Pavić and the then young managers Mladenko Knežević and Branislav Rokvić. In terms of human resources, this was the nucleus that started it all.

With the arrival of one of the leading global companies, we obtained the confirmation that our experts and exi-sting work force are capable, efficient in terms of organisation and particu-larly in terms of cost management i.e. financial and commercial aspects of business. We were also ready for radical change in our client service, which was a matter of fact in the previous system, but which now gained great importan-ce that requires tremendous responsi-bility. At the time of pressing insecurity and uncertainty we were offered, from a major global company at that, to get seriously engaged in mining operations, which was, let’s phrase it, a favourable momentum. People were simply taken away by this enthusiasm. We got the opportunity to build up new attitude to work and we used it. The enthusiasm was replaced by efforts to get acquain-ted with the job, and later, to rejuvena-te the human force and finally, we now have a crew which can be tossed in any mine on the planet and they will make it work. We have developed a strong sense for team work which, in the terms of technical capabilities, has risen to perfection. No technical issues have ever been dealt with by chief technical management but they were recogni-

zed and resolved on the lower level by those responsible and experts. The best proof of our good work today is the fact that we have worked with our own forces so far; there are no foreigners in our crews. The company implements continuous control mechanisms and there are frequent visits from foreign experts in various segments but the preparation of all strategic and long-term documents is entrusted to us,” explains Vlačina.

The two major challenges, according to Vlačina, are the successful transition of exploitation from the open-pit mine Jezero to open-pit mine Buvač without a production standstill and with the in-troduction of two technologies in GMS which will serve to make commercial quality goods from raw materials with 46% of iron content, excavated from Buvač, as was the practice when the ore with 49% iron content was used from the Jezero site. They include the installation of the filter press and ma-gnetic separators. This is the outcome of several years of research and te-sting conducted by local engineers and experts from the development institute of ArcelorMittal in France.

“Team of experts currently works on the study on the metal and energy po-tential of Ljubija region based on which further geological exploration can be done. We have partially financed this science-exploration work and delega-ted one of our members to this team of experts. We have already reached the end of the first phase which is the genetic mapping of metal potential of Ljubija region. It is to be followed by the first pre-detailed geological exploration and immobilisation of the area of 35 km2 that we expect to gain support for from the Government of the Republika Srpska and competent authorities from the company headquarters in London. This potential exploratory field is my short-term goal. My long-term and fi-nal goal is to offer ArcelorMittal, which is interested in expanding its raw ma-terial base, basic geological exploration on a much larger territory – the area from Novi Grad to Manjača,” concludes Vlačina.

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Omarska mine

– Heart of the

company

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“In August 2004, we were given the task of reviving the system that stopped functioning in 1992. Mining is the traditional activity of our people, they love the job and

they are good at it. The CEO, as the only representative of the new majority share-holder i.e. owner of the foreign capital, was working here with us, but the system was restored through the efforts of our people. I remember their strong will and desire to work and to live on what they earn after years which followed the war and econo-mic uncertainty. I remember their huge enthusiasm. It explains how we managed to complete such an enormous job in a few months and start the production in November of the same year,” recollects Mladenko Knežević, director of Omarska mine. “Today we are more experienced and, what is most noticeably different than ten years ago, better organised. Our employer has learnt from us and we have acquired knowledge from them and I think

that today we have a combination of what is good in both systems. In the past, Omarska mine had thousands of wor-kers but produced less than what we produce today with 580 of them which is the best indicator of the company’s productivity and efficiency. Also, treating everything that is made available to us with due care is a must and also a prerequisite for our employer to lend an ear to all our needs. Safety comes first when it comes to doing business and everybody must be made aware that safety is not the form but the essence,” adds Knežević.

The following organisational units are operating in Omar-ska mine: Open-pit mine, Gravity and Magnetic Separation (GMS) and Transport system, Maintenance and Laboratory.

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Omarska mine is the place of the core company activities – excavation, pro-cessing and shipment of iron ore. With record 2.1 million tonnes of iron ore concentrate produced in 2012 and each following year, this mine has re-ached the maximum of its production capacity which it intends to keep in the next ten years until the closure of the open-pit mine Buvač.

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Open-pit

mine

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The open-pit mine is managed by Žarko Knežević who has come a long way from an apprentice to manager in the past ten years. “The mine has 254 employees and represents the largest organisational unit within ArcelorMittal Prijedor. This is where it all begins, this is where the ore, thanks to which we make a living, is extracted,” says Knežević.

