Development brochure.cdr - ArcelorMittal South Africa

ArcelorMittal South Africa
Focus on
Development

Message from the CEO:
Putting Corporate Responsibility at the heart
of our business
ArcelorMittal South Africa prides itself in being the lifeblood of a developing nation. Steel is
fundamental to our economy. It is the core material in construction, housing, packaging and
household goods.
At ArcelorMittal South Africa, it is our aim to become an outstanding player in the steel sector, and
this requires that we provide superior returns to our shareholders. We recognise that being global
and maintaining a leading global position carries increased responsibility, enhanced accountability
and higher performance levels in every sphere of our business. We can achieve this only through
genuine partnerships with employees, customers, shareholders, local communities and other
stakeholders, based on integrity, co-operation, transparency and mutual value creation.
The financial crisis and the economic recession it triggered affected people around the world. This
is a period of intense change for our employees and our company, and our response has been to
intensify our commitment to areas such as skills training, education, enterprise development and
community investment.
As an industry leader we recognise that our work in these areas is increasingly important. In this
profile of our corporate responsibility, we have used case studies to illustrate how we translate our
sustainability goals and targets into actions in practice. This report is part of our commitment to
conduct ourselves in the best interests of the communities in which we operate, to develop the
potential of our people and to entrench sound governance.
Nonkululeko Nyembezi-Heita
Chief Executive Officer

Skills Development
Skills Development and Retention
ArcelorMittal South Africa recognises that
developing, attracting and retaining talent is
crucial to its continued success. The skills crisis
continues however, to present our company
with a serious challenge. As a result, targeted
skills development programmes, career
development initiatives and leadership training
form essential parts of our skills development
strategy; ensuring that we foster talent from
within and outside of our operations.
ArcelorMittal South Africa's core business
relies heavily on being able to access skilled
people in the scientific, engineering,
technological and artisanal sectors. We have
therefore directed our CSI budget at
programmes that empower people through
improved education and skills training.
ArcelorMittal South Africa's strategy broadly
includes promoting maths and science skills at
high schools; an extensive bursary programme
for artisans, engineers and other technical skills
and programmes that include upgrading the
skills of its own employees.
This investment not only ensures that the
company has a pool of skilled resources for its
own operations, but also contributes towards
addressing the skills shortage in the country in
general. Under government's Jipsa programme
ArcelorMittal has committed itself to
producing more artisans than it needs for its
own businesses.
Our multi-million rand investment strategy to
date has been successful, leading to
ArcelorMittal being recognised as a corporate
leader in the field of skills development and
training. We are represented in the Technical
Business Skill Partnership, a national initiative
by six leading South African companies, which
have committed to training more than 5 400
artisans over the next three years. Through
the College Industry Partnerships programme
we interact with further education and training
colleges to advance an industry-specific
agenda, and sit on various university advisory
committees that advise on the content of the
curriculum for the engineering and related
sciences.
ArcelorMittal South Africa's implementation of
retention mechanisms, such as aligning internal
remuneration practices and salary structures
with best practices in the market, has also
made a positive impact on our ability to retain
our talent. In the year under review, we have
also been able to use our affiliation with the
ArcelorMittal group to access industry experts,
knowledge and critical skills from the global
arena.
ArcelorMittal South Africa recently embarked
on a management and leadership development
initiative supported by the global ArcelorMittal
University. In 2008, we participated in 96
management development courses and trained
1 402 employees in management and
leadership skills. In addition, we funded 7
employees to obtain an MBA qualification and
21 to attend the advanced management
programme at Wits Business School.
Training needs are determined through an
annual skills audit for all categories. This
information is incorporated into a workplace
skills plan and included in the annual training
report.

