Sustainability Report 2008 ArcelorMittal Brasil transforming tomorrow
Transcription
Sustainability Report 2008 ArcelorMittal Brasil transforming tomorrow
SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil TRANSPARENT GOVERNANCE I INVESTING IN OUR PEOPLE I MAKING STEEL MORE SUSTAINABLE I ENRICHING OUR COMMUNITIES MANAGEMENT FOR LEADERSHIP I A WORD FROM THE CEO I ORGANIZATIONAL PROFILE I REPORT PROFILE Sustainability Report 2008 ArcelorMittal Brasil transforming tomorrow Contents SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil MANAGEMENT FOR LEADERSHIP Strategic Vision 1 2 A WORD FROM THE CEO 3 ORGANIZATIONAL PROFILE Markets served Sector challenges 4 5 6 TRANSPARENT GOVERNANCE Values In Brazil and the World 7 8 8 INVESTING IN OUR PEOPLE Employee profile People management Professional development Health and Safety 10 11 12 14 16 MAKING STEEL MORE SUSTAINABLE Water Energy Transport Materials Emissions Waste Biodiversity Sanctions Environmental Education 18 20 22 24 24 25 26 29 33 33 ENRICHING OUR COMMUNITIES Value Generation Suppliers Communities Culture Social Promotion Santa Catarina floods Human Rights 35 36 37 39 41 42 44 45 REPORT PROFILE GRI Contents Glossary Awards and Recognitions Credits 46 47 51 52 52 SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 1 STRATEGIC VISION A WORD FROM THE CEO ArcelorMittal Brasil keeps the best practices in people and environmental management, guided by sustainability principles. A constant quest for efficient processes, focusing on management gains and, consequently, better business opportunities. Management for Leadership Management for Leadership SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil STRATEGIC VISION 2 Under the responsibility of “transforming tomorrow”, the ArcelorMittal’s sustainability strategy is: To invest in our people Making all and every person working for us feel appreciated To make steel more sustainable Using our steel expertise to develop more ecological processes To enrich our communities Having a leading role in all communities where we operate All these are sustained by Transparent Governance Our position as the world number one steel company, with the capacity to produce 130 million tons of steel per year and present in more than 60 countries, implies huge economic, social and environmental responsibilities. A leader in the four market segments of long, flat and stainless steel – automotive, construction, house hold appliances and packaging industries –, ArcelorMittal was created in 2007 with the merger of leading global players (Arcelor and Mittal Steel), and endeavours to continue as a global actor in terms of sustainability. To ensure such a condition, ArcelorMittal is committed to professional excellence and life quality of more than 300 thousand employees and families around the world, encouraging the economic development of the communities where it operates and the responsibility for the environment, with permanent focus on technological innovation and the application of transparent corporate governance. The ArcelorMittal’s commitment to “Transforming Tomorrow” is based on this Corporate Responsibility strategy. ArcelorMittal Brasil An important company of the Global group, ArcelorMittal Brasil follows the strategic vision of the parent company. Consequently, it is also distinguished in its sustainability actions, and, likewise, Steel Coils at ArcelorMittal Vega is a benchmark for the steel industry. With activities in four countries – Brazil, Argentina, Costa Rica and Trinidad & Tobago – and consisting of the assets of ArcelorMittal Aços Longos, ArcelorMittal Tubarão and ArcelorMittal Vega, ArcelorMittal Brasil is proud of its good practice indicators. It was the first Brazilian steelmaker listed in the Bovespa Corporate Sustainability Index, and remained there until going private. It has repeatedly received distinctions in local and international rankings of corporate sustainability – among them, the Top Ten in the list of 150 Best Companies to Work for, by Guia Você S/A – Revista Exame – and endeavours to perfect both its productive processes and its relationship with society. Commitment With 15.3 thousand employees, distributed in 27 industrial units with rated capacity for 15 million tons of long carbon steel and flat carbon steel, ArcelorMittal Brasil – which in 2008 presented consolidated results with net revenues of R$ 19.8 billion (against R$ 15.3 billion in 2007) and net profit of R$ 1.4 billion – honours its commitment to an integrated management model, notwithstanding its business diversification. Highlights are activities in the environmental area that go beyond compliance with the law: the company invests in processes to eliminate or reduce environmental impact. In the social scope, priority goes to education and programs for generating income in neighbouring communities. Management for Leadership SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil A WORD FROM THE CEO 3 In 2008, as any other company in the steel industry, ArcelorMittal Brasil experienced antagonistic moments. The first three quarters were extremely positive for all segments of our business in Brazil, with expressive results for the Company. And this makes us proud. Stimulated by Brazilian economic growth, we maintained our outstanding position in the long carbon steel and flat carbon steel markets. Our units’ performance indicators compared to the best in our Group, especially concerning production costs, and operating and management efficiency. Service sharing, through the development of the ArcelorMittal Brazil Corporate Centre, ensured increasingly higher synergetic gains. As from September, however, the dramatic global economic change significantly impacted our results and altered the scenario for the following months. In spite of still satisfactory figures, the situation demanded caution and required adaptations at the Company. Carlo Panunzi The ArcelorMittal’s reaction when facing the new business reality was decisive and quick. The Group started focusing its action on a short- and mid-term strategy emphasizing the so-called “3 Cs”: Cost, Customer and Cash. Among the adopted decisions, investment plans were reviewed aiming at cutting expenses in upcoming quarters. Regarding working capital, we managed to improve cash flow, both with reduction in raw material and finished product inventories, and with closer monitoring of accounts payable and receivable. In line with the Group’s guidelines, ArcelorMittal Brasil managed to adapt to the new reality in timely fashion. We relied on the engagement of all areas of the Company to meet the new demands of the international scenario by carrying forward budget reviews, and reducing administrative overhead and operational process costs. These measures, taken as a response to face the new economic situation, however, have not made us deviate from our commitment to Quality, Leadership and Sustainability, the cornerstones of our actions. As the actions defined in 2008 make sure ArcelorMittal Group is well positioned for the future, we feel confident to achieve our objective to contribute to the economic, social and cultural development of the country. In this report we disclose the main activities related to our sustainable operation in 2008. We are sure that many of the projects described here will not only be continued, but diversified and expanded. We reaffirm our commitment to initiatives in favour of sustainability, especially the principles of human rights, labour standards, environmental protection and anti-corruption as established in the UN Global Compact, of which we are a signatory. With the same entrepreneurial spirit that makes the Company the world leader in steelmaking, we intend to keep our support to the communities in which we are inserted, intensify transparent, profitable relations with employees, suppliers, consumers and other stakeholders, and further progress in the sustainability of our businesses. Carlo Panunzi CEO ArcelorMittal Brasil SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 4 MARKETS SERVED SECTOR CHALLENGES One of the major steel companies in Latin America, ArcelorMittal Brasil has a remarkable position in the long and flat carbon steel sectors. Constituted in December 2005, it gathers the three most competitive steel companies in Brazil – ArcelorMittal Aços Longos, ArcelorMittal Tubarão and ArcelorMittal Vega. Organizational Profile Organizational Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil MARKETS SERVED 5 Markets Served ArcelorMittal Brasil locations Brazil 1. Bahia 2. Espírito Santo 3. Minas Gerais 4. Santa Catarina 5. São Paulo 1 3 2 5 Argentina Costa Rica ArcelorMittal Brasil in figures: Industrial units: 27 Employees: 15,306 Net equity: R$ 15.700 billion Total Sales: R$ 24.730 billion Net Operating Revenues: R$ 19.800 billion EBITDA: R$ 6.349 billion 4 Long steel – ArcelorMittal Aços Longos has production capacity of 5.6 million tons of steel and 1.55 million tons of drawing steel per year. We are the South American leader in wire for industrial and agribusiness applications, and one of the top three global producers of wire rod for steel-cord – steel used in radial-ply tires. The company relies on an extensive nationwide product distribution network, including the Belgo Pronto system, which delivers cut and moulded material for civil construction use. The company has units in seven cities in three states: Itaúna, Joao Monlevade, Juiz de Fora and Sabará (MG); Cariacica (ES); and Sao Paulo and Piracicaba (SP). Since 1997, ArcelorMittal Aços Longos has also been a part of the joint venture controlling Belgo Bekaert Arames, with a production capacity of 900 thousand tons of drawing steel per year, therefore enjoying the position of largest wire manufacturer in the Americas and leader in the domestic market, with products for a large number of segments such as agribusiness, consumer goods, civil construction, petroleum exploration, the automobile industry and household utensils. Flat Steel – ArcelorMittal Tubarão, located in the Greater Vitória area (ES), has a steel production capacity of 7.5 million tons per year; and ArcelorMittal Vega, located in Sao Francisco do Sul (SC), has a steel production capacity of 1 million tons of cold rolled coil and galvanized per year. ArcelorMittal Tubarão is leader in the international market of slabs and supplies hot rolled products to the domestic market. ArcelorMittal Vega is a steeltransformation specialized unit and it works with coils supplied by ArcelorMittal Tubarão, cabotage-transported to the industrial unit. Its specialization is the production of thin cold coils and galvanized coils. About 70% of its total production goes to the automotive market, especially for the auto body production. Organizational Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SECTOR CHALLENGES 6 Sector Challenges The steel industry lived two different moments in 2008. Until September, the companies enjoyed the same growth rhythm as in 2007. Stimulated by expanded consumption, especially in developed countries, figures promised expressive revenues at the end of the period. In the last quarter, however, the global financial crisis dramatically changed the scenario, altering all perspectives for 2009. According to the Brazilian Steel Institute (IBS), steel sales in the domestic market, in 2008, dropped 25.8% in November and 33.9% in December against October. In the foreign market, product sales also dropped: in November the reduction was 23%, and in December 9%. The alert level was raised in January 2009, when the domestic market recorded a decrease of 48% in steel sales and of 52% in steel production. In a scenario of excessive product offer in international markets, with consequent price reductions, ArcelorMittal Brasil, as well as its controlling group, would not be safe. However, in the crisis scenario, ArcelorMittal Brasil proved its strategic importance for the group, by showing results that supported the sustainability of businesses in Latin America. Nevertheless, these times call for prudence. Consistent with its controller, the company has adopted strategies aimed at enduring difficulties with minimum impact on performance. The focus on 3 Cs – Cost, Customer and Cash – remains our strategic basis for 2009, which will not be an easy year. On the other hand, compared to previous crises, the steel industry is in a stronger position, reflecting improvement in fundamentals, associated with an increasingly stricter commitment to sustainability, quality and leadership, which guide the company’s management in the task of overcoming barriers to growth. Investments In March 2008 before the first signs of the international crisis, ArcelorMittal announced an investment plan for Brazil: US$ 5 billion in five years intended for maintenance projects in existing industrial plants and the increase in production capacity. The first portion of these resources – US$ 1.2 billion – are intended to double the production capacity of ArcelorMittal Monlevade, located in Joao Monlevade (MG), with the construction of a new blast furnace, with capacity for 1.5 million tons/year of pig iron, a new sinter plant (raising capacity from 1.7 million to 5.7 million tons a year), a steel mill with capacity for 2.4 million billets per year (twice as much) and a new roller, increasing nominal capacity to 2 million tons per year. In July 2008, the company announced another R$ 1.6 billion investment, aimed at increasing long steel production by 65%, equivalent to 2.6 million tons per year, with the construction of two new blast furnaces, with total capacity of 400 thousand tons; an electric furnace with capacity for 1.2 million tons; a ladle furnace for two continuous castings; a rebar roller with capacity for 520 thousand tons; and a rolling mill with a 500 thousand tons capacity. With an investment of about R$ 300 million, the expansion of ArcelorMittal Vega increases the productive capacity of hot rolled galvanized material. The other units in the process will be expanded accordingly to reflect the production increment. Due to shrinking steel markets, as of the last quarter 2008, the company had to review the timeframes originally established for some of the investments. In Joao Monlevade, conclusion of duplication work is forecast at 40 months, up from 27, but the project has not been called off. Regarding the other programs, the company is waiting for possible changes in the behaviour of domestic and international markets before setting new schedules. Restraint Due to global financial turmoil, ArcelorMittal announced a 35% reduction in its global production in 2009. This reduction, resulting from the dramatic plunges of prices, aims at balancing accounts until the scenario becomes more favourable. In addition, measures also had to be taken regarding ArcelorMittal Aços Planos has productive capacity for 7.5 million tons a year personnel, but always trying to mitigate the impacts of the crisis on employees as much as possible. In January 2009, Belgo Bekaert Arames, controlled by ArcelorMittal Aços Longos, entered into an agreement with workers in the unit in Contagem, in the Belo Horizonte Metropolitan Area, for the temporary suspension of labour contracts with up to 1.3 thousand people. The procedure implies cancellation of contracts for up to one year. During this period the employees receive 55% of their monthly salary plus R$765 as an unemployment insurance granted by FAT (Worker’s Support Fund). Besides that, during this period the employees may take part in qualification programs at no cost. The success of the bargaining, endorsed by the assembly of Belgo Bekaert employees, may turn the measure into a model to be applied, if necessary, to other units of the company in the country. Another strategy to face the crisis was the implementation of the voluntary resignation and voluntary early retirement programs. The company has not yet assessed adherence to the program but the action is essential to balance the steel offer/demand mismatch in the market at the minimum expense to employees. SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 7 VALUES IN BRAZIL AND THE WORLD The ArcelorMittal Brasil corporate governance adopts the necessary good practices to ensure the Company’s organizational success, in addition to establishing strategic guidelines and following business development. The practices are aligned with the ArcelorMittal global principles, guided by three values: sustainability, quality and leadership. Transparent Governance Transparent Governance SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil In Brazil and the world 8 Aé In Brazil and the world Paulo Geraldo de Sousa receives the Minas Gerais Award on Environmental Management from State Governor Aécio Neves Values The ArcelorMittal operation is underpinned by three main values: • Sustainability – We are committed to the world around us beyond the basic aspects to include the people in whom we invest, the communities we support and the world in which we operate. This longterm approach is central to our business philosophy. • Quality – We look beyond today to envision the steel of tomorrow. Because quality outcomes depend on quality people, we seek to attract and foster the development of our talents to deliver superior solutions to our customers. • Leadership – We are visionary thinkers creating opportunities every day. This entrepreneurial spirit brought us to the forefront of the steel industry. Now, we are moving beyond what the world expects of the steel industry. The ArcelorMittal global corporate governance model goes beyond the formal requisites internationally established for sustainable corporate management. In the relationship with stakeholders, in the scope of the board of directors, in internal and external policy making and execution, and in the strict behaviour standards required of employees at all levels, the company has ethics, transparency and quality as premises. At the top of the managerial structure of the group worldwide is the Board of Directors, responsible for overall decision-making. Below it is the GMB (Group Management Board), led by Lakshmi N. Mittal – who is also CEO for the group, consisting of eight executive officers responsible for leading the businesses and determining the global strategies of the parent company as well as defining and supervising administrative activities in the countries where the company operates. Brazil ArcelorMittal Brasil has a corporate governance structure based on the same principles of ethics, transparency and quality as those of the controller. The Company’s Board of Directors, consisting of eight members elected at the General Shareholders’ Meeting for two-year mandates, establishes the strategic guidelines and supervises the businesses. The board members also choose directors, appoint or dismiss independent auditors, and supervise the company’s management. The company also has a Fiscal Council, an ad-hoc committee, which when convened is comprised of three to five members elected at the General Shareholder’s Meeting and the Management Board with two to nine members also chosen by the Board of Directors. The Management Board is responsible for running the group’s businesses in Brazil, discussing any subject that is not under the exclusive competence of the General Shareholders’ Meeting or the Board of Directors. Corporate responsibility principles extend beyond the boundaries of the Company, in investor relations and in the active participation in associations and other organizations, in Brazil and abroad, in an ongoing search for courses of action for the business sector and particularly the steel industry. The basic guideline is to develop strategies to supply markets with quality steel, encourage the socioeconomic development of the regions where the organization operates, and cause the minimum possible environmental impact with its activities, and whenever possible, eliminate them in all steps in the productive process. Global Compact As one of the first signatories of the United Nations Global Compact, ArcelorMittal Brasil demonstrates strong commitments to the promotion of a more sustainable and inclusive economy, shaped by ethical principles and socially and environmentally responsible management. The Company’s activities are in line with the ten principles of the Global Compact, derived from the Universal Declaration of Human Rights, with the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, with