Ore exploitation in Omarska site began in 1985, first in the open-pit mine Jezero, then at the Mamuze site and from 2009 the ore is excava-ted from the open-pit mine Buvač whose commissioning was worth 33 million KM in investments, which amounted to nearly half of all inves-tments during the first decade of the ArcelorMittal Prijedor operations. The preparatory works related to the commissioning of iron ore produc-tion on Buvač site commenced in 2007. Two rivers and one thoroughfare located on the surface above the ore body needed to be relocated as follows: the riverbed of Gomjenica River - 2.8 km, the riverbed of Od-bojna River – 1.6 km and the regional road – 3 km, from their original positions. Since Omarska area is a flat terrain, dehydration system in-cluded watertight membrane, dewatering bores and up to 150 m deep well dewatering bores for pumping water out of the ore body, so as to maintain the underground water level 10 to 20 metres below the works. Other systems used are cut-off drains and the main water collector for the excess water collection, sedimentation, treatment and restoration to the natural watercourses. For this reason, three years after the com-mencement of preparatory works, the pit was open for exploitation. The ore body on the Buvač site occupies the surface of approximately 1,200 x 1,300 metres. The shallowest layer characterised with eight meters deep overburden deposits is located on the southern part of the site and descends as far as 70 m deep in the Northern part.

Since 2004, the mining machinery and production have been doubled. At the time, we had four loaders, eight dumpers and three bulldozers and currently we boast ten loaders, 21 dumpers, six bulldozers, one new grader, one new drill, two brand new tank trucks and all low-profile utility vehicles we needed. Omarska mine produces 12 million tonnes of over-burden and three million tonnes of ore a year.

The production process starts with the drilling and mine-planting, sampling the bores and, after laboratory analysis of the samples is completed, the planning of production takes place. The following stage of the process is loading ores by loaders and their transport to the self-propelled primary crusher deployed on the site which turns 600 mm fractions into 150 mm fractions and the assembly line conveyor belt transports the ore to GMS for further processing. At the same time, the overburden is loaded and transported from Buvač to the empty mine Jezero which is now backfilled with it.

“Natural disasters are always a challenge we must be ready to face. In the period from 2007 to 2008, a landslide occurred on the Jezero site jeopardizing the production process, when a million cubic meters of soil tumbled off from the upper benches and threatened to backfill the lower benches. We succeeded in restoring the operation of the pit and to haul away more than a million and a half tonnes of overburden from the landslide area and to make safe the lower benches as well as to su-ccessfully complete the exploitation,” remembers Knežević one of the greatest challenges faced in the first decade.

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Gravity and Magnetic

Separation /GMS/ and the

Transport system

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GMS is the primary ore processing stage by which the raw material, which has been excavated and underwent primary crushing process, is turned into commer-cial concentrate whose physical and chemical properties allowed it to be used in steel factories. GMS is the final step of the production process to obtain a finished product and it gives value to the all segments in the chain of production of iron ore concentrate. Not all raw materials are suitable for metallurgical processing and GMS has the task to turn the unusable substance into the ready-use raw material. Omarska mine site provides ore with 47% iron content which GMS processes into the small-sized fractions up to 8 mm with 51% iron content i.e. into large-sized fractions from 8 to 40 mm with 53% iron content. Out of the total incoming qu-antity of ore, after the processing, about 70% becomes concentrate intended for sale while 30% is overburden. Maximum allowed moisture content in large-sized fractions is 12% i.e. 14% for small-sized fractions. Tertiary crusher, an investment worth more than five million KM, enabled flexibility in the production of small and large-sized fraction, manipulation of the scale of these fractions from 15:85% to 50:50%, depending on the needs of the buyers and the supplies, and even the control of the quality to a certain extent. This year, we will see the finalisation of the investment in filter press and magnetic separator which is worth 11 million KM. The ore from the Omarska site is hard for processing and very sensitive. Its physical, mechanical and chemical properties are such that miners call it “obstina-te” which resulted in this large investment.

“Generally speaking, granulometric composition of ore, iron content increases from small to large fractions and particles smaller than 25 microns are often not rich in iron and present burden. By monitoring exploitable reserves in Buvač, it was esta-blished that 49% to 51% iron is present in 25 to 30 percent of those particles, and we toss it away. This specific feature of this ore deposit must be exploited. The testing lasted for more than three years and, in cooperation with the ArcelorMittal research centre in France, we found a way to keep this elusive mass by screening i.e. by capturing those iron-rich particles and let them go when their iron content is poor,” says Draško Simić, technical manager of GMS and Transport system.