Qualified candidates who
completed training
Engineering bursars
Candidate engineers
Learner technicians
Candidate technicians
Artisan to technician conversion
Apprentices
Production learners (non-learnership)
Production learners (learnership)
Learners basic engineering
skills programme
Graduates in Training
Total
2007
10
19
15
0
0
61
23
10
0
–
138
EE
2007
2007
11
8
22
10
0
104
33
0
26
11
225
Non EE
2007
5
6
1
0
0
11
4
2
0
–
29
2008
6
18
3
1
0
25
7
0
6
1
67
EE %
2008
67%
76%
94%
0%
0%
85%
85%
83%
0
0
83%
2007
65%
31%
88%
91%
0%
81%
83%
0%
81%
92%
77%
Initiatives Undertaken and Progress
On Goals
The year under review saw the achievement of
a number of skills development goals and the
implementation of new initiatives that will help
us tackle the skills challenge. These included:
Bursaries
Our bursary programme plays an important
role in providing us with qualified engineering
graduates. A total of 81 bursars (comprising
39 black males, 11 black females, 22 white
males and 9 white females) are currently
studying engineering sciences through this
scheme, while 17 (7 black males, 1 black
female, 7 white males and 2 white females)
have completed their degrees.
These graduates are in the process of
completing an engineer-in-training
programme that complies with the
requirements of the Board for Professional
Engineers, after which they will be employed
by various divisions in the company.
Graduates in Training
A total of 12 graduates from our 2006 intake
successfully completed their two-year
internship during 2008. They have been
absorbed into different departments. In 2007,
12 new graduates started their training
programme while 2008 saw an intake of 25
graduates (including 12 black females).
Production Employee
Development
During the year, ArcelorMittal became the first
South African company to pilot and complete
all three National Qualifications Framework
levels (NQF 2, 3 and 4) for the newly
developed production learnership qualification.
This affords our production employees a
formal national qualification with status and
salary equal to that of a maintenance artisan.
The learnership covers fundamental
competencies such as mathematics and
communication, as well as work-related
competencies. The qualification has offered
employees a holistic overview of the
production process and is being run at all the
operations.
Artisan Training
ArcelorMittal's Accelerated Artisan Training
Programme has been adopted by the
Manufacturing, Engineering and Related
Services Sector Education and Training
Authority. It presents a major break from the
convention of training artisans over four years;
instead it involves an 80-week training period
that seeks to address not only our own need
for artisans, but also aims to meet the national
skills development goals set by Joint Initiative
on Priority Skills Acquisition. During the year,
the total number of learners in the training
pipeline rose from X to 655 of whom 86% are
EE candidates.

Education Development
The key pillar of ArcelorMittal South Africa’s
skills policy – and also that of JIPSA – is to
align tertiary education and other institutional
training with the actual skills required by both
the public and private sectors. ArcelorMittal
South Africa’s core business relies heavily on
being able to access skilled people in the
scientific, engineering and technological fields.
Improving maths and science performance at
schools in the communities around the
company’s areas of operation provides a
sustainable resource for ArcelorMittal South
Africa and works towards alleviating the
national skills crisis.
Science Centres
Underlining this commitment is the company’s
R28 million investment in Science Centres in
Sebokeng and Saldanha, adjacent to its
Vanderbijlpark and Saldanha operations
respectively.
The flagship Science Centre in Sebokeng was
launched in 2006 and serves the entire Vaal
Triangle region. The Science Centre has
uplifted the level of science, mathematics and
IT education for over 2000 pupils at 43
schools in Sebokeng. Much-needed
mathematics and science tutoring has also
been received by at least 30 teachers. The
centre provides pupils with access to
classrooms, science laboratories, state-ofthe-art
computer centres and interactive
science exhibitions and offers curriculumlinked
science and mathematics instruction. It
contributed towards a higher-than-average
pass rate among matriculants in the area
during 2008. Fifteen successful matriculants
have received ArcelorMittal bursaries, including
five bursars studying engineering at
universities.
On 5 December 2008 ArcelorMittal South
Africa launched its second Science Centre in
the Vredenburg/Saldanha Bay region of the
Western Cape. This centre was built and
equipped in co-operation with the Department
of Education and the Department of Science
and Technology.
DoE Partnership
In February 2009 ArcelorMittal South Africa
and the Department of Education (DoE)
announced a partnership to build ten new
schools throughout the country using new
steel technology. The announcement was
made at the sod turning ceremony of the new
primary school for the pupils and community
of Mamelodi (in Tshwane), the first school in
this programme.
Mamelodi Primary School is being built using
the pioneering method of insulated panels
technology, which relies heavily on steel as a
building material. It can withstand extreme
weather conditions, is fire resistant and ten
times faster to erect than using conventional
building technologies. This investment in
primary education completes the circle of
investment for ArcelorMittal South Africa
which now boasts a fully integrated education
and skills strategy upon which to structure
future investments.
Case Study:
Bursar overcomes the odds
In 2008, the strongest candidate to emerge
out of the Grade 12 Examination in the
Sebokeng area was a 17-year-old student
from Moshate Secondary School, Busiswa
Bobi. Busi is an orphan who lives in a shack in
the township and who managed to obtain
three distinctions for Maths, English and
IsiXhosa. Her hard work paid off, making her
one of 15 candidates who qualified for an
ArcelorMittal university bursary to study
chemical engineering at the University of the
North West in Potchefstroom.

