Full Disclosure 2016

Summary of findings and company response - 2015

ArcelorMittal’s environmental policy states as follows:

Environmental excellence, incorporated into all processing activities, is to be promoted by the following principles:

• Implementation of environmental management systems including ISO 14001:2004 certification for all production facilities;
• Compliance with all relevant environmental laws and regulations, and other company commitments;
• Continuous improvement in environmental performance, taking advantage of systematic monitoring and aiming at pollution prevention;
• Development, improvement and application of low impact, environmental production methods taking benefit of locally available raw materials;
• Development and manufacture of environmentally friendly products focusing on their use and subsequent recycling;
• Efficient use of natural resources, energy and land;
• Management and reduction where technically and economically feasible of the CO₂ footprint of steel production;
• Employee commitment and responsibility in environmental performance;
• Supplier and contractor awareness and respect of ArcelorMittal’s environmental policy;
• Open communication and dialogue with all stakeholders affected by ArcelorMittal’s operations.¹

ArcelorMittal’s operations have always had, and continue to have, serious environmental impacts. A number of inspections were carried out by Environmental Management Inspectors at ArcelorMittal facilities during the assessment period. However, there are numerous omissions and discrepancies between the findings of these inspections as reported in the National Environmental Compliance and Enforcement Reports and the way in which these findings were presented to shareholders in ArcelorMittal’s annual reports.

It is clear from the National Environmental Compliance and Enforcement Reports that ArcelorMittal has, over the period assessed, committed multiple serious breaches of environmental laws. It is also clear from ArcelorMittal’s annual reports that the level of disclosure of these non-compliances with environmental laws and permits to shareholders is low.

In his response to the Full Disclosure 2015 findings, ArcelorMittal’s CEO, Paul O’Flaherty, said that “…it was never the intention of AMSA to deal with all the findings as contained in the NECERs in detail as part of the [company’s Integrated Annual Reports / Sustainability Reports]”. It is unclear why this should be the case. Mr O’Flaherty further states that “…the most pertinent compliance concerns, whether highlighted by the EMI or not, are highlighted in our Reports together with the necessary corrective actions”.

The findings in Full Disclosure do not support this statement. For example, the 2012 NECER reported that a criminal investigation had been initiated against ArcelorMittal Vanderbijlpark in respect of non-compliances and ongoing incidents. In the 2013 NECER it was reported that this investigation was ongoing. The NECER reports also refer to criminal investigations at Vereeniging. ArcelorMittal does not mention these criminal investigations in its company reports.

In his response, Mr O’Flaherty makes the following statement:

It should be understood that the findings made by the DEA and other relevant government departments as part of the NECERs are based on the relevant government departments’ own interpretations and opinions of the relevant legislation, which was never confirmed by an independent third party as part of subsequent legal processes. … AMSA is of the opinion that the company does not conduct any unlawful activities at any of the company’s plants as referred to as part of the NECERs. Compliance with conditions contained in the various authorisations issued to the company does however remain a challenge …

There is no environmental regulatory system in the world in terms of which a finding by an enforcement official must be “confirmed by an independent third party as part of subsequent legal processes.” The Environmental Management Inspectors are empowered by the National Environmental Management Act to make findings of non-compliance where there are reasonable grounds for believing that there has been non-compliance with a provision of the law, or with a term or condition of a permit or authorisation. There are mechanisms for challenging these findings, but until such time as any challenge by the company has resulted in the finding being overturned, it remains a finding of unlawfulness.

ArcelorMittal’s company reports themselves contradict the position set out in the company’s response to Full Disclosure 2015. It is clear that ArcelorMittal accepted many of the findings of unlawfulness by Environmental Management Inspectors. To give only a few examples, some operations ceased immediately as a result of the inspection findings, certain sites were reported by ArcelorMittal to have been operated without the necessary permits, and a R220 million dust extraction unit was installed at the Vereeniging Works to achieve “legal compliance with … a major directive emanating from the 2007 inspection by the Green Scorpions”

In relation to findings by the EMIs as to permits required by the company for the operation of the Vaal disposal site at the Vereeniging Works, the NECERs make clear that there was an ongoing legal dispute as to the correctness of this finding. Mr O’Flaherty references a legal opinion from Senior Counsel in terms of which ArcelorMittal’s opinion that it did not require a permit in terms of section 20(1) of the Environment Conservation Act was confirmed.

ArcelorMittal’s response also details legal reasons for the company’s dispute of the EMI’s findings that two further sites at the Vereeniging Works were operating without a required section 20 ECA permit.

In 2013 the Vaal Environmental Justice Alliance (VEJA), represented by the Centre for Environmental Rights, sought access, under the Promotion of Access to Information Act, to ArcelorMittal’s Vanderbijlpark ‘Environmental Master Plan’ and the documentation relating to the closure of the Vaal Waste Disposal Site. After ArcelorMittal refused to disclose the documents, VEJA initiated proceedings to challenge this refusal and was successful in the South Gauteng High Court. ArcelorMittal’s subsequent appeal to the Supreme Court of Appeal was unsuccessful and ArcelorMittal was directed by the Court to release the document. The court gave a strongly worded judgment in support of corporate transparency.

The Master Plan contains the results of pollution tests and specialist investigations covering a broad spectrum of environmental issues, including ground water, air quality, surface water and environmental monitoring. The Integration Report of January 2003 (which forms part of the Master Plan) makes clear that, at the time that the Master Plan was prepared, there was already substantial pollution at the Vanderbijlpark plant, particularly groundwater and soil contamination by a range of contaminants including heavy metals.

It also recorded a “potentially unacceptable impact” on the surface water of the Rietkuilspruit via the Rietspruit canal. The report showed a “potentially unacceptable” risk to the environment and human health as these contaminants move through groundwater, with potential exposure through affected drinking water. The Report noted that the affected aquifers “can generally not be remediated to acceptable risk levels through technical measures, over the short and medium terms. Such measures will require flushing of the aquifers with ‘clean’ water and/or steam and will in any event take several decades to improve the situation significantly.”

It is important to note that the Master Plan was commissioned by ArcelorMittal, and community organisations have now started the arduous process of assessing the quality of the evidence provided by the Master Plan. Initial findings by expert and scientist at the Environmental Law Alliance Worldwide in the USA, Dr Mark Chernaik, are that, given that groundwater samples taken as part of the Master Plan reports showed detectable levels of cadmium, “cadmium toxicity should have been, but was not, a main focus of the investigation of groundwater contamination in the vicinity of AMSA”. Chronic exposure to very low levels of cadmium can cause renal dysfunction, including kidney failure. Residents of Steel Valley have long alleged significant health impacts from water pollution in the area.

On 20 March 2015, ArcelorMittal submitted a notification of contaminated land in respect of its Vanderbijlpark plant to the Department of Environmental Affairs in terms of section 36(5) of the National Environmental Management: Waste Act. Section 36(5) states that “an owner of land that is significantly contaminated, or a person who undertakes an activity that caused the land to be significantly contaminated, must notify the Minister or MEC of that contamination as soon as that person becomes aware of that contamination.”

The Department has acknowledged receipt of the notification and has required ArcelorMittal to conduct a site assessment in respect of the investigation area.  ArcelorMital is required to submit a site assessment report and a remediation plan if the findings are that the area is contaminated, but no deadline for the submission of the reports has been given.