When speaking about the installation of two-stage magnetic separator of the sand by spiral classifier sand washing machine, a segment of the process techno-logy had to be found in which the quality of iron ore concentrate can be improved. “If you want higher iron content, you inevitably must discard the poorer portions of ore and this is precisely where the loss in mass occurs. We purposefully incre-ased the mass entering the system in order to increase the iron content. Since some portion of ore had to be discarded, we discovered that it would be most efficient to discard particles smaller than one millimetre at the stage of treatment by spiral classifier sand washing machine. It divides the ore mass into two, one half being subjected to two-stage magnetic separator which extracts about 70% of useful mass which is 5% to 6% richer than the original material,” explains Simić and adds that these two mechanisms make it possible to maintain the quality of the finished product to be made from the raw material which will be excavated from the Buvač site until the expiry of its economic life.

“Last but not least, I am proud of the shipment of 250 trucks loaded with 30 tonnes of ore each by road every day during the standstill in the railway tran-sport. Whoever has not seen it can hardly picture the incessant traffic going on 24 hours a day i.e. 12 trucks per hour. This is not our common mode of operation but something we had to adapt to in certain situation, but nonetheless we have managed to achieve the production capacity as if the transport was done by rail, which is almost unbelievable. And on top of it, we went through it all without any incident at all,” says Simić.

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2020

Quality

control

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Quality control organisational unit belongs to Produc-tion and technical Sector. It is composed of four mu-tually independent segments: sampling on GMS with preparation and processing of samples, sampling on the transport system with preparation and processing of samples, process laboratory and analytical laboratory. “We are one of the links in the chain of production and transport of iron ore since everything excavated or fo-und on the surface passes through our hands, from the exploratory boring through soil sampling and separation to transport. In the course of regular processing, nine samples are taken on very specific locations. Beside re-gular, additional analyses are also frequently conducted at the request of the colleagues from GMS or open-pit mine,” says Mensura Stanić, head of Quality control Department.

Quality Control Department had 17 employees in 2005 – in the first year of production on a full scale – when it completed 36,616 analyses, and at the end of 2013, it had 34 employees and completed 78,523 analyses. Quality control of iron ore refers to measuring iron, manganese, silica, calcium, magnesium and alu-minium content, defines the moisture content and the solid-to-liquid ratio and carries out granulometric tests. The results serve as the basis for production planning, assessing the feasibility of introducing new technolo-gies and measuring investment results and profitability. Analyses are performed by applying standard method. Portion of the sampling is taken manually and the other portion is taken by machines. A spectrophotometer for measuring phosphorous has been acquired and a new grinder for samples at GMS stage while the new ven-tilation system for digestors significantly reduced the noise level.

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Maintenance

Major element

in plan implementation

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Milan Vlačina, head of this Department, has been in the maintenance business since 1985 but even today there are malfunctions he encounters for the first time. The task of revitalisation of the Omarska mine in 12 months and, if possible, nine months, was completed in a bit over three months. “In 2004, the initial problem was gat-hering the crew and finding high quality qualified workers. The tools were hard to come by too because nobody had any confidence in a compa-ny that had just been founded. It wasn’t so much neglected, as much as it was the issue of unsafe working conditions. I remember how we found grass and fern growing in the separation building. Only we know the extent of our improvisations and the sort of primitive methods we used, but the enthusiasm prevailed. We were overjoyed and very satisfied when we managed to restore to functionality a 30-tonne crane in the separa-tion building. This was the moment we knew we could get the job done,” Vlačina recalls and adds that the working conditions encountered ten years ago and those we have now are beyond comparison. “Today all our results are recording upward trend. All the tools and equipment we need are at our disposal or can be procured. In respect of know-how, we have improved im-mensely and filled in the gaps. We wish to fur-ther improve our skills regarding diagnostics in the area of mechanics, car wiring systems and automatics,” adds Vlačina.

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The importance of maintenance is reflected in the informa-tion that maintenance service always makes a third of the total number of workers at Omarska mine. The role of main-tenance is to ensure proper functioning of all machines and facilities used in the production process. The proper functio-ning of machines and facilities is a precondition for continu-ous production. Maintenance service should guarantee that machines and facilities are operational 80% of the available time and it is responsible for preventing small malfunctions from turning in major breakdowns.