Enterprise Development
ArcelorMittal South Africa has made some
progress in developing broad-based black
economic empowerment (BBBEE) enterprises
through a number of initiatives aimed at
suppliers to the company and supporting
small-to-medium-sized enterprises (SMEs).
In 2008 a development fund with a budget
allocation of R250 million was initiated to
provide loan finance, mentorship and
management services to SMEs in the
company’s supply chain as well as the
downstream steel industry. The fund, which is
administrated by Vesco Community Services,
considers applications for amounts exceeding
R500 000 from SMEs that comply with the
BBBEE Ownership Codes. Vesco assists
ArcelorMittal South Africa in assessing the
viability of entrepreneurial enterprises and
determining their risk profile, which is one of
the factors taken into consideration when
assigning interest rates and repayment periods.
Disappointingly, little progress was made in
disbursing funds to qualifying small enterprises
(QSEs) in the first year, with only R8.2 million
being distributed. This included R2.9 million as
start-up capital for a black-owned lightweight
steel-frame housing business; R1.5 million in
loan funding to a black entrepreneur who
purchased an existing engineering business;
R800 000 for a start-up business that needed
to purchase a CNC lathe machine; and R3
million to an existing business operating in the
laser-cutting sector.
We now have improved governance structures
in place to identify and ensure closer scrutiny
of the companies we want to support. One of
the key strategies is to spread our expenditure
across more and smaller firms. We are also
considering partnering with SME incubator,
Raizcorp, to establish an incubator for QSEs in
the Vaal area.
Preferential Procurement and B-
BBEE
We recognise the importance of preferential
procurement to bringing about meaningful
economic transformation in our industry. As
such, our primary aim is to encourage local
economic activity within our areas of
operation and to improve spend with B-BBEE
compliant enterprises.
ArcelorMittal South Africa has also developed
our strategic Preferential Procurement Pilot
Project at Vanderbijlpark. This project targets
those black-owned enterprises that are able to
meet the minimum procurement standards and
are capable of supplying a range of mechanical
spares.
Contracts are awarded for a minimum of three
years and are based on performance. We
provide support mechanisms in the form of
business mentorship and preferential
procurement terms to qualifying enterprises.
SHERQ (Safety, Health, Environment, Risk and
Quality) workshops are held to train potential
suppliers in our management requirements and
standards, and assist them to comply.
Work is also continuing in investigating the
feasibility and details of an ArcelorMittal
Supplier Development Centre (ASDC), aimed
primarily at increasing participation by blackowned
suppliers in the company’s procurement
value chain.
Developing Sustainable Businesses
ArcelorMittal South Africa has set up a
preferential procurement initiative to ensure
that its operations and activities contribute
towards the long-term sustainable
development of the communities within which
it operates.