the Rio Declaration on Environment and Development, and with the United Nations Convention against Corruption. Communication on the progress of the ArcelorMittal activities related to the Global Compact is identified throughout this report by icons representing the ten principles. Millennium Development Goals In addition to the consistency with the principles of the Global Compact, ArcelorMittal – while conducting its businesses and in the involvement with employees, their families and society – seeks to observe the Eight Millennium Development Goals – or Eight Ways to Change the World. The body of goals established by the United Nations in 2000 to add humanization, solidarity and sustainability to the planet, whilst not neglecting the economic development, calls for voluntary work and comprehensive involvement of the private enterprise through actions of corporate citizenship. In order to attain transforming, longtime results, the entity’s activities include the transfer of methodologies to the municipalities assisted. The development of citizenship programs is shared with the communities, the government and the third-sector partners, respecting local needs and regional identities. For the development of social programs, the ArcelorMittal Brasil units receive funds from ArcelorMittal and invest in partnerships allowing for the development of projects eligible for tax incentives. GOVERNANCE >> Transparent Governance SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil IN BRAZIL AND THE WORLD 9 The Global Compact Principles HUMAN RIGHTS Business should support and respect the protection of internationally proclaimed human rights; and Make sure they are not complicit in human rights abuses. LABOR STANDARDS Business should uphold the freedom of association and the effective recognition of the right to collective bargaining; Uphold the elimination of all forms of forced and compulsory labor; For additional information on the Global Compact on the site www.unglobalcompact.org Millennium Development Goals For additional information on the Millennium Goals, visit http://www.un.org/millenniumgoals Uphold the effective abolition of child labour; and ENVIRONMENT Uphold the elimination of discrimination in respect of employment and occupation. Business should support a precautionary approach to environmental challenges; Undertake initiatives to promote greater environmental responsibility; and ANTI-CORRUPTION Encourage the development and diffusion of environmentally friendly technologies. Business should work against corruption in all its forms, including extortion and bribery. SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 10 EMPLOYEE PROFILE PEOPLE MANAGEMENT PROFESSIONAL DEVELOPMENT HEALTH AND SAFETY The appreciation of people, satisfaction, professional and human development, and fair compensation to employees are the main principles guiding the Human Resources policy at ArcelorMittal Brasil. With 15 thousand employees, the company is an employer of reference, capable to attract and retain talents, as well as to develop a strong entrepreneurial guidance towards performance and results. Investing in our people Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil EMPLOYEE PROFILE 11 Performance The satisfaction of our employees is a major requisite for corporate success and for business sustainability Thus, ArcelorMittal Brasil invests in policies and programs for professional qualification, as well as in a salary policy that is a reference in the country, endeavouring to keep an excellent work environment and making everyone committed to the culture and objectives of the Company. The good indices attained in work environment quality and satisfaction resulted in recognition as one of the 10 best companies to work for in Brazil according to Guia Você S/A – Revista Exame 2008 – The Best Companies to Work for. For ArcelorMittal Brasil, the result was a reward for the efforts in undertaking increasingly more modern and efficient Human Relations practices, as well as for the search to align the organization’s cultural identity. The publication highlighted as positive aspects the scholarship grant and investment in personnel qualification – with an average of 100 hours p.a. per employee of operational level training – as well as the differentiated benefit policy. As an improvement opportunity, the equalization of benefits was mentioned – especially profit sharing – which varies from unit to unit. Total employees Year 2005 Employee category Full time Part time Full time Part time Full time Part time Full time Part time Directors 22 0 19 0 15 0 13 0 Management 386 0 379 0 247 0 382 0 Supervisors 258 0 260 0 352 0 647 0 Administrative 2,319 3 2,343 3 2,417 3 3,293 3 Operational 7,475 20 7,150 20 6,722 20 10,895 20 Interns 691 52 648 52 363 0 0 764 Apprentices - - - - - - 0 276 Contractors/temporary 6,694 6 5,817 6 5,634 0 1,263 0 TOTAL PER SHIFT 17,845 81 16,616 81 15,750 23 16,493 1,063 GRAND TOTAL 2006 17,926 2007 16,697 2008 15,773 Note: due to a new counting of operational employees, there has been a change from the Sustainability Report 2007 (5,893). 17,556 ArcelorMittal Brasil is one of the best companies in people management One of the main challenges at ArcelorMittal Brasil Human Resources is the valorisation of cultural identity as a way to leverage performance. Taking seventh place in the ranking of Best Companies to Work For is a result of this effort. The organization was compared to 550 competitors from different sectors. From the total, 220 qualified for the last stage, in which the finalists emerged. “The 150 best ranked are companies that are perfecting their management according to their business strategy, regional reality and internal public”, says the magazine, which relied on the partnership of Fundação Instituto de Administração, Sao Paulo, to choose the winners. ArcelorMittal Brasil was also graded above the steel industry average in the satisfaction survey (“Talk, ArcelorMittal”), according to ranking by Hay Group in Brazil. The survey interviewed 12,314 ArcelorMittal Brasil employees, equivalent to participation of 97%. The company was also highlighted in the survey “The Best in People Management”, jointly promoted by Valor Econômico newspaper and Hewitt Associates people management consultancy, finishing third in the category “4,000-10,000 employees”. The result shows evolution, as ArcelorMittal had been fourth in this category in 2007. Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil PEOPLE MANAGEMENT 12 People management A child receives attention at the Dental Prevention Program Benefits The benefit package offered to ArcelorMittal Brasil employees includes: • Meals • Health care (hospital, dental, ophthalmologic and psychological) • Sick leave complement • In-company doctor’s offices • Financing and loans* • School kit for children of employees in elementary and secondary school* • Free basic medicines* • Private Pension Plan • Day-care grant • Group life insurance • Grants for professional specialization; language courses and school education (Primary, Secondary and College) • Transportation • Uniform * Benefits not offered in all units Galvanization, Unit of Sao Francisco do Sul (SC) Over the years, labour practices have been consolidated at ArcelorMittal Brasil as a competitive advantage in the attraction and retention of skilled workers for the Company. Salaries above the market average, benefits and encouragement of continuing professional development foster professionals’ identification with the company and, consequently, they are more committed. within the organization. Employment opportunities are also offered in all countries where ArcelorMittal operates, translating as impulse for professional development. Education and professional qualification programs include agreements with language schools and mechanics and metallurgy courses, and employees attend frequent programs in prevention of accidents and diseases related or not to work. Regarding compensation, a number of programs evidence the Company’s concern about satisfaction and, consequently, best performance of employees. For instance: the lower salary paid by ArcelorMittal Brasil companies in December 2008 was R$ 741.40, an amount 79% higher than the country’s minimum wage in the same period, R$ 415. The Company has also identified improvement opportunities in feedback and coaching. The evaluations “The Best Companies to Work for”, “The Best in People Management” and “Talk, ArcelorMittal” identified this point as a reason for employee dissatisfaction. Career Plan ArcelorMittal Brasil and ArcelorMittal Aços Longos offer employees two complementary pension plans, managed by Bradesco Vida e Previdência. Both seek to contribute to improve life quality of employees, even after they leave the Company. OUR PEOPLE >> In the scope of career plan, a succession program is developed for all management positions, from the production line to the management board, therefore ensuring concrete promotion possibilities Performance management (GEDP) Pension Plans Ratio of average salary (men/women) Long and Wire Directors 1 Management Administrative Production Trainees Apprentices Interns 1. There are no female directors 2. Includes only ArcelorMittal Tubarão Flat 2 0 1.48 1.26 1.18 0 0 0.10 Directors 1 Management Administrative Production Trainees Apprentices Interns 0 – 1.03 1.29 1.00 1.00 1.00 The cornerstone of the Human Resources strategy – basis for continuous improvement and the group’s business strategy – is the Global Executive Development Program (GEDP), a program for people development and alignment of leadership competencies. GEDP assesses performance and potential aimed at: • Identifying talents for leadership positions • Elevating the organization’s competence level • Planning career and succession • Developing future and present leaders for the organization It is a space to discuss every aspect of people management and their careers. Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil PEOPLE MANAGEMENT 13 In 2008, ArcelorMittal Tubarão promoted the program for the Qualification of People with Special Needs living in the local community. HR coordinated preparation for training and professional qualification. Over the year, ten of these professionals were taken on. Upon retirement, an employee may receive up to 70% of their current salary in addition to the Social Security pension ArcelorMittal Aços Planos uses the Funssest Closed Complementary Pension Plan, offering four plans: three with defined benefits – not open to new participants – and one with defined contribution – open to new participants. The Free Benefit Generating Plan (PGBL) considers monthly contributions varying from 1% to 9.5% of salary, according to the employee’s salary. The Company and the employees contribute with the same amount. Upon retirement, the employee may receive up to 70% of the current salary added to the Social Security payment. The benefit is variable because it is based on the total contributed by both parties throughout the contribution period. The Defined Benefit Plan (PBD) determines the monthly amount to be paid to the employee when he leaves the Company, with a ceiling of 70% of the current salary added to Social Security contribution, with monthly contributions limited to 10% of their remuneration. Both in PGBL and PBD, the resources to be contributed by the Company come from the cash flow, and not from a specific provision. In 2008, ArcelorMittal contributed R$ 8,529,808.69 to complement PGBL and R$ 5,859,302.77 to PBD. Without the participation of a management fund, the contribution varies from 1% to 9.5% depending on the remuneration. The employee and the Company contribute with the same percentage. At the end of 2008, the estimated total of obligations was R$ 24 million, kept by the Company’s cash flow. Leisure ArcelorMittal Brasil employees enjoy clubs and associations focused on sports and leisure. In Minas Gerais, Clube do Ipê, founded in 1959, became a meeting point for the group’s employees. At the place, club members (including retirees and interns) enjoy a number of sports activities, including gymnastics and team sports. There is infrastructure for events, a party parlor, an informal, casual bar, and a kiosk for barbecue parties. In Espírito Santo, Aest, founded in 1978, has approximately 3 thousand club members. The association provides members with a wealth of leisure and entertainment options, and enjoys an excellent position in the ranking of all sports clubs in the State. Members may be current or retired employees with ArcelorMittal Tubarão and FUNSSEST plan participants. Their direct dependents are also eligible to enjoy the club facilities. Employees – per age group Category Up to 30 years 30-50 Above 50 years Directors 0 1 10 Managers 3 227 98 Superior 532 1,226 279 Administrative 383 363 78 Supervisors 96 370 84 Operational 3,163 4,653 667 Total 4,177 6,840 1,216 Employees – per ethnic group Declared ethnic origin Indigenous White Black Yellow Mulatto Not attributed Directors 0 9 0 0 2 0 Managers 1 242 1 1 83 0 Superior 1 1,442 21 9 554 10 Administrative 0 380 27 2 268 0 Supervisors 0 232 19 1 297 1 Operational 1 3,390 751 6 4,475 5 Employees – per gender Category Male Female Directors 11 0 Managers 304 24 1,544 493 Administrative 392 285 Supervisors 535 15 Operational 8,099 531 Superior Total employees with special needs Category Hearing Physical Mental Visual Total Managers 0 1 0 0 1 Administrative 3 10 3 3 19 Operational 4 16 0 1 21 Others 1 24 2 0 27 Note: Figures do not include Belgo Bekaert Artefatos de Arames Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil PROFESSIONAL DEVELOPMENT 14 ArcelorMittal Competences KEY COMPETENCES • Change Management • Decision-Making • Results-Orientation • Strategic Thinking • Teamwork COMPETENCES THAT WILL HELP BUILD THE CORPORATE CULTURE OF THE NEW ORGANIZATION • Stakeholder-Orientation • Effective Communication • Learning and Development Management challenges •H ow to attract, retain and develop talents • How to think and plan strategically • How to keep a high performance atmosphere • How to improve customer satisfaction • How to manage time and stress • How to remain ahead of the competition • How to align strategic vision and commitment • How to keep the balance of work and personal life • How to improve internal processes • How to encourage innovation Professional Development ArcelorMittal Brasil endeavours to continually improve its practices for assessment, recognition and development of the internal public. Through surveys on the workplace environment, the Company identifies opportunities for improvement and works to ensure conditions that will provide more quality of life and satisfaction to the entire body of employees. As an example is the Organizational Climate Survey – Talk, ArcelorMittal –, held in May 2008. It was the first time the survey was standardized throughout all ArcelorMittal Brasil. Previously, the survey had been conducted in separate ways for different units. The general favourability index was 70%, indicating that the Company is on the right track in its quest for excellence in its organizational climate. This favourability index is 11% higher than the Hay do Brasil market composite index and 7% higher than the steel industry composite. With this result, ArcelorMittal Brasil is placed in the socalled third quartile, that is, the results are among the best in the database of Hay Group, a global consulting firm in the business management area. The survey pointed out the effectiveness of actions related to safety and health, as well as of policies aimed at reinforcing the identification of employees with the company and the relationship with the external public. On the other hand, the results indicated the need to advance in some aspects of people management, such as careerenhancing and effort-recognition policies. Below expectations were the indexes of Managerial Style, involving aspects such as “Performance Planning & Development” and “Recognition & Reward”, with general average of 62% – indicating the need to perfect the programs for leadership formation and qualification. Existing qualification programs such as GEDP and Transform Now encompass such topics. There are other training programs with the same focus. The identified problem is that, in spite of qualification, there is little internalization of concepts. On these lines, ArcelorMittal Brasil developed the project Culture of Effective Feedback, as part of its HR strategic business plan, aiming at promoting management qualification in the task of giving feedback to team members. Two initial steps were taken in the meetings to plan training: defining and differentiating communication, feedback and coaching; and analysing the market’s best practices. In its production units, ArcelorMittal Brasil also offers employees technical-functional formation, focusing on improving and developing specific skills and competencies for the execution of their activities. Another important tool is the On Line Training Center, a distance-learning gateway offering over 3 thousand courses in its grid – in 2008, nearly 2 thousand employees participated in such training, in areas ranging from steelmaking and finances to language courses. DEVELOPMENT>> Talk, ArcelorMittal Survey – indicators of favourable perception 87% Labour Safety 79% 79% Credibility Principles and Values 77% 77% Clarity and Strategy Alignment External Relationship Note: The survey was answered by 97% of the personnel and followed a Hay Group methodology that assures total confidentiality to participants. Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil PROFESSIONAL DEVELOPMENT 15 Internal auditor course at ArcelorMittal Vega Transform Program The actions to form leaderships more aligned with the Company’s culture and strategic orientation started to be embodied in 2008, with the implementation of the Transform Program. The initiative consists of a series of internal procedures with the objective of developing people and producing sustainable results, by offering support to the continuous improvement and update of managers. Employees participate in workplace exercises in Piracicaba The idea is to prepare managers not only to overcome the challenges of movement within the group, such as retirement and creation of new leadership positions, but also to put into practice plans for development and growth of the Competence axes Technical-Functional Behavioural organization, employees and business units. Developed based on organizational competences and major management challenges, as defined by ArcelorMittal, the Program is intended for people holding or to hold leadership positions. To attain its objectives, the Program was structured to comprehend four axes of competence distributed in development topics, leading to the construction of a curricular grid connected with time and management scopes. The development plan is individual and established for each manager, according to their current position and estimated future position. In view of this, the qualification need emerges from the results of the performance management compared to what is required for the current position, from the succession perspective compared to what is required for the future position, and from the result of the performance and potential assessment, that is, the projections of potential for future positions. In 2008, the Transform Program executed its actions using the most advanced learning methodologies, such as the coaching program, encouraging networking, and training in the classrooms of renowned institutions such as Fundação Dom Cabral and Hay Group. In total, 3 thousand hours of training were provided to 750 participants with total investments of R$ 1,418,775.67. The Program is also supported by the Corporate ArcelorMittal University, with courses for growing the future leaders of the Group. In the period 2007-2008, eighteen leaders from Brazil and South America attended such training and, in addition to improvement in management knowledge, they had the opportunity for networking with ArcelorMittal professionals from different units across the world Transform Program - statistics Management Conceptual Instrumental Total Total employees trained Total hours delivered Total classes Actual 2007 341 2,038 24 Planned 2008 770 3,588 52 Accomplished 2008 753 3,130 45 Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil HEALTH AND SAFETY 16 Investing in Our People Health and Safety Day Employees undergoing periodic health exams Health and Safety in Figures • Rate of injuries: 2.63 (includes minor injuries with basic first aid) • Rate of occupational diseases: zero • Rate of lost days: 15.33 Evolution of absenteeism 1.10 0.89 0.94 0.69 2005 2006 2007 2008 Health and Safety are priorities for ArcelorMittal around the world and are strengths of ArcelorMittal Brasil. In all units – industrial and administrative – proactive policies are applied to value the physical and mental integrity of direct and indirect employees, as well as to supervise their activities so as to identify and prevent problems and to correct procedures. The schedule of routine activities includes attention tests before starting work for machine operators in all units. Constant individual performance evaluation of workers is performed, regarding accident prevention and safety workshops, in all units. Specific management systems, with certification based on Occupational Health and Safety Assessment Series (OHSAS) criteria, focusing on occupational health and safety, make use of communication tools, training, and diversified strategies for employee involvement to ensure low levels of occurrences and significant reduction of accident risks. The Internal Committees for Accident Prevention (Cipas) are present in all companies in the group, representing 100% of the employees, who are also formally represented in the health and safety committees. The two main objectives of the Health and Safety Day carried out annually in all units throughout the world are to involve and commit ArcelorMittal professionals at all levels to health and safety principles and to demonstrate the company’s commitment to all employees. In 2008, the theme was “Together a step forward towards safety”, aiming at equal involvement by all professionals, regardless of their positions, with the best safety practices in the workplace. The idea is to share experiences and practices among people, areas and units, emphasizing the sensitization of the leaders on the importance of leading by example. Brazilian employees from all units could watch videos with a speech by ArcelorMittal CEO, Lakshmi Mittal, and by Brazilian leaders in the long and flat segments. Employees visited the Health Circuit for blood pressure tests and measuring weight, height and BMI; and glucose and cholesterol tests. In some units, they received massages to potentialize their well-being and relieve stress, in addition to enjoying auricular therapy and foot spa, among other activities. The event also focused on activities and discussions on fatality-causing agents, developed from activities held at the units such as work at height, in high temperatures and with electricity, among others. ArcelorMittal. Safety Committee Assessment of individual safety performance The ArcelorMittal Brasil Safety Committee is responsible for developing the respective topics at the Operational Units. The objective is to contribute to the target of having zero accidents and injuries by setting up projects, campaigns, audits and standardizations in compliance with the guidelines of the ArcelorMittal Global Safety Committee. On these lines, the Committee seeks to identify, assess and reduce operational risks. The topics discussed by the Committee aim at guaranteeing the continuous improvement of People’s Quality of Life, by promoting safety. No corporate decision is made without being discussed at Committee meetings. The meetings follow an agenda with representatives from all business segments and focus especially on evaluating annual planning, as well as the identification and sharing of good practices, follow-up of safety tours to operational units, and consolidation of safety campaigns and dissemination of the safety standards of Global There is also a health committee gathering professionals from the entire ArcelorMittal Brasil, working under the same model as the safety committee. All units with ArcelorMittal Aços Longos conduct individual safety performance evaluation of employees. Indicators such as previous accident records, time in the company, absenteeism, and suggestions for improvements of risk conditions are taken into consideration. Based on the review, employees are classified in one out of four categories: ideal situation, motivation for reporting unsafe conditions, alteration of position, and critical situation. After being classified, the professional undergoes a specific process, aiming at ensuring the safety of activities. For instance: if the employee is classified in “motivation for reporting unsafe conditions”, the process endeavours to create in that employee the culture of communicating any situation deemed inadequate in terms of safety. HEALTH AND SAFETY>> Investing in Our People SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil HEALTH AND SAFETY 17 Employees go through the rebar production in Piracicaba (SP) Employees, Unit of Cariacica (ES) Safety Workshops and Meetings In addition to safety reviews, ArcelorMittal promotes periodic meetings of managers and operators from production areas. At these meetings, safety indicators of units are presented and critical situations in each area are discussed. This is another opportunity to record reports of nearaccidents or anomalies, and for the development of ideas for improvement. Based on the reports of these meetings, specific actions are programmed for each sector. These actions are the result of a process characterized by the interaction/ proximity between managers and operators. Systematic investment, continuous improvement and a great result: eight years with no lost time incidents Zero accident Ongoing measures, such as individual performance reviews, safety workshops and meetings, in addition to seminars and competitions dedicated to the topic ensure excellent figures to ArcelorMittal. Belgo Bekaert Arames, in Itaúna, MG, is a major Health and Safety highlight in the group. The unit, with 130 employees, has no report of a single lost time incident since 2000. The indicator is the outcome of a work started 11 years ago, when the company started to hold periodic seminars on safety and to develop plans for risk reduction, based on information on the individual performance of employees. In the same unit, a project to reduce noise level has been attaining significant results since 2006. Through constant monitoring of the volume of decibels emitted by machinery, specific and global measures were and are still being adopted to reduce these indices, with layout changes in the industrial plant and the acquisition of new equipment, thus making the workplace healthier. In June 2008, another ArcelorMittal Brasil unit celebrated the milestone of seven years (or 2,557 days) with no reports of lost time incidents: the Seedling Production Unit (UPM) in Ponte Alta, ArcelorMittal Forests, in Dionísio, MG. To celebrate and value the importance, a party was held with a theatrical performance and music composed by employees. Activities in UPMs are quite different from other units in the Company. Employees are exposed to risk due to factors such as electricity, contact with poisonous animals, handling dangerous equipment and bad weather conditions. However, the measures adopted by management in partnership with employees increased the commitment of all to safety, and there were no further occurrences. In the case of ArcelorMittal Vega, there are no records of lost time incidents after November 2007. Safety as a value of the company To encourage change in behaviour of employees, making health and safety fundamental and intrinsic values to the organization. These are the main purposes of the Health and Safety as a Value campaign, set up by ArcelorMittal Brasil in its units. The project consists of a number of coordinated actions aiming at diagnosing the situation of each unit and their level of maturity on the subject, preparing and carrying out specific behavioural action plans for direct and indirect employees, thus significantly reducing work-related accidents. In 2008 the three-staged campaign was started in some units such as Cariacica (ES). At the first stage, Sensitization, lectures are delivered to managers with ArcelorMittal or contractors on work methods and objectives. At the second stage, Diagnosis, the same managers are asked to fill out questionnaires on health and safety in their areas, and employees who have already had accidents are interviewed. All operational employees also answer questionnaires. The next steps are investigations of all accidents which occurred at the unit/ sector over the last four years and the follow up of high-risk activities. Next, the information gathered by the survey is analyzed and a report is produced to determine the degree of maturity of the Unit regarding risks and accidents. The last stage, Guidance, consists of the submission of final reports – one for each area –, of a qualification program on “Risk perception” for managers, the formation of homogeneous risk groups and the preparation of action plans. SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 18 WATER ENERGY TRANSPORT / MATERIALS EMISSIONS WASTE BIODIVERSITY SANCTIONS / ENVIRONMENTAL EDUCATION ArcelorMittal produces a complete spectrum of flat, long and stainless steel products to meet the current needs of all main consumer markets. Steel is the material of choice for environmental protection, not only for being environmentally sound, but also for having a performance superior to other products as it is immediately recyclable. Making steel more sustainable Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil PROCESS IMPROVEMENT 19 Steel Cycle COAL AND ORE LD STEELWORKS ELECTRIC STEELWORKS SCRAP PROCESSING ArcelorMittal Brasil environmental management monitors biodiversity around operational units Sustainability as a Differentiating Factor In analyzing possible strategies to face the current economic scenario, ArcelorMittal reinforces its vision that sustainability remains an important differentiating factor for business success. On these lines, the Brazilian subsidiary – which maintained award-winning ecoefficient programs in 2008 for carbon credit trading, water reuse in industrial units, industrial waste management and rational control of natural resources by suppliers – foresees the continuity of such actions. To ensure the balance between industrial activities and the rational use of natural resources, the company develops processes aiming at the lowest possible impact on biodiversity in the vicinity of its units, the constant search for updating its facilities, the recirculation of almost all used water, and the recycling of the waste generated in steel production, in addition to promoting ongoing projects for the environmental education of internal and external publics. In order to reduce and even eliminate the environmental impact of its ArcelorMittal Brasil Environmetal investments R$ 38.058.746,00 Total R$ 59,719,075.58 R$ 21.629.733,00 R$ 30.596,58 Prevention and environmental management Mitigation of impacts Environmental Protection industrial activities, ArcelorMittal Brasil makes use of a series of management and operational tools, based on the principles defined by its controlling group. In addition to complying with all environmental laws and regulations, the company has environmental management systems such as ISO 14001 certification. In 2008, the excellence of ArcelorMittal environmental practices was recognized by important awards. The Juiz de Fora unit, for instance, received the Minas Gerais Award on Environmental Management, awarded by the Brazilian Quality Union (UBQ) to distinguished companies for the management of the impacts of their activities. ArcelorMittal Brasil strives for continuous improvement of its environmental performance, systematically monitoring its activities aiming at preventing pollution. It also develops, perfects and applies methods for low environmental impact by making use of locally available raw materials, favouring the production of environmentally correct products, focusing on their use and subsequent recycling and, wherever technically and economically feasible, promoting the management and reduction of CO2 emission sources. FLAT AND LONG PRODUCTS SCRAP PROCESSING STEEL SCRAP CONSUMPTION OF GOODS Source: Brazilian Steel Institute (IBS) Process improvement Steel is a 100% reusable product being indefinitely recycled without losing quality, and keeping unchanged characteristics of strength and hardness. According to the American Society of Civil Engineers (ASCE), steel scrap recycling reduces by 90% the generation of mineral waste; by 90% the consumption of natural raw materials, and by 70% the energy required to produce new steel. By 2007, steel recycling represented 40% of the entire industry of ferrous materials. Always acting to ensure customer safety, ArcelorMittal Brasil provides information on its products in a transparent, objective manner. Products are shipped to customers with a Quality Inspection Certificate, which contains information on chemical composition, mechanical properties, size and weight of products, and nonradioactivity certificate. Product packaging is made of recyclable steel bands that may be reused by our customers. Products are identified with labels containing legal information and allowing for their total traceability. In 2008, there was a single case of non-compliance. Inmetro imposed five sanctions on ArcelorMittal Brasil for understanding that some nail packages presented lower weight than stated on the label. An action plan was implemented, with the installation of an automatic control system to weigh nail bags, and the deficiency was fully corrected. Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil Water 20 Aerial view, Port, ArcelorMittal Tubarão Water For ArcelorMittal, the efficient use of water is high priority in its productive processes. With programs to reduce effluent discharge, the company improved the rationalization of water resources to the point of reusing practically all of the water used in industrial processes – average recirculation reached 98.12% (taking into account the Industrial Units of Cariacica, Juiz de Fora, Monlevade, Piracicaba, Tubarão and Vega). The attained results help establish a benchmark for other industries and contribute significantly to reduce costs at the company. Finally, the funds previously spent on treatment of effluents are now directed to new projects, therefore increasing the company’s investment capacity. In 2008, the units of ArcelorMittal Cariacica (ES), Juiz de Fora and João Monlevade (MG) and Piracicaba (SP) presented effluent discharge lower than 0.06 m³/t of raw steel. The Monlevade Unit is distinguished for reducing collection at the Piracicaba River from 5.2 thousand m³/h to 287 m³/h between 2005 and 2008, after the recirculation process was started, reaching a 99.1% rate. Belgo Bekaert Arames, in Contagem (MG), collects rainwater from roofs for the cooling system. The procedure reduced the consumption of safe water supplied by the local public utility by approximately 5 million litres/year, enough to supply a 40-apartment building for about six months. At ArcelorMittal Tubarão, the Reuse Project aims at reducing the acquisition of water from the local Espírito Santo public utility (Cesan), even with production capacity increasing from 5 million to 7.5 million tons of steel per year. With capacity to collect and store 720 m³/h of rainwater, the system is also prepared for the treatment of industrial effluents and rainwater. In 2008, the average reuse rate was 229.3 m³/h of water from the drainage channel, which was formerly discharged into the sea. Another eco-efficient measure is water recirculation in the washing system of the truck and machine repair & lubrication shop. The system not only reuses 100% of the water required in the process but saves R$ 64 thousand per month – including costs with discharge and acquisition of detergents and degreasers. The investment is expected to be returned in 30 months. The water recirculation system at ArcelorMittal Vega allows for a reuse rate of 98.5%, a benchmark for other companies in the same industrial segment. In 2008, the company attained the milestone of only 0.41 m³ of newly input water per ton produced, 40% lower than in 2004. The practice – a benchmark for the industry – is to be extended to other units to reduce costs, reduce the acquisition of water, and extend the life cycle of bodies of water. Efficient use ArcelorMittal Tubarão uses approximately 5% of fresh water from the Santa Maria da Vitória River (2,461 m³/h), whose collection and delivery is made by the state public utility (Cesan). The other 95% comes from the sea, collected by an own pumping system. Even with increased production, the company has been maintaining the required volume, thus not impacting the source that supplies the Greater Vitória area (ES). In the case of ArcelorMittal Vega, water management was subject to a study jointly conducted with the local utility Casan – responsible for collection and delivery. It was defined that the source should be different from the water springs that already supplied the local cities. The selected source was Baden Meyer brook, a tributary to Saí-Mirinzinho River, in the continental part of São Francisco do Sul. The studies developed by Casan determined the maximum volume to be collected in order not to compromise the Baden Meyer brook flow. Currently, the volumes collected by the company (39.6 m³/h) are significantly lower than the authorized by the environmental agencies in the operation licensing (79.2 m³/h). Research is still underway at ArcelorMittal Aços Longos to report on the impact of its collection on water bodies more precisely. However, it is worth highlighting the project for volume reduction in surface water Total water consumption (m3/year) collection at the Piracicaba Unit. With a technological investment of about US$ 20 million, the company replaced the water storage tanks used for cooling steel, eliminating water waste due to overflowing. With this action, water consumption remained unaltered even with production doubling to 1 million tons of rebars per year. Specific consumption is 1.26 m³/t, lower than the global steel industry average of between 1.8 m³/t and 2.5 m³/ t of steel. It accounts for savings of over 471 million litres of water, a volume enough to supply the entire unit working at full capacity for four and half months. WATER >> Surface water Underground water Collected and stored rainwater Public utility supply Total (sea water + fresh water) 421,673,376 802,713 5,020 801,345 423,282,454 Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil WATER 21 Ecotoxicological monitoring of effluents Effluents ArcelorMittal Brasil endeavours to minimize the impact of water discharge with ongoing investment in proper effluent discharge systems. At ArcelorMittal Vega, effluents are treated at a station furnished with equipment for chemical-physical and biological analyses and tests, in addition to a disinfection process using ultraviolet rays. Living organisms undergo an ecotoxicity verification process (more in the box). After treatment, effluents are discharged into the sea through a pipeline approximately 13 km long, with 600 m underwater, in the sea. In 2008, 187,134 m3 of effluents were discharged through this system. At ArcelorMittal Tubarão, effluents that are not directed to internal recirculation (approximately 2%) are treated before discharge through the drainage channel. In 2008, the average volume discharged by the unit was 871 m³/h, taking into account the 229.3 m³/h average recirculation rate of the Reused Water Treatment Station operating over 12 months. Sea water, which is also used by the company, is collected by its own pumping system and is returned by a long canal allowing for heat exchange with the atmosphere, thus keeping temperature within the legal limits for discharge. The drainage channels are connected to a retention dam, keeping effluents for approximately three hours in a stabilization pond before discharge. Excess rainwater from the water collection system is also directed to the channel system. The ArcelorMittal Aços Longos steelworks are now considered a ArcelorMittal Tubarão Analysis of final effluents pH Oils and greases BBA Contagem 8.3 < 5.0 mg/L 0.01mg/L Suspended solids 22.8 mg/L Temperature 0.007 mg/L 31.1 °C The wire drawing units are innovating water resources management with increased indices of water recirculation and use of rainwater as make-up water. A highlight is the Cariacica steel mill: the reuse of sewage and rain water eliminated the discharge of effluents into the environment, and saved 30% due to lower purchasing of water. With an investment of R$ 11,635.00 a physical barrier was built for retention and decantation of the final effluent at the unit. After the process, the effluent is conveyed through a siphon system for filtering before reaching the main tank. Next, the water is stored at the cooling system pH Total cyanide Oils and greases 7.52 13.0 mg/L Total phenol < 0.001 mg/L Suspended solids Not monitored 0.008 mg/L Total zinc 0.16 mg/L 0.021 mg/l Temperature Total iron 0.65 mg/L Total zinc 0.36 mg/L Total lead Total manganese At Belgo Bekaert Arames, in Contagem (MG), the water recirculation rate reached 98%. The company also reuses 15% of the treated effluent. In the year, the company discharged 262,356 m³. It is worth stressing that ArcelorMittal Brasil does not receive liquid effluents from other organizations. ArcelorMittal Vega, in São Francisco do Sul (SC) – supported by the Applied Microbiology Laboratory, Vale do Itajaí University (Univali), and with the consent of Santa Catarina Foundation for the Environment (Fatma) – developed an innovative project to monitor the eco-toxicity of the effluents generated by its industrial production. Analyses of two microorganisms determined by the environmental legislation for use in the monitoring process – micro-crustacean Daphnia magna and bacteria Vibrio fischeri – indicated that the former was inadequate in the control of effluents discharged into the sea, as it is less sensitive to detect toxic elements. After laboratory tests with ten species, during a year, marine micro-alga Skeletonema costatum proved to be more sensitive in the eco-toxicity analysis and replaced Daphnia in the effluent monitoring process. In 2007, Fatma issued a technical opinion authorizing the replacement. The toxicity standards for monitoring were also defined, although the results were already in compliance with established international standards. < 0.01 mg/L 0.66 mg/L 0.05 mg/L 52.63 mg/L The mass of discharged liquid effluents consists especially of rainwater and sewage water, which otherwise would be discharged into the public sewage system. Total ammonia nitrogen Total lead COD tank of the steel mill equipment, before being reused. ArcelorMittal Vega Total phenol Total zinc benchmark for water resources management within ArcelorMittal. 