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Central workshop

and Car repair shop

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“In 2005, we pressed on even more intensively because it was clear that the old equipment will not suffice to realise the plan. After the management reached its decision, we started working on overhauling of six CAT 777 dumpers and their en-gine replacements. There were five dumpers simultaneously in the workshop with some 50 people engaged on their repair. There has never been more equipment and fewer workers at any other time in the workshop. The management was in severe dilemma whether to entrust the restoration of five million KM worth equ-ipment to a young and inexperienced crew. By mid-May, all dumpers were made available for production in Omarska mine. Foreign colleagues, both internal and those from Caterpillar and Cummins could not believe that our workshop was be able to carry out the task successfully. Our engineers, technicians, managers and workers have managed to finish the job which even more experienced workers, with more engineers and specialists at hand, would hardly take on themselves,” re-members Draško Jazić, technical manager of the Central workshop.

In addition to their basic activity, employees wor-king within the perimeter of the Central workshop removed three hundred tonnes of waste in the first two years and mowed the law for the first time in a decade. They have turned the neglected working space, with numerous broken down machines and poor and unkempt infrastructure into exemplary working premises. They washed the floors, windows and appliances, they painted the walls. After the renovation of the canteen, locker rooms and toilets for workers, a new kind of behaviour with wor-kers emerged. They developed new awareness and accepted the standards that were not common in the past era.

Central workshop participates in the preparation and overhauling of GMS and transport system every year. Its work significantly contributes to overall fun-ctioning of production equipment in Omarska mine. In addition to that, none of the testing or production improvement project goes without the involvement of the Central workshop which thus justified its exi-stence and continued the tradition of a good and successful staff,” Draško Jazić, Central workshop manager is proud to say.

Central workshop includes car repair shop with 23 employees. Its core activity is transportation of employees on the following routes: Prijedor – Ljubija, Prijedor – Kozarac – Omarska and Prijedor – Tomašica – Omarska, by means of eight tourist class buses purchased in 2010 and three large town buses. Additionally, it has two tow trucks at its disposal. Car repair shop is currently engaged on reconstruction of vehicle technical inspection and tachograph calibration facility, whereas regular maintenance and repair of small vehicles is carried out in the area reserved for re-pairs.

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Central workshop is responsible for maintaining ma-chines and wiring systems and car repair. In the past ten years, there was not a single problem that was not successfully resolved. In the summer of 2004, a small crew was assigned with the task of overhauling the first assemblies in order to restore functionality of equipment that had been idle since the war broke out. The task was carried out with limited resources and limited human potential in the premises that were not fit for any work at all. For the majority of workers in the mechanical maintenance crew this was the first time to be faced with such extensive and complicated works. By the end of 2004, we completed the over-haul of the first two CAT 777 dumpers with Cummins engines. A highly sensitive task of assembling very expensive equipment of two different manufacturers into one functional unit was the first accomplishment achieved in the central workshop in 2004. It was cele-brated when the two completely overhauled dumpers headed their way to Omarska on December 30, 2004.

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Drenovača

quarry

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“Upon the arrival of ArcelorMittal and its reco-gnition of the importance of this quarry in ore production process in Omarska mine, a small crew took on this laborious task and today all mining inspectors say it is the best organised quarry in B&H,” says Desanka Petrović, technical manager of Drenovača quarry.

The production process includes the following sta-ges: penetration, mine-planting, drilling, transpor-ting, loading and crushing. The excavated stone can be as large as three metres and it is crushed to 60 mm fractions for the mine’s internal needs and to 0 to 31 mmm fractions for sale to third parties.

“It took us eight years to conquer this hill with our own forces and regular production going on at the same time. Up until then, we worked at the bottom of the hill. When the hill is hovering above one’s head, each loose stone can be a potential danger and may jeopardize human lives and very expensive machines. Everybody made effort to clear the area covering 70,000 m2 by removing wild vegetation. We climbed the hill on May 15, 2012 and discovered 20 million cubic meters of stone, enough to last generations in the next 300 years. This also meant the end to the overburden and the ratio which once was 60% overburden and 40% stone has become 10% to 15% over-burden and 85% to 90% of finished product,” says Petrović.

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The exploitation of the rock from Drenovača started immediately after the Omarska mine was opened in 1985 for the purpose of road and platform pavement and maintenance and riverbed relocation and lining. In addition to internal use /50,000 to 60,000 cubic me-ters a year/, limestone has broad applications in civil engineering and it is also sold to third parties /10,000 cubic meters a year/. The company also sells stone dust, the so-called filler, used in agriculture to reduce soil acidity, boost yields and facilitate soil cultivation.