A R30 million Vaal-Triangle based initiative,
launched in May 2009, is the first in what are
planned to be long-term and country-wide
initiatives which will be used to procure goods
and services from small- to medium sized
enterprises, with a focus on black-owned
companies which offer engineering and related
services.
The initiative will run for three years. Three
preferred suppliers have been carefully
selected. The identified suppliers have differing
core competences and excellent BEE
credentials. Two of the suppliers are based in
the Sedibeng area near Vanderbijlpark Works
and the other on the East Rand.
The three companies are:
• Commit Engineering: A black-women
owned business that specialises in medium
to heavy general engineering and
fabrication, as well as the installation and
maintenance of both air filtration systems
and conveyors. It has workshops in
Sasolburg and Vanderbijlpark.
• Tunnel Engineering, a 100% black-owned
business, specialises in general engineering
with particular expertise in turning, milling,
drilling, hydraulics and welding. Tunnel has
supplied major organisations such as Eskom,
Transnet Rail, MetroRail and Anglo Plats
amongst others.
• Hencill Engineering: A 5 year old supplier of
services and products related to steel
fabrication, steel manufacturing and repairs.
The initiative has three key aims:
• Increasing the number of broad-based
black economic empowerment (BBBEE)
suppliers; building up enterprises to be able
to compete with more established ones.
• Identifying and removing possible barriers
to entry for these suppliers;
• Creating a culture that supports
procurement from BBBEE suppliers.
ArcelorMittal South Africa is developing a
mentorship programme, in conjunction with
other stakeholders, to assist suppliers with
business skills and help them overcome the
challenges associated with doing business with
a large corporation.
The company’s corporate social responsibility
division is also launching a community based
enterprise development project in Bophelong,
a township that borders Vanderbijlpark Works.
The initiative has been set up in partnership
with the African Dream Trust, an organisation
engaged in local economic development,
poverty alleviation and wealth creation.
Preferential Procurement Initiative Case Study:
Vusi Twala, Tunnel Engineering
Vusi Twala’s Tunnel Engineering is one of three
companies participating in ArcelorMittal’s
R30m preferential procurement initiative.
Twala is the CEO of Tunnel, which he joined in
2008 and co-owns with three other partners.
The last year has proved difficult, involving the
need for Vusi to use personal savings to fund
and bankroll Tunnel to buy the necessary
machines to supply potential clients. He
laments the slow pace with which large
companies are moving. “We approached a
number of companies well before
ArcelorMittal and we still aren’t on their vendor
list,” Vusi comments.
Despite the tough start, in 2009 his fortunes
turned when Tunnel Engineering was named
one of the three preferential procurement
suppliers to ArcelorMittal South Africa. “We
needed to make significant investments to
meet ArcelorMittal’s stringent quality
standards,” Twala explains. Other contracts
have been entered with Transnet, Eskom and
AngloPlats. “Things are definitely looking up,”
he adds.

CSI approach and strategy
Corporate social investment (CSI) plays an
important role in helping to transform the
communities in which we operate. During
2009 we drafted a corporate social
investment policy outlining our strategy, focus
areas and social development goals.
Community Development
Our Impact in the Community
At ArcelorMittal South Africa it is critical that
we conduct our business in a responsible
manner – through careful consideration of the
impact of our actions not only on our bottom
line, but on the environment in which we
operate. For the communities where we have
operations, our goal of “transforming
tomorrow” requires that we take an active
interest in their development and wellbeing.
Dovetailing with the company’s global
strategy, ArcelorMittal South Africa has also
embarked on a new community engagement
journey, beginning with the creation of a
designated community & government relations
portfolio within corporate affairs. The strategy
sets out the company’s vision of building longlasting
partnerships with community
stakeholders. It is supported by three pillars:
• Mobilisation of communities around the
issues that affect them;
• Social investment to meet community
needs where these align with our
designated focus areas; and
• A partnership approach.
The global ArcelorMittal Foundation – whose
local arm will in future drive CSI investment in
SA - has defined broad priority investment
areas of education, environment, health &
science, arts & culture, sports, social
promotion and emergency aid, though each
regional company defines its own focus areas
within these guidelines. ArcelorMittal South
Africa favours those projects that:
•
•
•
•
•
Focus on communities around or close to
one of our units;
Are related to one of our areas of activity;
Target a significant number of direct
beneficiaries;
Allow for direct and active monitoring
through key performance indicators;
Focus on education, with a specific focus
on maths, science and technology; and
Infrastructural development.
•
In 2008, ArcelorMittal South Africa had a
target of investing 1% of net profit after tax in
corporate social investment initiatives.
However, company-wide cost-cutting meant
only R21 million of the originally-budgeted
R57 million were spent.
How we do what we do
ArcelorMittal will transform tomorrow by:
Investing in
our people
Making each
and every
person working
on our behalf
feel valued.
Making steel
more
sustainable
Using our
expertise in
steel to develop
cleaner
processes and
greener
products.
…all this is underpinned by
transparent governance
Enriching
our communities
Our presence
plays an
important role
in all the
communities
where we
operate.