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Yelge Qaitaru Foundation: Lakshmi Mittal should compensate for the damage caused to the state

The Karaganda Metallurgical Plant (“Karmetkombinat”) is the largest steel­mak­ing enter­prise in Kazakhstan, it was found­ed in 1944 and was one of the largest met­al­lur­gi­cal enter­pris­es in the USSR.

The con­struc­tion of the Kazakh Metallurgical Plant began dur­ing the Great Patriotic War.

In the 1950 the con­struc­tion of new work­shops announced as the All-Union Youth Construction Site began to the east and south­east of the city.

The first prod­ucts of the Karaganda Metallurgical Plant were issued in 1960.

In 1970, a met­al­lur­gi­cal plant was formed, with the inclu­sion of a met­al­lur­gi­cal plant, the Atasusky and South-Toparsky min­ing depart­ments and the Alekseevsky dolomite quar­ry (knows as ADR SSGPO nowa­days) into its com­po­si­tion. Iron ore was sup­plied from the Sokolovsko-Sarbaisky and Lisakovsky min­ing and pro­cess­ing plants.

The num­ber of employ­ees of the plant in the 1980’s was 41 thou­sand peo­ple, includ­ing 6 Heroes of Socialist Labor.

In November 1995, one of the flag­ships of the domes­tic indus­try, “Karmetkombinat”, was sold to “Ispat International UK”, a com­pa­ny of Indian busi­ness­man Lakshmi Mittal, for vir­tu­al­ly noth­ing. The amount of the sale amount­ed to $ 225 mil­lion, which was payable in four tranch­es: from May 17, 1996 to November 17, 1999, i.e. first pay­ment of $ 22.5 mil­lion on May 17, 1996; sec­ond pay­ment of $ 112.5 mil­lion on November 17, 1996; third pay­ment of $ 22.5 mil­lion on May 17, 1997; fourth pay­ment of $ 67.5 mil­lion on November 17, 1999.

Having acquired a full-cycle met­al­lur­gi­cal plant almost for noth­ing, Lakshmi Mittal got 15 coal mines for free (lat­er he kept only eight mines) and bought the Temirtau Thermal Power Station — 2 for a pen­ny, fol­lowed by four more mines.

At the same time, the plant was sold cleared of almost all debts, which were in their turn trans­ferred to the state joint stock com­pa­ny “Karmet” hav­ing zero assets. And as evi­denced by mate­ri­als on the Internet, Lakshmi Mittal paid off his oblig­a­tions from the income of the plant itself.

Also under the con­tract, Mittal receives a lux­u­ri­ous gift in the form of the low­est prices for raw mate­ri­als, elec­tric­i­ty and rail­way tar­iffs. In addi­tion, the new own­er got rid of 90% of all social facil­i­ties of the plant.

The con­tract also pro­vid­ed Lakshmi Mittal with an unrea­son­able ben­e­fit in the form of a lia­bil­i­ty lim­it for envi­ron­men­tal vio­la­tions in the amount of mere 200 mil­lion tenge. Thus, he could cause any harm, but he would be liable only with­in the spec­i­fied lim­its, the bud­get of Kazakhstan was respon­si­ble for the rest.

It is out­ra­geous that peo­ple — cit­i­zens of the Republic of Kazakhstan — reg­u­lar­ly die at the pro­duc­tion facil­i­ties of “Karmetkombinat”! The death toll has long exceed­ed a hun­dred, which indi­cates the crim­i­nal atti­tude of the own­ers of the plant to labor pro­tec­tion and com­pli­ance with safe­ty regulations!

We would like to draw your atten­tion to the fact that a sim­i­lar plant “Kryvorozhstal” was sold in 2005 by the Government of Ukraine to the same Mr. Lakshmi Mittal for $4.8 bil­lion. Over 14 years of oper­at­ing in Krivoy Rog, ArcelorMittal’s total invest­ments amount­ed to $9.7 bil­lion ($4.8 bil­lion — the amount of the acqui­si­tion of the enter­prise dur­ing pri­va­ti­za­tion, as well as addi­tion­al $4.9 bil­lion — invest­ments in pro­duc­tion development).

We ask you to check these facts and, if these cir­cum­stances are con­firmed, take mea­sures to bring the per­pe­tra­tors to jus­tice and com­pen­sate for the dam­age caused to the state.

Considering that Mr. Lakshmi Mittal has also left his trace in the case of the sale of “Mangistaumunaigas” shares due to non-pay­ment of tax­es to the coun­try’s bud­get for bil­lions of US dol­lars, we ask you to con­sid­er the issue of return­ing “Karmetkombinat” to the own­er­ship of the Republic of Kazakhstan.

Your response will be shared with the pub­lic and media.

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