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Engineering

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If the Omarska mine can be called the heart of the ArcelorMittal Prijedor, than the Engineering is the brain behind it. En-gineering Department is responsible for logistics and preparation of documents in the area of geology, geodesy, mining, construction, electrical engineering, project designing, water management and ecology, planning, production moni-toring and supervision, various technical surveys and measurements, tender pro-cesses and activities imposed by regula-tory bodies competent for these fields. It is the link between the company and state institutions and it also manages the company’s archive. It has 17 employees, 5 of which are continuously engaged in exploration activities regarding both exi-sting and potential ore deposit sites.

For the purpose of illustrating this, we prepare geological stu-dies of ore reserves by ourselves which we must submit every five years to the Ministry of Industry, Energy and Mining in the Government of Republika Srpska and based on which further project designing is carried out and exploitation permits are obtained. The cost of outsourcing these works would be no less than 50,000 KM. We do this work by ourselves and just recently we found out that other mines in our vicinity do not have such capability and therefore must hire a project design bureau which is a significant expense” says Branislav Rokvić, head of Engineering Department. “We perform some of the measurements, such as noise and dust levels, and there are also those measurements for which competent institutions

must be hired, such as water quality and safety. The peculiarity is that internal control performed by our colleagues from abroad is often more rigorous than local and republic inspections. Once, we were ordered to inspect the meat quality of fish living near the mine. Veterinary In-stitute of Republika Srpska ‘Doktor Vaso Butozan’ Banjaluka analysed the fish and issued a certificate confirming no negati-ve effects on its quality due to vicinity of works,“ says Rokvić.

Integrated final destination of the overall company’s operations is the Main mining project design which is the base for all other key documents and which is done after the preparation of the “Supplemen-tary mining project design”. Long-term production plans used to be prepared with a five-year long period and now we have a plan until 2023 which is believed to be the final year for ore exploitation on Buvač site in Omarska mine. The econo-mic life of this mine could be prolonged by opening a new mine in Ljubija and by

simultaneous production of the iron ore at that site though it is basic and of different value than oxide ores from Omarska mine. In this case, Omarska ore and Ljubija ore could be mixed in ArcelorMittal Zenica steel factory to preserve the quality level of metallurgical process. This would prolong the economic life of the Omarska mine and make good use of Ljubija ore. Experts believe that the Ljubija mine could be revived in a year, in addition to simultaneous managing of project design docu-ments, preparatory works and revitalisation of the mine pits.

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Sector for Human Resources, legal and general affairs

31

Legal affairs Department, among other things, represents company in all court, administrative and civil procedures, implements disciplinary procedures and ensures their compliance with the laws, keeps track of any changes to the law regulations and initiates harmonisa-tion of company’s normative acts. In cooperation with the Public Attorney’s Office of Republika Srpska, it handles the expropriation procedure in terms of defining interest of the general public, issuance of the decision on expropri-ation and conclusion of an agreement on reimbursement of expropriated real estates which would enable the Production and technical Sector, as the most valuable client, to carry out its work and production without hin-drance. This department also ensures the conversion of agricultural land to construction land and other activities which fall under the jurisdiction of the-se administrative bodies. And finally, it provides professional assistance to committees operating within the company and pays special attention to meetings of the Managing Board and monitors the implementation of their decisions.

Extraordinary progress was achieved in the area of human resources and education of staff. Having in mind that the employees are our most valuable resource, they have our special atten-tion, starting from health and safety to their education and advancement. “We make an effort to meet the requ-irements of production and technical sector in terms of providing the needed work force at all times. Over the past years, this sector developed with the company and we managed to provide high quality, professional and skilled staff working for ArcelorMittal Prijedor and reaching targeted production. Also, we have made progress in communi-cation with our employees by issuing internal bulletin which is prepared and published on quarterly basis since 2012. Security of buildings, sites and facilities, food preparation and hygiene are basic activities in the general affairs department incorporated within this sector. By working together as a team, we have managed to overcome vario-us circumstances and to find solutions to challenges we faced. I hope we can continue to do so in the future,” con-cluded Ljiljana Vujčić-Štrbac.

This sector comprises Legal

affairs Department, Department for

Human resources and staff education

along with the General affairs

Department.

“The Sector for Human resources, legal and general affairs is one of the pillars the company relies on and its operations contribute, directly or indirectly, to the accomplishment of the company plans and objectives. During the first ten years we made effort to ensure all company activities are carried out in compliance with the laws as well as corporate policies and procedures,” said Ljiljana Vujčić-Štrbac, head of the Sec-tor for Human resources, legal and general affairs.