24.79 °C Due to the positive results and the high sensitivity detected, there is a study to include Skeletonema in the existing law, thus creating compatible parameters for all companies discharging effluents into the sea. Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil ENERGY 22 Efficiency generates R$ 20 thousand in cost reduction Energy ArcelorMittal Brasil has been successful in its initiatives to improve energy efficiency in its industrial processes. For the second year running, the company managed to report reduced energy consumption while increasing production. More than that, the company used the opportunity to market excess energy equivalent to 9,149,148 GJ (including electric energy, oxygen, nitrogen and argon). Evolution - direct energy consumption (in gigajoules) ArcelorMittal Juiz de Fora managed to reduce charcoal consumption in blast furnace tops by using a charcoal fines injection system. With this system, total energy savings reached the 353,722 GJ mark. ArcelorMittal Florestas, in turn, has a research under development to use the methane released during wood burning for energy generation. At ArcelorMittal Tubarão, the reuse of effluents in the mill produced total energy savings of 3,756 GJ, equivalent Gasoline 195,622,470 169,261,487 119,583 Natural gas 4,395,999 Electricity 19,543,591 The unit – specialized in IT resources management – held an internal campaign to eliminate unnecessary uses, mobilizing the unit in November. Studies were also carried out on energy consumption at ArcelorMittal Sistemas, in partnership with Cemig technicians. The result was an energy bill for R$ 48.1 thousand, against R$ 68.3 thousand for November 2008, with about 1.5% more in active energy. Description Bill total value Active energy Aug (R$) 63,984.18 (41.63%) Sep (R$) 60,873.92 (39.02%) Oct (R$) 67,976.33 (38.05%) Nov (R$) 68,328.94 (37.93%) Dec (R$) 48,152.02 (39.53%) 353,722 High purity oxygen 1,423,215 Low purity oxygen 53,262 Compressed air 2008 10,410 Fuel oil Argon 2007 142,762,238 425,587 Nitrogen Turning off lights in warehouses and cooling water recirculation pumps when not required for operations, produced cost reductions of up to R$ 6,083.00/month in the Slab Conditioning area. In areas used by employees, simple measures taken to reduce undue use of equipment produced a R$ 13,392.81 reduction in expenses in the high voltage sector, and R$ 1,992.67 in low voltage, as well as better use of labour and material resources. ENERGY >> ArcelorMittal Sistemas electricity bills in 2008 Diesel Charcoal 2006 Another measure taken after a study was to reduce hot rolling speed from 2 m/s to 1 m/s, representing a 52% reduction in energy consumption, with monthly savings of 160 MW/h. Total energy consumption by primary source (in gigajoules) Mineral coal 169,717,465 to approximately 2,012 Dam³. Among the initiatives in the area of energy at ArcelorMittal Tubarão, it is also worth mentioning the production maximization at more efficient air separation plants and electric energy generation plants. The efforts of the ArcelorMittal Sistemas team to reduce energy consumption resulted in savings of about R$ 20 thousand in the December 2008 electric energy bill as compared to the previous month. 171,916 1,964 292,936 Note: Total consumption of direct energy = Direct primary energy acquired + Direct primary energy produced – Direct primary energy marketed Industrial unit, Piracicaba (SP) Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil ENERGY 23 Reduction in indirect emissions In order to reduce its indirect emissions – those deriving from transportation, travel or contractors operations – ArcelorMittal Brasil companies carry forward activities focusing on the reduction of fuel usage for transportation. ArcelorMittal Vega increased the frequency of maintenance in airconditioning systems and air filters of all buses – from quarterly to monthly – and tire pressure is now checked every two days. The opacity of the fleet is now checked every month. Light transportation was readjusted to reduce the number of vehicles, thus reducing the consumption of gasoline and diesel oil Another measure was aimed at raising the awareness of the drivers loading and unloading at the company of the influence of their driving style on fuel consumption, by means of theoretical lectures delivered by a Senai instructor on Recycling, and hands-on training with a company instructor with a VCR installed in the vehicles. In addition, the Santa Catarina Unit includes fuel consumption as a target of the Profit Sharing Program (PPR). ArcelorMittal Tubarão has contracts with two transportation companies, Viação Satélite (collective transportation) and Vix Logística (light transportation). The former, providing employee commuting, used 77 buses in 2008, consuming 1,387,166 litres of diesel fuel, a reduction of 84,583 litres when compared to the amount forecast before the adjustment in the number of lines and schedules. Light transportation, provided by Vix Logística, was also readjusted to reduce the number of vehicles, thus reducing the consumption of gasoline and diesel oil. New logistics reduced freight expenses by 25% in 2008 Internal vehicles for employee transportation are now fueled with biodiesel, which emits less gas than regular diesel, is biodegradable, and is produced from a renewable source. The ArcelorMittal Aços Longos Traffic Centre has been successful in avoiding the so-called “void return”, i.e. trucks coming back with no cargo after customer shipment. This not only generates environmental benefits but also reduces the specific transportation cost per ton of steel. For this purpose, the company uses a vehicle fleet (not older than five years) hired in a full-time dedication regime. Therefore, it has become possible to centralize management of demand and increase vehicle productivity through identification of traffic flow, specification of routes, types and volumes of cargo and analysis of time frames to complete a cycle. Reduction in fuel consumption (vehicles) Fuel consumption (vehicles) Total = 6.19 GJ Total = 0.57 GJ 5.20 0.35 0.22 Gasoline With predetermined routes, it is possible to establish traceability systems, and loading and unloading schedules, as well as rotation of drivers making possible 24-hour operations to serve customers in the best way. In addition, drivers attend qualification sessions for the best customer services possible. On the routes operated by the Traffic Centre, the new operation model produced freight savings of 14% in 2006, 33% in 2007 and 25% in 2008. With these good results, the system will be expanded to the flat steel mills and other units. 0.99 Diesel Traffic centre generates gains in transportation Diesel Gasoline Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil TRANSPORT / MATERIALS 24 Materials Barge for transportation of coils between the units of Tubarão and Vega The four barges have capacity to carry 9.8 thousand tons of coils each. The same amount of steel would require the travel of 300 semi-trailer trucks. For that reason, the system was qualified as a Clean Development Mechanism (CDM). In spite of the several advantages, an incident happened on January 30, 2008: while transporting 9,010 tons of coils, a barge was wrecked next to the access channel to the port of Sao Francisco do Sul. Cleaner transportation The barges carrying steel coils between the units of Tubarão (ES) and Vega (SC), a 1,170-km sea route, not only reduce costs in about 60% but they are also a cleaner transportation means, as the coastal navigation system emits less greenhouse gases than highway transportation. As part of the investments made by ArcelorMittal Brasil is the implementation of process adjustments aiming at the efficiency and maximization in the use of process-related raw materials. Within its recycling policy, ArcelorMittal Brasil consumed 2,425,583 tons of waste or byproducts resulting from external industrial sources, equivalent to 12.45% of recycled input materials. Although there is no specific target for 2009, the amount is supervised in the industrial production plan. Materials used that are recycled input materials in 2008 (in tons) Materials used by weight (in thousand tons) Total = 6.19 GJ The consequences were not very serious: the pilot and 11 crew members were rescued and received medical attention. The barge capsized and went aground on a sandbank. The coils remained in the hold. A residual oil spot was observed, but there were no spills from the tanks. Acquired scales Since then, ArcelorMittal Brasil has been following up the case and supporting all actions necessary to deal with the water. As a result of the incident, the group is fighting a lawsuit filed by 103 fishermen from the municipality of Itapoá (SC), who recently filed indemnification demands against the carrier company that provides the service for alleged material losses from the oil spill. Refractory The service provider indemnified most affected parties, even signing a Conduct Adjustment Term (TAC) with the local Public Attorney’s Office. The fishermen still in litigation against the navigation company are those who decided not to be included in the referred TAC. 16,971 Acquired blast furnace slag 113,262 Acquired steel scrap (local) 1,865,583 Briquette Steel scrap: internal recycling 17,556,763 17,718,835 2006 2007 19,493,837 2,495 425,037 2,505 2008 Raw materials connected to processing Mineral coal Petroleum coke Pellets Breeze coke Limestone / Dolomite Heavy oil Iron ore Hydrochloric acid Sinter Rust inhibitor Coke Caustic soda Charcoal Sodium thiosulfate Scrap metal Defoamer EAF electrode Chromic acid Charcoal for PCI Scale Mineral coal for PCI Zinc Iron alloys and other materials (Fe Mn AC, Fe Mn Mc, Fe Si Mn, Fe Vanadium, Fe Niobium, Nitrogen Manganese, Copper, Aluminum drop, Fluorite, etc.) Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil EMISSIONS 25 Emissions ArcelorMittal Brasil endeavours to reduce its CO2 emissions by analyzing and restructuring industrial processes, whether generating carbon credits or not. Clean Development Mechanism (CDM) programs are, however, included in the Environmental Management Policy. The programs are in line with the Kyoto Protocol recommendations and are related to the reduction of polluting gases, known as Greenhouse Gases. In early 2009, the Company concluded the process for trading carbon credits generated by reduced greenhouse gas emissions, an unprecedented occurrence within the ArcelorMittal Group. The credits – certified by the United Nations – were obtained with gas recovery at the ArcelorMittal Tubarão steelworks. For 10 years the process will prevent the emission of approximately 500 thousand tons of CO2. Conducted by the Controller’s Office – supported by ArcelorMittal Tubarão and the Environmental Area –, the carbon trade, unprecedented for ArcelorMittal worldwide, was executed with the German bank KfW, and is worth US$ 5 million. At ArcelorMittal Brasil, other projects aim at reducing CO2 emissions: • Cogeneration of electric energy, Heat Recovery process • Cogeneration of electric energy, steelworks gas recovery • Transportation of coils by maritime barges • Reduction of Methane Emissions at Coal Producing Units • Injection of Charcoal Fines in Blast Furnace • Use of Blast Furnace Gas in the Billet Reheating Furnace • Use of renewable biomass in charcoal blast furnaces • Forest Producer Program Ozone depleting gases ArcelorMittal Tubarão does not emit the gases CH4, N2O, HCFs, PCFs and SF6. In 1999 the company eliminated all sources of CFC11 emissions. At ArcelorMittal Vega there are no CFC11 emissions either. During 2008, Belgo-Mineira Bekaert Artefatos de Arames used in its processes 13 kg of FREON R-22, a liquefied gas used for cooling. The gas has been gradually replaced by ISCEON 29, with no ozonedepleting potential. CO2 emissions by source (tons) INDIRECT EMISSIONS 2007 2008 Power generation 194,798 292,205 Physical-chemical processing 13,401,398 9,058,798 NOx, SOx and other significant air emissions (t/year) Emissions 2008 NOx 6,235 SOx 17,356 Persistent organic pollutants (POP) 0.269 (g/year) Volatile organic compounds (VOC) 33.58 Hazardous air pollutants (HAP) 42.06 Smokestack emissions 1,600 Fugitive emissions According to the survey, the activities in the Espírito Santo unit indirectly emitted 5,780,348 tons of CO2 in 2008. 562 Particulate material (PM) 3,225 ArcelorMittal Brasil – emissões de CO2 (em toneladas) 14.230.684 13.956.196 2006 2007 14.768.826 2008 Note: Calculations made with ArcelorMittal Group methodology, following precepts by WISI Balance Site Employee at the Piracicaba Unit (SP) ArcelorMittal Tubarão calculated indirect greenhouse gas emissions related only to employee commuting and business travel. Other indirect emissions account for less than 5% of total emissions and have not been considered, and have no reduction targets. At ArcelorMittal Tubarão, monitoring identified low indexes of indirect emissions Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil WASTE 26 Waste The ArcelorMittal Brasil guidelines for management of waste and byproducts are based on a preventive approach, continuous improvement and on principles to minimize generation; maximize internal reuse, recycling and sales; and properly dispose of waste in compliance with all applicable laws. The company invests in research and development of new uses for waste generated in the processes, seeking excellence and sustainability in steel production. All these activities are based on a strict system of industrial standards to ensure control and efficient management. Results in 2008 At ArcelorMittal Tubarão, the waste reutilization rate in 2008 was 99.66%, a benchmark for the sector, with 33.16% recycled or reused, 64.19% marketed, and the remaining 2.11% treated and stored at the processing plants for possible recycling/reuse or sale. Total revenues with the sales of byproducts reached R$ 86,017,399.67, with the evolution of waste sales to cement and chemical industries, ceramic producers and railways. ArcelorMittal Vega does not have a system for final disposal of waste within own premises, with the waste being sent to specialized contractors. Solid residues are properly packaged in retainers at the production lines and temporarily stored in a warehouse, and finally sent to their final destination after screening. The final waste disposal method was jointly determined with CLE Brasil (a company with Grupo Veolia, directly responsible for the operation), aimed at the maximum reuse and recycling, according to screening, available technology and cost. The ArcelorMittal Aços Longos steel producing units reached an average of 86% waste and byproduct reuse in 2008. Over the year, sales of byproducts accounted for net revenues of R$ 22,111,000.00. At the company, the waste destination method is determined by the environmental area of the Industrial Units, together with the corporate environmental area and the top management. From slag to opportunity Steelmaking slag, an inherent residue of steel production, has been used as a tool for social promotion and fight against environmental degradation by the ArcelorMittal Brasil business units. In 2008, ArcelorMittal Tubarão obtained technical and environmental licenses to use steelmaking slag as an aggregate for concrete artefacts and floors. As a result, the waste has been used for the benefit of society, to pave roads or to produce artefacts for civil construction, or even for more complex tasks such as soil acidity reduction and filtering in sewage treatment. for use as asphalt layer base and sub-base, with the Department of Highways in Minas Gerais. There is an ongoing study to use waste as a foundation for artificial reefs, to foster the use of marine biodiversity in sustainable economic exploration and the preservation of areas as an element in underwater landscaping. Shellfish farming may well become another source of income for local fishermen. For 2009, the target is to implement the SAP module for Waste and Byproduct Management, unprecedented in Brazilian steelworks, at ArcelorMittal Juiz de Fora. The system aims at monitoring the entire waste and byproduct chain generated by the company, mapping the entire waste life cycle. WASTE>> ArcelorMittal Aços Longos endeavours to develop new projects to add value to its waste. Below are some examples: • Agreement with Institute for Highway Research (IPR), National Department of Transportation Infrastructure (DNIT) for tests with slag as asphalt layer base and sub-base. • Project for recycling the dust from the de-dusting system of the ArcelorMittal Piracicaba electric steelworks, for production of pre-melted agglomerate for the electric furnace, therefore preventing its disposal in landfills and reducing raw material consumption. • An agreement with the Federal University of Minas Gerais (UFMG), for recycling alternatives for LD steelmaking sludge from ArcelorMittal Monlevade. The waste has significant iron content, and is potentially recyclable for sintering plants, reducing iron ore consumption and generating income from the zinc. • Tests with electric steelmaking slag Waste at the yard of ArcelorMittal Tubarão Reuse of steelmaking slag in figures • Pavement (paved road base and sub-base) – 400,000 t since 2005 • Primary coating of rural and neighbouring roads (REVSOL) – 700,000 t since 2001 and 230 km of roads with primary coating since 2006 (New Ways Programme) • Railway ballast – 530,000 t since 2001 • Agriculture (soil correction) – 10% gains in production • Cement industry – 200,000 t since 2001 Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil WASTE 27 Employee uses PPE at ArcelorMittal Vega ArcelorMittal Tubarão1 - Solid waste Destination Hazardous Non-hazardous Reuse ² Tar sludge: 2,198 t Secondary steel mill de-dusting powder: 21,012 t Reused industrial waste (sintering): 583,232 t Steelmaking slag reused in internal investment works: 209,090 t Recycling ³ External recycling of batteries: 3.3 t Light bulbs: 57,000 units Vegetal oil: 13.44 t Steelmaking coarse sludge: 63,953 t briquetting Steelmaking thin sludge (sintering + briquetting): 75,751 t Steel slag (sintering): 22,066 t Recovery Reuse at coal piles: Grease: 60 t Lubricant oil: 8 t Reuse of lime fine at Sintering Plant: 26,501 t Reuse of KR slag at Sintering Plant: 22,066 t Final disposition in controlled landfill Oil contaminated with diverse solids: 29.1 t Clinical waste: 4.96 t On-board waste (port): 35,610 t Water contaminated with oil (port): 464,020 t Organic (restaurant): 1,109.35 t Local storage Zero Plant processing (steelmaking slag, pig-iron making slag, R-BIT industrial waste): 435,000 t CASP – Steelmaking sludge, blast furnace sludge, EP powder: 430,846 t ArcelorMittal Vega1- Solid wastes Destination Hazardous Non-hazardous Reuse ² 0 0 Recycling ³ Lubricant oil, hydraulic oil, emulsions, hardening fluids: 1,142.79 t Ink cartridges and toner: 0 t Grinder sludge: 64.93 t Contaminated empty packaging: 6.30 t Scrap metal: 55,790 t Iron oxide: 4,134 t Zinc slag: 802 t Plastic, paper and cardboard: 78.05 t Hazardous Waste In 2008, ArcelorMittal Brasil transported 107,266.4 tons of hazardous waste under of terms of the Basel Convention. Mercury lamps 0.72 t Recovery Chromium bath: 23.06 t Electronic material: 6.66 t Used edible oil: 0.00 m3 Incineration (or use as fuel) 0 Wood: 121.40 t Clinical waste: 1.08 t Contaminating waste, oil and grease: 21.63 t Organic waste: 159.06 t Rubbish: 45.27 t Iron oxide: 1.121 t ETS biological sludge: 65.10 t ETS chemical sludge: 484.05 t Contaminating waste, oil and grease: 47.18 t Degreasing sludge: 3.90 t Recovered oil: 23.02 t 0 Sanitary landfill (industrial) Others (co-processing) ArcelorMittal Aços Longos1- Solid waste Destination Hazardous Non-hazardous 9,158 1,523,553 t Incineration (or use as fuel) 1,1 t 0 Sanitary landfill (industrial) 0 746 t Local storage 40,816 t 2,471 t Industrial landfill 17,272 t 22,388 t Reuse ² Recycling ³ 1. The company does not perform underground injection of waste. 