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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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