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Employees

Most important resource

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The fact that employees are the most important resource of the company is reflected, among other things, in our focus on the education of the staff for the past ten years with the aim to ensure as successful and safe performance as possible and in order for them to meet the demanding production plans. The largest number of educational courses was attended by members of pro-duction and technical sector, mostly for improving work force capabilities to operate and handle machines independently and safely. Educational courses were organised in accordance with the desire of the company to ensure incre-asingly higher level of training of its staff for operation and handling of multiple machines and facilities. This is testified by the fact that more than 700 workers underwent training in the past ten years and it is not rare for workers to be trained to operate multiple machines and facilities.

There are numerous other forms of education, training and vocational trainings for employees, among which are: state examinations for technical management and supervision in mining operations, state examinations for licencing in the area of health and safety, licensing for construction and supervision and for project design and supervision, higher education specialisation, training for rai-lway and transportation sector workers, vocational training of workers respon-sible for safeguarding, handling and transportation of hazardous substances, workers handling steam boilers, etc. Vocational training and courses are also organised by the corporation itself or by organisation units, then, there are also seminars, congresses and counselling for miners, mechanical engineers, electri-cal engineers, economists, lawyers and others and training courses in the area of ISO standards, ecology, security and health and safety.

It should be noted that computer literacy and education courses presented a special challenge. Numerous courses were organised: Word, Excel, AutoCAD, SURPAK, etc. Following the foundation of the company, the English language courses were also organised. Various types and levels of learning were in place: internal elementary level courses, external courses addressing various levels of prior knowledge and applying diverse methods of education organised by Fore-ign Language Teaching agency and from 2011, online courses were organised by ArcelorMittal University.

Furthermore, training for employees was implemented in accordance with the education programs in the area of compliance with law regulations and corpo-rate ethical requirements such as training in business ethics and human rights policy. This training course covered the largest target group which included all employees.

Since 2012, one portion of employees was included in online education pro-grams through Online Campus portal organised by Online Education Depar-tment of ArcelorMittal University. The training courses covered the different areas: management and organisation, development, legal and financial affairs, communication, human resources or project management. “The plans to edu-cate our staff receive more and more attention each year and more funds are invested to ensure maximum level of security, preparedness and training of the workers and to achieve final objective in overall development of production process: safe, educated and capable workers who will be able to raise up to any challenge and task,” said Stanka Marin-Došen, head of the Department for Hu-man resources and staff education.

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34

Administrative Affairs

Department

Timely and in According to

Requirements

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Administrative affairs Department includes security, food pre-paration for workers, hygiene maintenance and emergency res-ponse. The demanding and time consuming job, and therefore involving many employees, is the security which covers six si-tes: Management building, central workshop in Prijedor, Omar-ska mine, Drenovača quarry, and non-active mines such as Tomašica and Ljubija since, according to founding acts, Arcelor-Mittal Prijedor provides security services to RŽR Ljubija Prijedor as its co-founder. In ten years we achieved enormous progress which is most visible in the technical segment due to the fact that video surveillance system was installed along with time and attendance system or card system and radio communica-tion with GPS positioning. Fire protection is reinforced with the introduction of fire detectors inside in all rooms and facilities. Electric barrier gate was also introduced. All these systems are upgraded according to needs. Regardless of the technologies deployed, the people remain the most relevant and inevitable factor. Sentry posts are established on all sites with a guard pa-trol in Omarska mine due to the highest fluctuation of people.

“In the past ten years we have had no incident of concern whi-ch would involve attack on the company’s property. Statisti-cally, the number of thefts within the company never exceeded ten a year whereas the number of thefts prevented by our security officers is multiple times higher. The next important segment is the emergency response, however redundant and unnecessary it may seem to some. Only when faced with a di-saster, like this year’s flooding, do we realise that the consequ-ences could have been mitigated had we been all trained to act adequately. Each year, we organise evacuation and rescue drills for the flooding, fire or earthquake scenarios,” says Nebojša To-mičić, head of General affairs Department.

This Department takes pride in the segment concerning our employees’ meals by preparing about 260,000 meals a year. Inspections conducted have not yet found anything which might have negative effect on the quality of food prepared. According to findings, food procurement, preparation and sto-rage is carried out in compliance with the standards. In 2013, an opinion survey was conducted among employees about the food quality and the results were satisfactory.