2. Reuse: a process that does not modify the properties for use in another process. 3. Recycling: a process that modifies the properties and use as byproduct WASTE>> Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil WASTE 28 Destination of hazardous waste ArcelorMittal Vega Destination Waste Co-processing in cement kilns Filter cake; degreasing sludge; used grease; Qwerl sludge; bearing washing; waste contaminated with oil and grease; chemical sludge from Effluent Treatment Station; contaminated empty packaging Re-processing Chromatization waste; residual acid Recycling Ink cartridges and toner; electronic material, contaminated empty packaging, mercury lamps (with mercury recovery) Treatment and recycling of oily emulsion waste Recovered oil Lubricant oil refining/ re-industrialization Lubricant oil, hydraulic oil, emulsions, hardening fluids Industrial landfill Contaminated waste chemical product/ paint/ Qwerl/ biocide; Clinical waste (after autoclave sterilization and grinding) Processing Grinder sludge Re-processing and final disposal Chromium bath Spills In 2008 there were no significant leakages or spills at ArcelorMittal Brasil operational units. The target for 2009 is zero leakage of any hazardous products handled either by the Company or on its behalf. ArcelorMittal Aços Longos Destination Waste Recycling ¹ Depleted hydrochloric acid; lead soil; used containers; used car batteries; empty 200-liter drums; used alkaline batteries; used fluorescent lamps Incineration ¹ Clinical waste; expired reagent/ chemical product/ others; imported wooden boxes without phytosanitary certificate of origin; used sleeve filter ² Re-refining ¹ Used oil Returned to supplier Empty agrochemical packaging 3; industrial towel 4 Co-processing Material contaminated by oil and grease (in clinker kilns in cement industries) 5 Industrial landfills (on-site or external/ temporary storage) Used sleeve filter ²; electric arc furnace de-dusting powder 6 1. In environmentally proper place. 2. Destination depends on industrial units. 3. Supplier ships to environmentally licensed location 4. Supplier performs specific treatment and returns for reuse 5. In environmentally licensed location 6. There is on-site temporary storage.. ArcelorMittal Tubarão Used oil Naphthalene absorption oil Tar Recycling or external recovery or disposal in industrial landfill Tar sludge Grease On-board waste (port) Clinical waste The waste reuse rate at ArcelorMittal Tubarão is 99.66% Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil BIODIVERSITY 29 Biodiversity A major challenge in the steel industry activity is to mitigate the impacts of this kind of operation. ArcelorMittal Brasil invests in the identification and monitoring of areas with high biodiversity value within or near its units. From the studies, information on environmental impacts is updated, including the identification of risk scenarios, determination of remedial actions and assessment of the effectiveness of such actions. Some of the main studies at ArcelorMittal Brasil is biodiversity monitoring aimed at identifying species of local fauna and flora, including a survey of endangered species in progress in all units. In 2008, ArcelorMittal Aços Longos concluded the avifauna (birds) monitoring started in 2007. The inventories of fish fauna and herpetofauna (reptiles and amphibians) are still in progress to be concluded in 2009. In Aços Planos (Flat Steel), ArcelorMittal Vega analyzed the mammalian fauna, avifauna (birds) and flora, at the Private Natural Heritage Reserve (RPPN), a 760-thousand-sqm area surrounding the company. The study recorded 14 mammal species, 152 wild birds, and 261 vegetable species including trees and other plants. Among the species preserved at the place, there are specimens of Guanandi, the first Brazilian hardwood, and Ocotea catarinenses, an endangered species. The second stage – in progress – is surveying the fish fauna, entomofauna (insects) and herpetofauna (reptiles and insects). ArcelorMittal Tubarão, operating within the Atlantic Forest – one of the planet’s biome with the highest biodiversity value – keeps a Wild Fauna Management Program, developed to improve the protection of species in part of its green areas. The studies include the reintroduction of animals in existing habitats. Impact management Aligned with global guidelines, ArcelorMittal Aços Longos has legal reserve areas, Private Natural Heritage Reserves (RPPNs) and Permanent Protection Areas (APP). The forest management areas are monitored by private security teams and fire brigades. There is also an agreement with the Forest Police for their action in case of incidents. If necessary, the program for recovery of degraded areas and the emergency action plan are put in action to recover Girl observes biodiversity in Piracicaba (SP) the original status of areas possibly affected by industrial operations. At the Guilman Amorim Hydroelectric Plant, the Plan for Conservation of fish species in the area is under implementation, to be concluded in 2009. In addition, the local RPPN, located in an Atlantic Forest section with high recovery interest (Doce River Basin), is undergoing a systemic management – including periodical assessment of the vegetable coverage and fauna diagnosis –, implemented to accelerate the recovery of native species. With annual investments of R$ 79.2 thousand, between 2009 and 2012 ArcelorMittal Florestas will survey and monitor vegetation remnants and vulnerable or endangered plant species. The target is to stabilize reforested areas – environmentally and biologically. The project’s first stage started in April 2009 and will be concluded in March 2010, will analyze maps and aerial photos to identify locations for research. A major study in progress at ArcelorMittal Brasil is biodiversity monitoring In 2008, ArcelorMittal Tubarão performed maintenance services in the Green Belt, including tree pruning, fertilization and planting 10 thousand seedlings of several species, produced at the company’s own nursery, located in a 1,152-sqm area next to the company’s Environmental Education Centre. BIODIVERSITY>> Tornar o Aço mais Sustentável SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil BIODIVERSITY 30 Aiming at reducing the impact of winds, eucalyptus and acacia trees were planted to create a green barrier around the new Slag and Coal Yard next to the Sol Coking Plant and the North Gate of the unit. Another particularity of the Espírito Santo unit is the basin formed by eight lakes and a creek. A system of small streams interconnects the central lake to another five. Since 2004, hydrological monitoring of the lakes has been performed to assess physical, chemical and biological parameters. The results show different levels of pollution in the water of the two lagoons, impacting not only the others, but also external bodies receiving the water. Although ArcelorMittal Tubarão seem to be the origin of contamination, studies indicate that it actually comes from sanitary effluents from neighbouring districts through bodies of water located in the districts of Novo Horizonte and Habitar Brasil. In 2009, the target is to contact the Serra Municipal Administration, Cesan and Iema to report the flow of external effluents into the unit. Measures have already been taken by the agencies to correct the problems identified. At ArcelorMittal Vega, surveys show that the number of species and animal specimens has been increasing in recent years when compared to other local Habitats protected or restored Unit ArcelorMittal Tubarão ArcelorMittal Vega Size Type Situation* Partnership to protect or restore 102 ha Permanent Preservation Area Preservation area consisting of sandbank and mangrove with vegetation undergoing regeneration. The target for 2009 is to keep the same area None 35 ha Environmental Education Centre Reforestation with growth, native, fruit and riparian vegetation species undergoing regeneration. The target for 2009 is to keep the same area None 27 ha Mill Green Belt Ponds and creeks with vegetation. The target for 2009 is to keep the same area None 76 ha RPPN São Francisco do Sul Awaiting approval by IBAMA None ArcelorMittal Aços Longos – 253.50 ha UHE Guilman Amorim 182.6 ha RPPN Antônio Dias (MG) Permanent protection area, with private security, fire brigade Environmental Police Antônio Dias and Nova Era (MG) Legal Reserve Permanent protection area, with private security, fire brigade Environmental Police 518 ha Private Natural Heritage Reserve (RPPN) in Joao Monlevade Preserved Local Fire Dept. 382 ha Permanent Preservation Area in Juiz de Fora Preserved None 400 ha Legal Reserve Area in Juiz de Fora Preserved None ArcelorMittal Cariacica 59.81 ha Permanent Preservation Area Preserved None ArcelorMittal Florestas – Região Bahia 1,846 ha Permanent Preservation Area in the region of Teixeira de Freitas, Alcobaça, Caravelas and Prado (BA) Preserved None ArcelorMittal Florestas – Região Rio Doce 2,059 ha Permanent Preservation Area in the region of Coronel Fabriciano, Dionísio, Joao Monlevade, São José do Goiabal, Marliéria and São Pedro dos Ferros (MG) Preserved None ArcelorMittal Florestas – Centre-West Region 485 ha Permanent Preservation Area in the Centre-West Region – Abaeté, Bom Despacho, Dores do Indaiá, Martinho Campos Preserved and Quartel Geral (MG) None 1,358 ha Permanent Preservation Area in the North Region – Carbonita, Diamantina and Senador Modestino Gonçalves ArcelorMittal Monlevade ArcelorMittal Juiz de Fora ArcelorMittal Florestas – Região Norte * At the end of 2008 Preserved None ecosystems. In addition, 40 thousand sqm of areas used as debris storage during the construction works were reforested with native trees, and the remaining areas not used by the mill facilities are covered with vegetation. The largest impact on biodiversity identified by ArcelorMittal Brasil in consequence of its activities happened in marine habitats, in aquatic microbiological communities, and in fish communities in the mid-Piracicaba River. The directly affected section extends for 20 km along the river where there are a lentic environment (slow moving water) and a lotic environment, with altered running flow. The impact was deemed as irreversible. Total of endangered species* by risk of extinction level Critically endangered 3 Endangered 3 Vulnerable 5 Near threatened 0 Low risk 3 * All from aquatic habitats BIODIVERSITY>> Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil BIODIVERSITY 31 Protected or high biodiversity value areas ArcelorMittal Vega ArcelorMittal Cariacica Location: São Francisco do Sul (ES) Location: Vitória (ES) Total area of the company: 2.2 sq km Total area of the company: Own area managed by the company Position regarding the protected area: A 0.76 sq km RPPN area within the company’s borders, and a 0.75 sq km sandbank preservation area at the treated liquid effluent outfall (non-contiguous) Position regarding the protected area: Within the company’s premises and/or in surrounding areas Type of operation: Administrative offices and production area Type of operation: Administrative offices and production area Size of the unit: Size of the unit: 0.1 sq km 113 ha total area, with 0.78 ha built area, and 59.81 ha Permanent Preservation Area Biodiversity value: The RPPN features several biomes and a diversity of avifauna and flora. At the RPPN office, there is an Atlantic Forest native species nursery, including seasonings, vegetables and flowers, with average annual production of 500 thousand seedlings. The sandbank area is part of the Acaraí State Park and is considered the last untouched area in this biome Biodiversity value: Land ecosystem with 25 ha ArcelorMittal Tubarão ArcelorMittal Florestas – Região Bahia Location: Southern Bahia (municipalities of Alcobaça, Caravelas and Prado) Total area of the company: Land leased or managed by the company Position regarding the protected area: Within the company’s premises and/or in surrounding areas Type of operation: Forestry, charcoal production and administrative offices Size of the unit: 16,084.37 ha total area, with 8,843.52 ha built area, 1,946.37 ha APP and 1,946.37 ha Legal Reserve Area 46% of the unit area consists of Atlantic Forest native vegetation Location: Serra (ES) Total area of the company: 1,338 ha Biodiversity value: Position regarding the protected area: Permanent Preservation Area (APP) within the company’s premises, totalling 122 ha ArcelorMittal Florestas - Região Centro-Oeste Type of operation: Administrative offices and production area Location: Size of the unit: 13.38 sq km Region of Abaeté, Bom Despacho, Dores do Indaiá, Martinho Campos and Quartel General (municipalities located in the Center-West Region of Minas Gerais) Biodiversity value: There are eight lakes within the area. Six of them are interconnected, forming the Praia Mole creek Total area of the company: Land leased or managed by the company Position regarding the protected area: Within the company’s premises and/or in surrounding areas Type of operation: Forestry, charcoal production and administrative offices Size of the unit: 27,881.73 ha total area, with 24,221.32 ha built area, 485.57 ha APP and 485.57 ha Legal Reserve Area Biodiversity value: 20% of the area consisting of Cerrado (Brazilian savannah) native vegetation ArcelorMittal Juiz de Fora Location: Juiz de Fora (MG) Total area of the company: The entire own area managed by the company Position regarding the protected area: Within the company’s premises ArcelorMittal Florestas - Região Norte Type of operation: Administrative offices and production area Location: Size of the unit: 2,000 ha, with 13.5 ha built area, 382 ha Permanent Preservation Area, and 400 ha Legal Reserve Area Region of Carbonita, Diamantina and Senador Modestino Gonçalves (municipalities in Central Minas Gerais) Total area of the company: Land leased or managed by the company Land ecosystem with 471.15 ha Position regarding the protected area: Within the company’s premises and in surrounding areas Type of operation: Forestry, charcoal production and administrative offices Size of the unit: 37,353.19 ha total area, with 26,436.80 ha built area, 1,357.80 ha APP and 1,357.80 ha Legal Reserve Area. It also has a 6,000 ha RPPN Biodiversity value: 33% of the area consisting of Cerrado (Brazilian savannah) native vegetation. It features fauna and flora diversity rates compatible with the Conservation Units in the same region Biodiversity value: ArcelorMittal Monlevade Location: João Monlevade (MG) Total area of the company: The entire own area managed by the company Position regarding the protected area: Within the company’s premises and in surrounding areas Type of operation: Administrative offices and production area Size of the unit: 578.20 ha, with 60.20 ha built area and 518 ha RPPN Biodiversity value: Activities to be performed in response to indicator ArcelorMittal Florestas - Centre-West Region Location: Region of Abaeté, Bom Despacho, Dores do Indaiá, Martinho Campos and Quartel General (municipalities located in the Centre-West Region of Minas Gerais) BIODIVERSITY>> Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil BIODIVERSITY 32 Other initiatives to mitigate impacts ArcelorMittal Tubarão ArcelorMittal Florestas Scope Initiative Result/target Scope Initiative Result/target Noise pollution To reduce noise from vehicles Installation of 23 booths (for assessment of Individual Daily Duty) with acoustic lining; time reduction of engines working during loading; Measured average noise reduction: 5 dB Water usage To reduce specific water consumption at the forest and in seedling production Reduction of 11% at the forest and 30% in seedling production Effluents To recirculate 100% of the effluents in the Seedling Production Units In the Centre-West Region, recirculation volume reached 4,487 m³ of water Noise pollution To measure operational noise in Dionísio (MG) In 2008: Noise during daytime: 48 dB Noise during the night: 42 dB Scope Initiative Result/target Use of materials To reduce the specific consumption of natural gas Average 2008: 17.73 m³/t Target (July 2009): 17.20 m³/t Emissions Description Quantitative results Effluents To reduce the specific consumption of hydrochloric acid Average 2007: 16.89 kg/t Average 2008: 18.73 kg/t Target 2009: 16.00 kg/t ArcelorMittal Vega Scope Initiative Result/target Noise pollution To monitor noise in external areas Measurements indicate that the noise produced by the industrial process is within the limits established by law, with no discomfort for neighbouring community ArcelorMittal São Paulo Scope Waste Initiative To recycle plastic, paper and cardboard Result/target 17.16 t sent for recycling BBA Hortolândia ArcelorMittal Itaúna Scope Water usage BBA Contagem Initiative Result/target To collect rainwater 5,000 m³ To reduce water consumption From 1,708 m3 to 646 m3 To reduce industrial water consumption From 4.312 m3 to 2.752 m3 Scope Initiative Result/target Use of materials To recover packaging material: reels and pallets 26,010 units Emissions To use natural gas boiler 30% reduction in emissions of particulate material (128.33 mg/Nm³) Effluents To reuse the acid water from the gas washer to dilute pickling bath Approximately 1,036.8 m3/year Waste To reduce solid residues at the ETS 208.3 t/year Scope Initiative Result/target Use of materials To reduce lead consumption Reduction from 2.69 kg/t to 2.42 kg/t Effluents To treat industrial effluents at the ETS 100% of effluents treated in compliance with the law ArcelorMittal Juiz de Fora Scope Initiative Result/target Noise pollution To measure operational noise in Dionísio (MG) In 2008: Noise during the day: 51.10 db Noise during the night: 52.90 db ArcelorMittal Sabará BBA Osasco Guilman Amorim Hydroelectric Plant Scope Initiative Result/target Scope Initiative Result/target Waste To reuse 100% of the industrial waste (scales + granulated metal powder) at Monlevade steelworks Increase in total reused waste (scales + granulated metal powder) from 118,960 t/year to 776,380 t/year Effluents To increase the efficiency of the Sanitary ETS, based on legal parameters and Enzilimp use Improvement 95% BOD (2007-2008) and 70% COD Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SANCTIONS / ENVIRONMENTAL EDUCATION 33 Themes for the ArcelorMittal Brasil