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36

Romania

Macedonia

Bosnia and Herzegovina

Hungary

Poland

Czech Republic

Germany

Austria

Italy

Spain

France

Belgium

U.K.Luxemburg

KRAKOW

KATOWICE

PRIJEDOR

ZENICA

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XI

Ukraine

Romania

Sector for Economic and commercial affairs

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“I remember the times when our courts were not familiar with the word ’joint venture‘ and they encountered this form of organisation for the first time, which led to a series of issues that had to be resolved in the process of com-pany registration. It is hard to forget the times when every activity had to be done manually and we had to acco-mmodate to what for us was compli-cated system of reporting and to study new programs and company standards in English while observing all domestic laws and professional standards. To-day, all our activities are covered with appropriate software and by educated staff able to respond to any challenge. It is interesting to note that the mana-gement positions in this sector occupy women alone. I am very proud of the work they do. Those are experienced, determined and responsible persons willing to tackle any issue they encoun-ter. Our focus is on the market condi-tions. We are oriented to internal sale, within ArcelorMittal Group, to maxi-mum rationality of costs and timely balancing between income and expense which contributes to positive financial results. It is particularly important for us to prevent customer complaints and to establish good cooperation with all of our business partners, state autho-

rities and institutions as well as with colleagues working in other segments of the company and especially to keep our employees satisfied. And we have actually been able to pull it off over the past ten years.

Business policy of ArcelorMittal, which is observed by ArcelorMittal Prijedor, is to give portion of its gains back to the community it operates in. In addition to regular payment of dividends to foun-ders, a certain percentage of the profit is directed to various educational, cul-tural and sports institutions which have received more than three million KM in donations for 150 projects so far,” says Branka Tomičić, head of Sector for Eco-nomic and commercial affairs

This sector includes four Departments: procurement, sales, finances and acco-unting. The Procurement Department is responsible for ensuring that produc-tion can go on without interruption by procuring fixed assets, consumables, spare parts for mining and other ma-chines, energy fuels, food, etc. Special attention is paid to the level of supplies which must comply with the allowed level of assets, on the one hand, with the production requirements, on the other. Sales Department is responsible for unhindered delivery of iron ore to

existing buyers within ArcelorMittal Group. Timely delivery and required quality are imperatives which the Sales Department adheres to, along with close cooperation with the railways of Republika Srpska and BH Federation and steel factories in the region, all with the aim to make sure that the products arrive safely to their destination. The main task of the Finance Department is to maintain high liquidity and cash generation both for the purpose of settling liabilities towards the state, suppliers, owners and employees and for investment in further growth and development. And finally, all business transactions are recorded by the Acco-unting Department which, in addition to reporting, is responsible for planning and analysis. Also, it must operate in compliance with the standards of the profession, local laws and company standards. One of the more important functions performed by this depar-tment is providing the bases for reac-hing timely business decisions.

Sector for Economic and commercial affairs is one link in the cha-in of business processes. Good overall business results of Arce-lorMittal Prijedor arise from the team work, clear and uniform goals and harmonised policies implemented across all company sectors. In the past ten years, this sector went through various stages: manual data processing, studying the English language, staff recruitment and training and adaptation to a different re-porting method and dynamics, full automation and learning all available and mandatory local and company programs.

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38

Computer Centre

In line with

the modern developments

and new technologies

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Few companies from ex-Yugoslavia can boast to have kept its accounting, financial and staff records in the 1980s on a computer like our co-founder RŽR Ljubija Prijedor which once had six thousand employees. Times have changed in the field of information and communication technologies very fast and very dramatically. Nonetheless, a newly founded joint venture ArcelorMittal has managed to keep the position of a leader in respect of deployed IT technology.

“Year 2004, the foundation year, was welcomed in more or less poor circumstances. The company used UNIX operating sy-stem software and 15 to 20 years old ASCI terminals. We had a few 486 old PCs and even several Pentium 3 and Pentium 4 work stations for various tasks. The internal network, besides a dozen terminals connected to application server, was non-existent. We had to build up the company from scratch and the remoteness of Omarska mine and Drenovača quarry from the directorate building proved an additional challenge. In 2005, the integration all organisational units of the company was completed and licensed Microsoft software was obtained whi-ch required considerable investment,” recalls Milan Pašić, head of Information technology centre.

Information technology was fully integrated within the compa-ny and all users were connected to our network. The majority of data is entered at the place of their origin, regardless of the geographic location. Our hardware is mostly new and frequ-ently upgraded. Active networking and telecommunication equipment is state-of-the-art and procured from renowned manufacturers. The business application covers all vital se-gments of company operations. All communication and surve-illance systems are modern and stable. All users are provided with fast Internet access from any location and they take the advantage of this type of communication to the maximum. Users have various applications at their disposal for the purpose of reporting both on the organisation unit level and across the company. Employees are continuously educated in the field of information technology. Company intranet covers 310 devices with about 170 active users on as many computers.

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40

Cooperation

with the Union

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“General opinion of employees is that our employer is fair and square. Negotiating workers’ rights is hard but once the deal is made, there is no fear that any aspects of the arran-gement will not be observed. It is no reason for concern. This is the kind of employer any employee would like to have. There are discontent workers too, but their number is ne-gligible. Unfortunately, this is the time when the guaranteed workers’ rights are a luxury and privilege, whereas most of our workers enjoy the rights that exceed the legally prescri-bed minimum,” says Milanko Stojnić, chairman of the Arce-lorMittal Prijedor’s Union.

Board for Health and Safety was formed in 2008 and its mem-bers are representatives of employees, the Union and Manage-ment. They meet periodically or when needed to discuss issues proposed by the Board members. The Union has kept its role in the majority of fields it was active in before the war and it still provides medical check-ups for employees, one-time financial assistance in case of natural disasters, severe diseases, fatali-ties and child birth, financial aid for the children of deceased workers, New Year’s gift packages for employees’ children and daily excursions, travels, summer vacations and free of charge use of fitness club and sports recreation facilities.

“When I compare our company with similar companies in the country and surrounding area, we have a singular advantage regarding our attitude to work which is so visible to be al-most palpable. One commonplace but picturesque example would be our surprise, when visiting colleagues at another neighbouring mine site, when we saw that the lawn within the perimeter was not mown. This would not be possible in our mine. When it comes to the Union’s activities, the ge-neral motto goes ‘we can always do more and better’. Our goal is to have the average salary equal to the consumer basket determined by the Union and worth about 1,800 KM for a family of four. This should be everybody’s goal. Every working person should strive to achieve this since any wor-ker should be able to live on his/her salary. Our priority is to resolve the issue of past employment service with benefits,” says the representative of the Prijedor mine’s Union which celebrated 90 years of active engagement back in 2011.

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42

Corporate responsibility

and activities of

ArcelorMittal Prijedor

Foundation

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43

Prijedor mines have always provided assistance to local community and with the foundation of a new association in August 2004, the tradition was con-tinued. All around the globe, Arcelor-Mittal is supportive of corporate res-ponsibility and creates programs for assistance and support to local com-munities in which it operates. The Pri-jedor Foundation is as respectable as the company itself and in December it shall mark eight years since its incor-poration. The list of organisations and individuals interested in working with the Foundation grows by the day along with the number of people interested in getting employment. The trust of the local community was not gained over-night but through hard work and disci-pline in the course over the years.

“In eight years of its active engagement with the local com-munity, ArcelorMittal Prijedor Foundation was, I think, involved with every segment of community and contributed to it as much as it could. We made an effort to support programs,

associations, institutions and or-ganisations whose objective was to provide education and commu-nity development as well as social projects, sports, culture and art. We have always been focused on the young and we wished to pro-vide new facilities and more po-ssibilities for them. The young are our future and sometimes it takes only a little for them to achieve their goals,” says Predrag Šorga, coordinator of this Foundation.

Just like the iron ore production was doubled in the first ten years, the Foundation has been doubling the number of projects and its beneficiaries annually and signifi-cantly increases its budget every year. In a nutshell, the Foundation has implemented more than 150 projects covering 80,000 bene-ficiaries and invested more than three million marks. One would be hard pressed to find an educati-

onal or healthcare centre, sports or youth organisation, non-government organisation, cultural centre or artists’ association, charity or any socially deprived or vulnerable and marginalised group of people who had not received financial support from the Foundation that has been financing projects for certain tar-get groups.

“ArcelorMittal Prijedor is a socially responsible company and over the past decade it proved to be ready to help in case of need. Its social responsibility programs, procedures and policies were aimed at improving both ourselves and the community we work in. Our results are indicative of success and I hope that we can continue to work and develop in the years to come to-gether with our community,” concludes Šorga.

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ArcelorMittal PrijedorAkademika Jovana Raškovića 1

79 101 Prijedor, BiHT. +387 52 234 100, F. +387 52 244 141

www.arcelormittal.com