Award 2009 – Healthy Food: a delicious lesson Environmental education We are currently awaiting the Sao Paulo State Government’s arrangement for the purchase of the area. As part of the same agreement, the Company agreed to implement, together with the municipality of Piracicaba, the Santa Terezinha Natural Municipal Park in an area of approximately 40 ha. The park has already been inaugurated. Olhos d’Água Project complies with TAC with revegetation and replanting trees Environmental sanctions In 2008 ArcelorMittal Brasil operational units did not receive any significant fines or non-monetary sanctions for noncompliance with environmental laws and regulations. The company is now complying with the Agreement for Environmental Compensation (TCCA) and the Conduct Adjustment Agreement (TAC). The Agreement for Environmental Compensation resulted from the expansion of ArcelorMittal Piracicaba, in 2004, and its value was arbitrated in 0.5% of the total costs for the project implementation to be used in environmental compensation projects. ArcelorMittal Brasil aims to use the funds, which have already been deposited in a bank account, in the protection of muriquis, or woolly spider monkeys, a critically endangered species. It is the largest monkey in Latin American that lives only in the remaining Atlantic Forest of southeastern Brazil. The agreement involves the creation of an Integral Protection Conservation Unit, in a piece of land known as Barreiro Rico, in the municipality of Anhembi, in Sao Paulo. ArcelorMittal Brasil has already executed work on area demarcation and georeferencing on its own account. The Conduct Adjustment Agreement was also signed in 2004. In August of that year, part of the area of the Olhos D’Água Distribution Centre, in Minas Gerais, was invaded by 75 families that occupied the area in a disorderly manner and caused environmental damage. ArcelorMittal Brasil removed all the families and indemnified them for the evacuation.. In March 2006, still in fulfilment of the TAC, the Company submitted to the Environmental Public Prosecutor’s Office the Plan for Recovery of Degraded Area (PRAD) referring to planting and revegetation in the area degraded by the squatters, a Permanent Preservation Area on the banks of Bonsucesso Creek. Currently, 70% of the area is already planted. The Company also provided chemical grubbing and removal of rubbish left at the place, in accordance with what was established by the Plan for Recovery of Degraded Area. It is the company’s duty to spread knowledge about environmental preservation. ArcelorMittal Brasil develops environmental education programs in almost all its units. Some of the operational units have environmental education centres aimed at raising critical awareness and changing environmental behaviour. For this purpose, they are toured by students and people from the communities, so as to involve them. Some of the group’s units maintain Private Natural Heritage Reserves (RPPNs) where fauna and flora are researched. The Company is also concerned about entering into partnership agreements with public agencies aiming at developing projects to protect natural resources. Among a series of initiatives in environmental education, highlight goes to the Program for Environmental Communication, a partnership of ArcelorMittal Tubarão with public and private schools to provide teachers and students with reflections on environmental awareness. Only in 2008, 125 schools were involved and, since its beginning, the project has already benefited over 100 thousand students In 2008, a highlight in the Program for Environmental Communication was the 11th Meeting on Environmental Education, in June, promoting reflection on the importance of developing socioEDUCATION>> 2008 – Enter the climate! A reflection on global warming 2007 – Keeping an eye to the city 2006 – Ethics and environment 2005 – Conscious consumption for a better world 2004 – The best of me for the best of worlds. What I have done and how I can continue 2003 – The best of me for the best of worlds 2002 – What are the main ecosystems in your community? 2001 – All living beings are important 2000 – Rediscovering our waters 1999 – Ecological citizenship starts at home 1998 – Planet Earth: what can I do for it? 1997 – Wise consumption privileges life quality 1996 – Water: use wisely for continuous supply 1995 – Wastefulness: use wisely and you will lack nothing 1994 – Garbage, how to solve this problem? 1993 – River: source of life 1992 – The Company and the Environment Making Steel more Sustainable SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SANCTIONS / ENVIRONMENTAL EDUCATION 34 The ArcelorMittal Brasil Environment Award was created in 1992 and since then it has enjoyed the participation of over 4 million students environmental projects. The activities were intended for educators, students, parents and councils of partner-schools, municipal secretariats of education and environment of Vitória, Vila Velha, Serra and Cariacica, and the Espírito Santo State secretariat of education, in addition to company partners and employees. Around 500 people attended the meeting, held at the Environmental Education Centre (Ceam). With the theme “Environmental Education: we are part of a whole”, the program included playful activities focusing on environmental knowledge. The ArcelorMittal Vega Environmental Education Program has managed to reach a variety of publics (students, teachers, employees’ children, fishermen’s children, and the community), making people aware of environmental issues and raising their interest for protecting nature. Parts of the program: • School Contest – an activity involving 8 thousand students from Sao Francisco do Sul schools, raising their awareness on environmental preservation • Environmental Qualification for Teachers – environmental program for teachers of schools in São Francisco do Sul and region • Colours and Flavours – distribution of seedlings of flowers, fruit trees, seasoning, teas and vegetables among the community of Sao Francisco do Sul and employees of Condomínio Vega, an incentive for the creation of gardens at home The Award was created in 1992 and since then, it relied on the participation of 4,131,710 students. In the last ten years, 6,984 schools from 40 municipalities were involved. • Green with Life – alternative environmental education program for students at Sao Francisco do Sul schools and the ArcelorMittal Vega employees’ children. • Agreement with Casa Familiar do Mar – offering internship programs for students from the institution for complementary environmental education The program includes incentives for the creation of flower and vegetable gardens at home – with distribution of seedlings – and internship at the Private Natural Heritage Reserve of ArcelorMittal Vega. Another important initiative is the ArcelorMittal Brasil Environment Award, a writing and drawing contest developed in schools in the states of Bahia, Espírito Santo, Minas Gerais and Sao Paulo, aimed at promoting debate on environmental and sustainability issues. Over the school year, students develop activities on the proposed theme for the annual edition, incorporating reflection on citizenship and ethics. The theme for 2008 was Global Warming. Students read a publication about the ArcelorMittal Vega School Contest SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 35 VALUE GENERATION SUPPLIERS COMMUNITIES CULTURE SOCIAL PROMOTION SANTA CATARINA FLOODS HUMAN RIGHTS The companies forming ArcelorMittal Brasil have a long track record of action in the communities where they are present, through activities to promote or sponsor a wide range of projects intended to improve the population’s quality of life. The projects aim especially at education, social promotion, culture, health, environment and urban infrastructure. Enriching our communities Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil VALUE GENERATION 36 Value Added Statements (in R$ million) PARENT COMPANY In 2008, the company’s value added was R$ 6.86 billion, 15.4% higher than in 2007 Following the Company’s global guidelines, ArcelorMittal Brasil develops corporate policies and internal and external programs to ensure that its economicfinancial performance would benefit the communities where it is inserted. In addition, when establishing its business strategy, the Company is based on the diversification and quality of its products, services and markets and on the permanent search for competitive costs. The Company works so that a considerable amount of the value generated by its productive chain will benefit society at large, especially focusing on three aspects: education, health & safety, and social promotion. 2008 2007 2008 2007 13,409,044 7,559,198 24,733,031 19,335,154 Rebates, losses and recoveries of contingencies (24,801) (31,402) (55,472) (44,131) Revenues from own assets 592,569 142,133 1,122,188 1,443,517 Other operating revenues 125,994 29,280 272,404 93,010 14,102,806 7,699,209 6,072,150 20,827,550 Raw materials consumed (6,675,260) (3,745,051) (8,447,033) (7,869,205) Cost of goods and services (2,869,383) (1,225,176) (5,977,262) (4,079,971) (351,904) (301,808) (2,504,808) (1,023,026) - 150 (14,830) (5,272,035) (16,928,954) (12,987,032) (2,326,104) (844,709) (3,233,949) (1,738,605) 1,880,155 1,582,465 5,909,248 6,101,913 1,613,902 1,096,382 7,047 (388,997) 24,770 17,048 24,770 17,048 8,798 7,934 8,900 8,048 REVENUES Sales of products and services THIRD-PARTY INPUT Energy, services and other operating expenses Recovery (loss) in the realization of assets (9,896,547) Financial assistance received from government In 2008, ArcelorMittal Brasil received tax incentives in the amount of R$ 17,110,000.00 and subventions for investment, research and development in the amount of R$ 410 thousand. CONSOLIDATED Depreciation, amortization and depletion Net value added produced by the entity Value added received from transfer Result on investment in affiliates Dividends, interest of investment evaluated at cost Other financial income and rent Financial revenues and monetary variance TOTAL VALUE ADDED 1,600,072 65,335 908,397 205,662 3,247,542 1,186,699 949,115 (158,239) 5,127,697 2,769,164 6,858,363 5,943,674 529,854 267,357 1,232,475 1,021,631 9,318 9,557 17,464 22,484 106,128 48,018 234,053 195,814 EMPLOYEES Payroll and payroll taxes Management remuneration (note 24) Profit sharing with employees Pension plan Statements of resources generated in 2008 24% 19,396 7,466 35,840 29,239 664,697 332,398 1,519,832 1,269,168 Federal 627,932 447,948 1,881,991 2,046,132 State 138,034 145,666 388,720 356,124 8,524 3,961 23,185 6,994 - (272) (70,375) (183,198) 774,490 597,303 2,223,522 2,226,052 973,227 (434,030) 1,318,620 (870,878) 10,716 - 10,716 - TAXES 22% Municipal (-) Tax incentives FINANCERS Interests and monetary variance 22% 32% Capitalized financial charges Leases and rents 133,326 67,491 155,226 72,434 1,117,269 (366,539) 1,484,562 (798,444) 2,523,043 2,266,743 2,737,603 1,958,480 48,198 (60,741) (1,107,156) 1,288,418 2,571,241 2,206,002 1,630,447 3,246,898 5,127,697 2,769,164 6,858,363 5,943,674 SHAREHOLDERS Shareholders Taxes Employees Financers Interest on shareholders’ equity and dividends Retained earnings Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SUPPLIERS 37 Suppliers Service contracts include clauses aimed at reducing possible risks in the provision of services During the year, approximately 28% of the ArcelorMittal Brasil acquisitions of raw materials and others occurred in the regional or local sphere, thus ensuring job generation, tax collection and improvement of socio-economic conditions of the communities. This is offset by requirements included in supply contracts aiming at ensuring excellence not only in aspects such as quality and reliability, but also in socioenvironmental performance and the product impact. The document General Conditions for the Hiring of Services – available on the ArcelorMittal Brasil homepage – contains all the conditions which must be met by the suppliers before a service is hired. Among others, the potential provider’s management must assure good work conditions for employees, and preservation of the environment. The terms have also to comply with the Global Compact, therefore the service provider must internally adopt all necessary measures to support the UN framework, under the penalty of having the contract terminated or not even entered into. At the same time, suppliers and providers are supported by ArcelorMittal Brasil for their programs for training, qualification and development. With this assistance, they become more prosperous and competitive, and capable of meeting requirements based on socioenvironmental criteria. Contracts Due to the characteristics of the steel industry, consisting of long and complex productive chains, the large companies – major links in the industrial chain – have to extend to their suppliers the same care they internally dedicate to issues such as safety, health, human rights and environment. Requirements in contracts with suppliers ensure quality products Service contracts include clauses aimed at reducing potential risks in the provision of services. These clauses are drafted and controlled by ArcelorMittal Brasil’s Legal Area, which is also required to provide legal support to areas involved in the negotiation of mandatory clauses (labour, environmental, safety, fiscal), depending on the nature of different contracts. At the local level, units monitor the fulfilment of supply clauses, based on established criteria and governed by set standards which suppliers are well aware of, with monthly evaluation of deadlines and quantities, as well as certification of quality, environment, health and safety on the part of suppliers. Each plant establishes their own baselines for the companies and proposes corrective and/or preventive actions in case they fail to comply with their targets. In case of suppliers of critical raw materials for ArcelorMittal Monlevade (MG), there is also the statistical control of the process, as well as initiatives referring to the social responsibility of the contractor. SUPPLIERS>> Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SUPPLIERS 38 Prodfor The Program for Vendor Development and Qualification (Prodfor) is highlighted at the units of Tubarão and Cariacica (ES) developed or implemented internal processes to reduce the environmental impact of their activities, 60% articulated dialogues with their stakeholders to enhance internal management processes, and 53% developed products/ services with socio-environmental aspects and criteria. Participants attend group dynamics during a Tear Project meeting ‘Tear’ Project ArcelorMittal Brasil was one of the nine companies in strategic economic sectors selected to support the ‘Tear’ Program – Weaving Sustainable Networks (‘tear’ means loom in Portuguese), an Ethos Institute initiative in partnership with the Multilateral Investment Fund (Fumin) of the Inter-American Development Bank (IADB). And it achieved the best results among all participants. Held in the period 2006-2008, the program promoted the adoption of corporate social responsibility actions by small and mid-size businesses acting in the value chain of the sectors of sugar & alcohol, civil construction, electric energy, mining, oil & gas, steel & iron, and retail. In every segment, a large company was identified as having advanced experience in corporate social responsibility to serve as anchor for the program. ArcelorMittal Brasil, the anchor in the steel sector, worked with 15 small and mid-size businesses, fostering the incorporation or expansion of socially responsible management. Progress was assessed by means of the Ethos Indicators of Corporate Social Responsibility, and filled out the Brazilian Matrix of Evidence of Sustainability, which was jointly developed by SustainAbility, International Finance Corporation (IFC) and Ethos Institute. One half of the companies in the chain anchored by ArcelorMittal acquired new customers and prepared their Vision, Mission and Values to guide their actions. In addition, 100% of the companies prepared and implemented their Codes of Ethics, 73% created programs to reduce consumption of energy, water and paper, and implemented a selective waste collection. The results still evidenced that 67% In addition, 67% developed programs for employee qualification in sustainabilityand corporate responsibility-related topics, 93% of them stated that the implemented socio-environmental responsibility measures helped them improve their business relations with large companies, 87% declared to have improved business relations in their value chains, 87% perfected the dialogue and reduced conflicts with the anchor-company, and 100% improved productive or management processes. ‘Tear’ was awarded the Make a Difference Award 2008, by O Globo newspaper, in the category of Social Purpose. This award recognizes outstanding companies or projects for their social responsibility actions in the country. The ArcelorMittal Brasil case was published in the website of the World Business Council for Sustainable Development (WBCSD), a global association of 200 businesses working on matters of sustainable development, highlighting the ‘Tear’ Program as a reference in sustainability and social responsibility practice. The focus is to assist suppliers in the implementation of a quality management system, qualifying them to advance in preestablished contractual conditions of large companies, thus favouring their relationship. Prodfor consolidated and developed over time, now including certifications in environmental management systems, occupational health and safety, as well as an unprecedented certification in financial, fiscal and labour management. In 2008, the program evaluated and qualified other two suppliers: Acimex Transporte e Comércio (trade and transportation), including an award as highlight in the implementation of its Environmental Management System, and Hilub Produtos de Lubrificação e Abastecimento (lubrication and fuels). For 2009, other five companies were appointed. ArcelorMittal Tubarão Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil COMMUNITIES 39 Communities The operation of companies of the size of ArcelorMittal Brasil’s industrial units requires ongoing work on the relationship with neighbouring communities. The engagement is carried out through the promotion of economic, cultural and socio-environmental development of the areas. The community involvement really matters for the success of the ArcelorMittal Brasil undertakings. For that reason, the transparent dialogue with those populations guides the Company’s activities, searching for the joint development of programs to attain equally common objectives. The engagement processes include public audiences with local residents. As from 2008, the policy was emphasized with training focused on the improvement of relations with community associations, government agencies and other entities. Sispart Breakdown of investments in external social responsibility SECTOR Health and Science Education 697,116.00 4,579,731.98 Arts and Culture 825,006.83 Sports 813,709.75 Social Promotion Environment Total 2,078,379.29 499,342.20 9,493,286.05 Sispart One of the dialogue tools is the System of Interested Parties (Sispart), developed by ArcelorMittal Tubarão, aimed at providing timely and effective responses to demands, for instance, from associations of residents and non-governmental organizations. The good practice was adopted by the ArcelorMittal Foundation and is under implementation in all units of the ArcelorMittal Group, under the name Foundation Global Social Management (FGSM). Sispart uses a software resource that allows for the effective recording of all social responsibility-related requests that reach the company, reducing the time needed for assessment and approval of projects and enhancing control over funds. Following the data recorded and monitored by Sispart in 2008, the company determined the breakdown of an investment to the tune of R$ 10 million in external social responsibility initiatives, in in-house social programs, in support to specific initiatives – such as infrastructure works and promotion of technical and cultural events – and in systematic support to social projects proposed and developed by local NGOs. Dialogues in São Francisco do Sul An example of a successful action by ArcelorMittal Brasil to involve the communities in projects and ensure the sustainability of its undertakings was the installation of a unit for transformation of flat steel in São Francisco do Sul (SC), in 2002. The mere announcement of the ArcelorMittal Vega implementation generated a series of questions on the part of the population of the small coastal municipality – selected for its strategic location in regard to Mercosur countries, for the port infrastructure, and for its equidistant position from large automotive industries. The community was afraid of a large environmental and economic impact in the city, as São Francisco do Sul, close to celebrating 500 years, lived basically on the port, tourism and fishing, with absolute no industrial tradition. The questions focused on possible impacts to nature, and possible damages to tourism and fishing activities with the installation of a steelmaking facility. To clear up their doubts, ArcelorMittal Vega constituted set up an Advisory Council, with the presence of economic and community leaderships of Sao Francisco do Sul, which followed all stages of the unit implementation. It also created the Association São Francisco of the Future, in partnership with local entrepreneurs. The entity mapped necessities and improvement opportunities in environmental, social and economic IT class at ‘Casa Escola’ Project, ArcelorMittal Vega aspects. The work resulted in the local Agenda 21, a document with an inventory of ideas from the entire community on the sustainable development of São Francisco do Sul, to meet the needs of the municipality. Image auditing Another tool used at ArcelorMittal Brasil to monitor the impact of its activities on society is Image Auditing, whose results exceeded the target established in 2008. The survey was based on the Index for Quality of Exposure in the Media (IQEM), a comprehensive work to identify, qualify and assess news involving the company published in means of communication. The survey measures aspects such as reading criteria, based on the assessment of opinion makers carried out by CDN Estudos & Pesquisas, and editorial importance, based on the assessment of journalists. The average monthly IQEM stayed at 8.5 – against the set target of 7.5. The company also had the lowest negative visibility among the large steel industries in the country (2,895 occurrences, against 7,691 of the runner-up). In addition, an image survey is periodically conducted nationwide to verify the opinions of priority stakeholders – employees, communities, customers and entities – on the performance of ArcelorMittal. COMMUNITIES>> Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil COMMUNITIES 40 Transforming action In 2008, the ArcelorMittal Brasil Foundation celebrated its 20th anniversary. It is a non-profit organization intended especially for the formalization and development of the Group’s social responsibility, emphasizing works with communities living near the business units. Through partnership agreements with other entities, such as NGOs, public agencies and community leadership, the Foundation has strengthened its role as an integration network and increased the effect of its activities, endeavouring to identify and add value to local capacities and potential – which is key for the construction of a better world. The activities of the ArcelorMittal Brasil Foundation follow the same principles, for the current benefit of about 800 thousand people per year. Its major focus is the education of children and adolescents to become more conscious, productive and participative citizens, with programs comprehending education, culture and social promotion. Specific projects in the areas of health and environmental education complete its action and also contribute to improve the quality of life of the community. In order to attain effectively transforming, longterm results, the Foundation’s activities include transfer of methodologies to municipalities served. In 2008, the ArcelorMittal Brasil Foundation invested US$ 619,522.00 in education, a priority focus of the group’s social action. The resources were applied in the programs Quality Education (PEQ), Affective and Sexual Education (PEAS), Juvenile Entrepreneurship and Digital Citizenship, in addition to other initiatives intended for the health of children and youths such as Seeing is Living, Always Smiling, and Listening Well to Live Better. Youths and citizenship Two educational programs developed by ArcelorMittal Brasil, in partnership with public agencies and teaching institutions, share the same objective: to offer more opportunities for destitute young people to become citizens and perform their roles in the socio-economic development of their communities. One of them is the Socio-Educative Training Program (Procap), offering adolescents ages 15-18 internship programs at ArcelorMittal Tubarão provided they fulfill some requirements: to be resident in Serra (ES); to study in the public school network; and to have family income of up to two minimum wages. In addition to the experience of working in a large-scale company, the youth has access to training, assistance grant of one minimum wage, English classes, and professional courses provided by institutions such as Senai and Sesi. The opportunity can change the lives of the adolescents, as it was the case of the Benefit Control Technician with the Personnel Management area, Wesley Lima Ferreira. He joined Procap in June 2000 and was an intern up to September 2001. During the time, he attended several courses and continued his studies. Six months after leaving the company, he was called back as an outsourced employee. He has been working for ArcelorMittal Tubarão for almost four years now, and he is at the university. The objective of the Program for Affective and Sexual Education (PEAS), developed by the ArcelorMittal Brasil Foundation, is to contribute to the personal, social and productive development of adolescents, focusing on sexual and reproductive health. The initiative benefits 78 thousand students from public schools in the cities of Carbonita, Contagem, João Monlevade, Juiz de Fora, Itaúna and Vespasiano (Minas Gerais), Cariacica (Espírito Santo), Feira de Santana (Bahia) and São Paulo, contributing to reduce the number of unwanted pregnancy, sexually transmitted diseases, drug abuse, violence, and relationship problems. In the period 2000-2007, PEAS also qualified 755 educators, including technicians from municipal secretariats of Education, Health, Social Action and Justice. In 2008, PEAS qualified 67 educators, benefiting 2,106 students from nine municipalities. The investment was US$ 99,969.00. For 2009, plans call for the expansion of PEAS to other two municipalities in Minas Gerais, in addition to the qualification of a youth committee. PEAS is also applied as a socioeducational measure to minors in conflict with the law, the so-called Seeding Project. In 2008, Rio Piracicaba (MG) and Bela Vista de Minas (MG) followed the successful experience of Joao Monlevade and joined the project. The program Educating in Diversity created in 2008 to qualify educators aims at transforming pedagogical practice to foster the school inclusion of students with disabilities. Over the year, 23 educators attended 120hour courses with both theoretical content and practical and planning activities focusing on specialized educational attention. Student attends educational activity at the ArcelorMittal Brasil Foundation Quality Education Program The Quality Education Program (PEQ) was the program receiving the greatest share of investment in education from the ArcelorMittal Brasil Foundation, amounting to US$ 224,854.00. The Quality Education Program (PEQ) is intended to assist public schools in perfecting their pedagogical processes and school management, providing for a more effective and stimulating learning process, resulting in better performance of students and lower failure and drop-out rates. In 2008, PEQ involved 2,730 educators and benefited 24,898 students from 58 schools. For 2009, the program shall be expanded into another municipality, in addition to the current three where it is developed (Cariacica, Feira de Santana and Senador Modestino Gonçalves). For an idea of its effectiveness, in Feira de Santana (Bahia), the rate of students with gains in reading targets grew from 27% to 53% in 2008; in writing targets, it came from 13% to 40%; in communication from 39% to 59%, and in calculation from 26% to 46%. Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil CULTURE 41 Theatre performances promoted by Cultural Foundation of Sao Francisco do Sul (SC) Investments made with tax incentives (in R$) Resources from Rouanet Law (Income Tax) Culture The companies in the ArcelorMittal Brasil group develop specific cultural programs for their internal public, as well as for the employees’ families, retirees, pensioners, and young apprentices. In 2008, investment of ArcelorMittal Foundation’s own resources in culture amounted to R$ 917,307.48. The highlight was the ArcelorMittal Culture Program, putting together all the initiatives developed by the Foundation in the area of arts and culture. The focus is to expand the access of communities to cultural assets and services, and to promote projects for the formation of managers and artists. The program includes a free agenda of workshops and performances in the municipalities served by the Foundation. Between 2007 and 2008, ArcelorMittal Cultural supported initiatives in 28 municipalities: Belo Horizonte, Abaeté, Bela Vista de Minas, Bom Despacho, Contagem, Dionísio, Dores do Indaiá, Itaúna, Itabirito, João Monlevade, Juiz de Fora, Martinho Campos, Nova Era, Ouro Preto, Quartel Geral, Rio Piracicaba, Sabará, Santos Dumont and Vespasiano, (MG); Vitória and Cariacica (ES); Salvador and Feira de Santana (BA); São Paulo, Bauru, Hortolândia and Piracicaba (SP) and Rio de Janeiro (RJ). The program is carried forward with the support of the company’s Culture Committee, and its management is totally computerized through the Ctrl + Culture Belgo Bekaert Arames 976,000.00 ArcelorMittal Tubarão 3,529,810.31 ArcelorMittal Itaúna Resources from State Law (ICMS) Belgo Bekaert Arames Osasco 46,000.00 152,806.10 ArcelorMittal Piracicaba 2,066,831.22 ArcelorMittal Monlevade 1,270,501.64 ArcelorMittal Juiz de Fora 1,131,700.00 ArcelorMittal Sabará Total investments in culture 177,373.97 9,405,085.89 Total investments in culture 9,405,085.89 Resources from the Sports Law (Income Tax) ArcelorMittal Tubarão ArcelorMittal Itaúna Total investments in sports 948,002.50 11,000.00 959,002.50 Total 10,364,088.39 Note: ArcelorMittal Vega made no investments from tax incentives system, a software resource allowing for the integration of all information related to cultural projects, facilitating the processing of sponsorship requests, analyses, monitoring and evaluation of project results, meeting the demands of both the company and cultural promoters. At ArcelorMittal Tubarão, a highlight in cultural support was the Christmas Concert, promoted at the Camburi Beach on the evening of December 20. It involved about 1,000 professionals and relied on the participation of the company’s choir and presentations by social projects supported by the Company. The event featured the Espírito Santo Philharmonic Orchestra (Ofes), performing a repertoire that included classical music, Brazilian popular music and frevo. Other performances included music and dance. Talents of the Company, an itinerant project, focuses on valorization of art, stimulating the creativity and artistic development of employees in their leisure time, reducing stress and improving the organizational climate. A bus which has been converted into an art gallery, visits the ten lunchrooms of the steelworks with exhibitions of works of art by employees, young apprentices, retired people and pensioners. Up to the eighth edition, held in 2008, there were over 17 thousand participations. Between September and October, the company promoted the Musical Talent Festival, with the objective of revealing talent in the company, promoting contact with music, encouraging cultural production and valorizing local art. Participants contested in four categories: composer, singer, instrumentalist, and “Popular Jury”, in which the public chooses the best among all participants. In November, celebrating the 25 years of the company, a Gala Evening Festival was promoted, an event open to all employees with free admission. In two evenings, there were performances by Espírito Santo musicians and by the winners of the Musical Talent Festival held a month earlier. At ArcelorMittal Vega, a highlight is the National Museum of the Sea, in Sao Francisco do Sul, which was totally restored and modernized five years ago with an investment of R$ 480 thousand of Company funds. The museum featuring Brazilian vessels, aims at valuing the art and knowledge of those make their living at the sea. In partnership with the Cultural Foundation of São Francisco do Sul and the Association São Francisco of the Future, the Santa Catarina unit promotes, once a month, the São Francisco on the Movie, an event with exhibition of films for the community of São Francisco do Sul. With the initiative, the Company provides entertainment for the community and helps destitute families with the distribution of food donated as admission. The action benefits about 12 thousand people from the community. ArcelorMittal Vega supported five cultural projects in 2008, with investments of R$ 285 thousand. For 2009, the investment forecast for the cultural area is R$ 160 thousand. Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SOCIAL PROMOTION 42 V-Day Participants in Pró-Voluntário perform educational activity for children Social Promotion Among the initiatives connected with social promotion, a highlight is the Citizens of Tomorrow, encouraging individuals and companies to donate part of their due income taxes to Municipal Funds for the Rights of Children and Adolescents. Over 7 thousand donors – most of them employees with subsidiaries of ArcelorMittal Brasil – collected R$ 2 million in 2008, the best result ever in ten years of the initiative. The funds, managed by the ArcelorMittal Brasil Foundation, will be distributed to Municipal Councils for the Rights of Children and Adolescents from 28 cities located in five regions where ArcelorMittal companies operate in the country (MG, SP, ES, RS and BA), for use in social projects at the communities. Another distinguished initiative was the Program for Bone Marrow Donation, mobilizing, in the last two years, employees and their families as well as the entire network of suppliers and partners of ArcelorMittal Brasil. The objective was to increase the National Database of Bone Marrow Donors (Redome), of the National Cancer Institute (Inca), and to keep donors active and informed of the campaigns, with updated registers, strengthening the link among the parties. To this moment, there are 36 thousand registers (equivalent to 5% of the total), with estimated 300 thousand registers by June 2009. In total, ArcelorMittal Brasil has already invested about R$ 1 million in projects with Inca, including the expansion of the pediatric unit and the development of the internal program to recruit donors. To disseminate the practice of volunteering among its professionals, at least 11 units of ArcelorMittal Brasil programmed activities on December 5 to celebrate the International Volunteer Day, the V-Day. Further to collecting and donating goods, the core objective was to engage employees, stimulating the feeling of solidarity. The year 2008 was the first to have the date celebrated in an integrated way in almost all plants of ArcelorMittal in the world, involving approximately 7.6 thousand employees in 45 units. During the event, simple actions are promoted, but they make all the difference, ranging from school remodeling, house painting and visits to orphanages. The participating units are free to determine the scope of their activities. In ArcelorMittal Aços Longos, the V-Day involved 547 employees from nine units, benefiting 1,190 people. The volunteers worked for about 90 hours on tasks such as gardening, electrical repairs, painting and health attention for the benefit of the community, with the best results ever achieved when compared to previous years the celebration was held. SOCIAL PROMOTION>> Young people participating in the Shadow Entrepreneur for One Day visit ArcelorMittal Tubarão Shadow Entrepreneur for One Day In November 2008, seven adolescents experienced a different routine: they observed decision-making and employee recruitment, attended meetings and witnessed other administrative activities performed by a Personnel Manager from ArcelorMittal Tubarão. All thanks to the Shadow Entrepreneur for One Day program. The objective is to offer young people a realistic view of the job market, helping them understand how the knowledge acquired in the classroom is applied in the career, in addition to providing values for the development of characteristics required of professionals. The Shadow Entrepreneur for One Day is part of a series of activities planned by ArcelorMittal Tubarão to celebrate the International Volunteer Day (December 5). The initiative is replicated in other companies in the State of Santa Catarina, with the promotion of Junior Achievement, a non-profit association founded in 1919 in the USA dedicated to educating students about workforce readiness and entrepreneurship, especially in economics and businesses. The results calculated by Junior Achievement with the program Shadow Entrepreneur for One Day go beyond simple learning. The young people have the chance to network and, therefore, discover good opportunities for internships and jobs. Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SOCIAL PROMOTION 43 ArcelorMittal Tubarão financed the basic infrastructure for fishing and gastronomic activities at the Juara Lake Juara Lake Reuse generates income ArcelorMittal Sistemas donated eight computers to revitalize the computer room of Project ‘Vivo’, which gather 13 volunteer professionals from ArcelorMittal Aços Longos Planning and Assistance Management. The project is dedicated to Caminhos da Paz institute, in Sabará (MG), which supports 180 destitute children aged 6-16. The intermediary for the process was the ArcelorMittal Brasil Foundation. The project promotes local development, combining environmental preservation with job and income generation. This is the vector of the Sustainable Development Project of the Juara Lake, encouraging local tourism, handicraft and fish farming activities through the associative work of inhabitants in the region of the municipality of Serra (ES). Developed in partnership with the Municipal Secretariat for Economic Development of Serra (Sedec), the priority of the Project for Sustainable Development of the Productive Chain of Recyclable Material Reuse is to restructure Recuperlixo, the main association of refuse collectors in the municipality of Serra (ES). At ArcelorMittal Tubarão, the solidarity campaign started three days earlier, for the collection of non-perishable food among employees and contractors interested in participating. The donations were sent to Banco Verde Vida, a project of the Vida Nova Vila Velha Movement (Movive) which is supported by the Company, benefiting families living in the Aribiri River Basin who are helped by trading waste for Green Currency for shopping at the Solidarity Supermarket. One of the achievements was the creation of the Fishermen Association of the Juara Lake – APLJ, a non-profit organization aimed at generating job and income for the local fishermen community through sustainable practices in the exploration of the Juara Lake natural resources. ArcelorMittal Tubarão supported the initiative by financing infrastructure improvements for fishmongers’ facilities. The company has also invested in the construction of a restaurant managed by the fishermen on the banks of the lake. It contributed to add value to the product and also to expand leisure and tourism options in the region. ArcelorMittal Vega created an Enrolment Committee to register those interested in performing volunteer work. Enrolled employees performed activities for screening, set assembly, and distribution of supporting material in the areas affected by floods in the State of Santa Catarina at the end of November, or for the assembly and distribution of kits with food and toys for the Fraternal Christmas Campaign benefiting destitute communities in São Francisco do Sul. Improvements in the quality of life are already noticeable: average monthly income is now around R$ 1,000.00. The project also contributed to improve the infrastructure of the district that now has paved streets, better urban transportation system and landscape planning. Fishermen activities generate income for the community of Juara Lake ArcelorMittal Tubarão supported the necessary conditions for the development of the entire reuse chain by constructing a shed for waste screening. It increases the added value of marketed waste and, consequently, the monthly average income of the workers. Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil SANTA CATARINA FLOODS 44 Santa Catarina floods ArcelorMittal Vega was very active in its attempt to relieve the impacts of the floods that affected Santa Catarina at the end of 2008, leaving a large number of victims and homeless people. To assist affected families, the unit contacted the Association of Volunteer Social Work of Sao Francisco do Sul (Volunteer Fire Brigade) to get information about the situation of the city and the region. In Sao Francisco do Sul, the most affected district was Majorca. The situation in the municipality of Itapoá was critical too. The immediate local need was to supply material for the firemen to rescue the victims, such as personal protective equipment (PPE) and fuel. Based on the information, ArcelorMittal Vega started an action plan involving the participation of the internal public and the communities, as well as the support of the ArcelorMittal Brasil group. Internal campaign This focused on the collection of clothes, food, and cleaning material. The collected items were sent to the Municipal Secretariat of Housing, Social Development and Citizenship in São Francisco do Sul, to be donated to the community of Majorca. The movement, occurred on November 28, collected six boxes of clothes and nonperishable food. Firemen provide assistance after destruction caused by floods in Santa Catarina External action Itapoá Managers contacted partners, suppliers and customers to request their support. In response, there was a mobilization for a collection campaign, the development of information material on the care and prevention of diseases associated with floods (cleaning water tanks, care with drinking water and fresh food); the donation of medicines, the assistance through volunteer work, money deposits in Civil Defense’s bank account, and even a contribution to logistics with trucks to transport donated items. On December 11, the municipality of Itapoá, one of the most affected by rainfalls in the north of the state, received the assistance of ArcelorMittal Vega. About R$ 50 thousand were invested in the acquisition of 2,515 items including cleaning material, mattresses, pillows, sheets and towels, which, according to the Civil Defense, were the most needed items. Fire Department The Association of Volunteer Social Work of Sao Francisco do Sul received six complete sets of special fire fighting apparel (boots, helmets, trousers, jackets, balaclavas and gloves) and fuel to the value of R$ 10,000.00 to assist in the rescue of victims in the region. São Francisco on the Movie Held in the last weekend of the month by ArcelorMittal Vega, the project “São Francisco on the Movie” consists of movie sessions for the community of São Francisco do Sul. The admittance fee is one kilogram of non-perishable food. In the edition of November 2008, the collected food was sent to the Municipal Secretariat of Housing, Social Development and Citizenship in Sao Francisco do Sul, to be donated to the Majorca district residents. Corporate action ArcelorMittal Brasil opened a current account on behalf of the “Fund for the Reconstruction of Santa Catarina”, with an initial deposit of R$ 100,000.00. In addition, an Internal National Campaign requested donations from employees of units all over Brazil. At the end, ArcelorMittal Brasil and ArcelorMittal Vega donated together about R$ 170 thousand. Approximately two thirds of the amount was intended for the acquisition of building material for 15 new houses in the municipality of Gaspar. The families benefiting were selected by the Municipal Secretariat of Social Development and the local Rotary Club, with the approval of ArcelorMittal Vega. The land for the construction of the houses will be donated by the municipal administration and the building work will be done by the community under the supervision of the entities involved. Items donated to the municipality of Itapoá DESCRIPTION QUANTITY TOTAL VALUE (R$) Single mattress 130 9,100.00 Double mattress 130 20,927.40 4-piece double sheet set 130 5,967.00 4-piece double sheet set 130 4,212.00 Towel 520 3,484.00 Bleach (5-liter container) 260 733.20 Broom 260 741.00 Squeegee 130 2,600.00 15-liter bucket 260 1,154.40 Rough cleaning cloth 260 286.00 Bar soap package 175 633.50 Cleaning cloth package 130 169.00 2,515 50,007.50 TOTAL Enriching our communities SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil HUMAN RIGHTS 45 Respect for human rights ArcelorMittal Brasil maintains a policy for protection of human rights aimed at contributing for the development of society through an action governed by the best practices in social responsibility. The group propagates these concepts and works to align its partner’s management with them, and expects that its stakeholders will share the vision of a sustainable and fair society, following the principles of: Conduct The maintenance of ethical, transparent and reliable relations between ArcelorMittal Brasil and its stakeholders is one of the pillars for the sustainability of its businesses. This is one of the reasons behind the creation and application of the Code of Conduct, establishing rules and procedures required from the professional whenever acting on behalf of the company. The contents, approaching topics connected with ethical issues, corruption and human rights, is the subject of training offered to 100% of the employees. ArcelorMittal maintains a Policy of Reports of improper behaviour on issues related to accounting, auditing, finance, or involving bribery, setting up an open channel for employees to report irregularities to their immediate supervisor, to the legal department or to internal auditing, without exposing themselves. Should the agent of the illicit behaviour be one of these people, the denouncement may be reported to higher hierarchical levels anonymously. In 2008 there were no reports of material cases or lawsuits where ArcelorMittal Brasil or employees acting on its behalf were involved in cases of corruption. During the year the company continued the work of assessing corruption risks, scanning 100% of the units of the group in the country, which had started in 2006. In turn, the group updated managerial procedures for dealing with ethical issues and planned new training sessions and communication plans for related policies, focusing on managers, to be accomplished during 2009. However, there was one lawsuit related to improper behaviour. A former employee filed an action for alleged sexual harassment. After the presentation of evidences and witnesses, the court ruled that her accusations were baseless and dismissed the case. She appealed, pending decision in second instance. Upon learning of the case, ArcelorMittal Brasil reinforced its preventive action with employees, guiding them on the consequences of conduct that might be considered illicit. • Refusing the use child labour • Refusing the use of compulsory labour • Providing a safe and healthy workplace to employees • Respecting the right to freedom of association of its employees’ unions and class entities, recognizing collective bargaining as labour relations • Not being involved in incidents of discrimination in hiring, dismissal or promotion of employees, and not supporting its use • Not being involved in physical punishment or verbal abuse, and not supporting their use • Complying with applicable law regarding working hours • Making sure that salary paid is sufficient for the basic needs of employees Relationship with indigenous communities Until 2008, ArcelorMittal Brasil was never involved in lawsuits or even in complaints to the authorities regarding conflicts of corporate interests and the rights of indigenous communities. In February 2009, a maintenance audit conducted by the Forest Stewardship Council (FSC) found that ArcelorMittal Florestas has operations as close as 8.5 km to indigenous areas in the Center-Western region of Minas Gerais. In view of this, the company, which was not aware of the proximity, will comply with a resolution by the National Council for the Environment that says that “the authorization to explore forests and succeeding formations involving management or suppression of the forests and succeeding formations in rural real estate in a range of 10 km from delimited indigenous lands shall be preceded by georeferenced information to the Indian National Foundation (Funai)”. In compliance with the FSC, ArcelorMittal Florestas warrants the indigenous people the right to possess and manage the resources of their territories, giving them the right to control the activities of forest management in those areas, except if they assign such control, in free and willful manner, to other agents. The document also clarifies that the activities of forest management may not threaten or reduce, directly or indirectly, the resources or rights of possession of indigenous peoples, and it is necessary to clearly identify and protect the areas of cultural, ecological, economic or religious relevance to those peoples. It is also warranted a reward for the application of management techniques, which should be formally agreed upon. SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 46 GRI CONTENTS GLOSSARY AWARDS AND RECOGNITIONS CREDITS ArcelorMittal Brasil believes that the Sustainability Report 2008 complies with the application level A of the GRI guidelines. Report Profile Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil GRI CONTENTS 47 GRI - Table of Contents Global Compact Principle Page Strategy and Analysis 1.1. Statement from the most senior decision maker 3 1.2. Impacts, risks, and opportunities 2 and 6 Organizational Profile About the Report This sustainability report, prepared according to the Global Reporting Initiative (GRI) guidelines, presents the ArcelorMittal Brasil’s strategies and experiences related to the challenges of the national and international steel industry, the practices of corporate governance, the investments in personnel, the search for sustainability in steel production, and social and economic attention to the populations living in the localities where its subsidiaries operate. Its contents have been defined through analysis of surveys conducted in 2008 and submitted to the transversal and permanent working group, responsible for the information contained in this publication. 3.10. Explanation of the effect of any restatements Re-statements are accompanied by explanatory notes 3.11. Significant changes from previous reporting periods None GRI Content Index 3.12. Location of standard disclosure 47 Assurance 2.1. Name of the organization 2 2.2. Primary brands, products, and/or services 2 2.3. Operational structure 2 2.4. Location of organization’s headquarters 2 4.1. Governance structure 2.5. Countries where the organization operates 2 4.2. Identification of the highest executive officers Corporate website 2.6. Nature of ownership and legal form 2 2.7. Markets served 2 4.3. Independent and/or non-executive members Annual Report 2.8. Scale of the reporting organization 5 2.9. Changes during the reporting period 5 2.10. Awards received in the reporting period 52 Report Parameters Report profile 3.13. External assurance None Governance, Commitments and Engagement Governance 8 Home – Company – Management 4.4. Mechanisms for recommendations to the highest governance body 4.5. Linkage between compensation / economic and environmental performance Bonus based on economic, environmental, social and management targets 4.6. Processes to ensure conflicts of interest are avoided 8 3.1. Reporting period for information provided Jan 1 to Dec 31, 2008 4.7. Qualifications and expertise of the members 8 3.2. Date of most recent previous report Jan 1 to Dec 31, 2007 3.3. Reporting cycle Annual 4.8. Internally developed statements of values, codes, and principles 8 4.9. Procedures of the highest governance body 8 4.10. Processes for evaluating the highest governance body’s own performance 8 3.4. Contact point for questions 52 Report Scope and Boundary 3.5. Process for defining report content Defined by the permanent internal work group 3.6. Boundary of the report 3.7. Specific limitations on the scope 47 GRI protocols Commitments to External Initiatives 4.11. Precautionary approach Brazilian operations 3.8. Basis for reporting 3.9. Data measurement techniques and the bases of calculations 47 Annual Report 47 4.12. Social charters, principles, or other initiatives 8 47 4.13. Memberships in associations 8 GRI CONTENTS >> Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil GRI CONTENTS 48 Stakeholder Engagement EN5. Energy saved 8 and 9 22 4.14. List of stakeholder groups 2 EN6. Eco-efficient products and services 8 and 9 22 4.15. Basis for identification and selection of stakeholders 2 EN7. Initiatives to reduce indirect energy consumption and reductions achieved 8 and 9 22 and 23 4.16. Stakeholder engagement 2 4.17. Key topics and concerns raised through stakeholder engagement 2 Water EN8. Total water withdrawal by source 8 20 EN9. Water sources affected 8 20 EN10. Water recycled and reused 8 and 9 20 EN11. Protected areas 8 31 EN12. Impacts on biodiversity 8 29 EN13. Habitats protected or restored 8 30 EN14. Strategies for managing impacts on biodiversity 8 30 EN15. IUCN Red List species 8 29 and 30 PERFORMANCE INDICATORS Management Approach Global Compact Principle EC1. Economic value generated and distributed EC2. Risks and opportunities due to climate change Biodiversity Page 36 7 25 EC3. Defined benefit plan 12 EC4. Financial assistance received from government 36 Market Presence EC5. Standard entry level wage compared to local minimum wage 12 EC6. Spending on locally-based suppliers 37 EN16. Direct and indirect greenhouse gas emissions 8 23 and 25 EC7. Local hiring 40 EN17. Other relevant indirect greenhouse gas emissions 8 25 EN18. Initiatives to reduce greenhouse gas emissions 7, 8 and 9 25 EN19. Emissions of ozone-depleting substances 8 25 EN20. NOx, SOx, and other air emissions 8 25 EN21. Water discharge 8 21 EN22. Total weight of waste 8 26 EN23. Significant spills 8 27 EN24. Transported waste deemed hazardous 8 27 and 28 EN25. Water bodies and related habitats affected 8 29 Indirect Economic Impacts EC8. Development and impact of infrastructure investments 40 ENVIRONMENTAL PERFORMANCE Management Approach Global Compact Principle Page Materials EN1. Materials 8 24 EN2. Materials used that are recycled input materials 8 and 9 24 Energy EN3. Direct energy consumption 8 22 EN4. Indirect energy consumption 8 22 Emissions, Effluents, and Waste Products and Services EN26. Initiatives to mitigate environmental impacts of products and services 7, 8 and 9 EN27. Products and packaging materials that are reclaimed 8 and 9 19 and 32 24 GRI CONTENTS>> Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil GRI CONTENTS 49 Compliance EN28. Monetary value of significant fines 8 24 and 33 Transport LA11. Programs for skills management and lifelong learning 12 and 15 LA12. Performance and career development reviews 12 and 15 Diversity and Equal Opportunity EN29. Impacts of transporting 8 23 and 24 Overall EN30. Environmental protection expenditures 7, 8 and 9 LA13. Composition of governance bodies 1 and 6 11 and 13 LA14. Ratio of basic salary of men to women 1 and 6 12 19 SOCIAL PERFORMANCE – HUMAN RIGHTS SOCIAL PERFORMANCE - LABOUR PRACTICES AND DECENT WORK Management Approach Management Approach Global Compact Principle Global Compact Principle Page Page Investment and Procurement Practices Employment LA1. Total workforce by employment type and region LA2. Rate of employee turnover 11 6 LA3. Benefits provided to employees 11 12 1, 2, 3, 4, 5 and 6 37 HR2. Percentage of suppliers that have undergone screening 1, 2, 3, 4, 5 and 6 and actions taken 37 and 38 Non-discrimination Labour/Management Relations LA4. Collective bargaining agreements 1 and 3 LA5. Minimum notice period(s) regarding operational changes After meeting with unions (usually in September), significant changes are informed and discussed 45 HR4. Incidents of discrimination 1, 2 and 6 45 1, 2 and 3 45 1, 2 and 5 37 and 45 1, 2 and 4 37 and 45 Freedom of Association and Collective Bargaining HR5. Operations in which freedom of association and collective bargaining may be at risk Child Labour Occupational Health and Safety LA6. Workforce represented in formal health and safety committees 1 and 3 16 LA7. Occupational diseases, lost days, and work related fatalities 1 16 LA8. Serious diseases 1 16 6 11 and 15 Training and Education LA10. Average hours of training HR1. Percentage and total number of significant investment agreements that include human rights clauses HR6. Operations identified as having risk of child labour Forced and Compulsory Labour HR7. Operations identified as bearing risk of forced or compulsory labour Indigenous Rights HR9. Violations involving rights of indigenous people 1 and 2 45 GRI CONTENTS >> Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil GRI CONTENTS 50 SOCIAL PERFORMANCE - SOCIETY Management Approach SECTOR INDICATORS – MINING AND METALS Global Compact Principle Management Approach Page Global Compact Principle Page Revenue Capture, Management, and Distribution Community SO1. Management of impacts of operations on communities 37 and 39 Corruption MM1. Local economic contribution and development impacts 37 MM2. Value added disaggregated 36 Biodiversity SO2. Units analyzed for risks related to corruption 10 45 SO3. Employees trained in anti-corruption policies 10 45 EN23. Land owned, leased, or managed for production activities 30 SO4. Actions taken in response to incidents of corruption 10 45 MM3. Biodiversity management plans 29 Public Policy SO5. Participation in public policy development and lobbying Materials 1 and 5 45 Compliance SO8. Fines and non-monetary sanctions for noncompliance with laws and regulations. 24 MM4. Percentage of products derived from secondary materials 24 MM5. Assessing the eco-efficiency 26 MM6. Management of residues 26 Community SOCIAL PERFORMANCE – PRODUCT RESPONSIBILITY Management Approach Global Compact Principle Page PR1. Impacts assessed 19 MM8. Artisanal and small-scale mining No involvement in 2008 PR3. Product and service information required by procedures 19 PR4. Non-compliance 19 PR5. Practices related to customer satisfaction 19 24 Resettlement No policies and no such activities in 2008 Operations Closure MM10. Operations with closure plans Product and Service Labelling 6 Land Rights MM11. Local communities’ land and customary rights 45 Emergency Preparedness Marketing Communications Website MM12. Preparing for emergency situations 29 Health and Safety Compliance PR9. Fines concerning the provision and use of products 1 MM9. Resettlement policies and activities Customer Health and Safety PR6. Adherence to laws MM7. Incidents affecting communities None MM13. New cases of occupational disease No cases of new diseases in 2008 Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil GLOSSARY 51 Glossary Added Value: measures the wealth generated by the company by analyzing the difference between sales revenue and the cost of resources acquired from third parties. Altered area: environmental area changed by industrial use. Blast furnace process: process for reducing iron ore at high temperatures, fed by a mixture composed mainly of coke (derived from coal), whose final product is pig iron (the raw material for steelmaking). CFC (chlorofluorocarbon): are synthetic chemical substances used in sprays, refrigerator gases, solvents and fire extinguishers. Corporate governance: system by which companies are run and monitored, including decision-making and the relationship between shareholders, Boards of Directors, management, independent auditors and fiscal council. Effluent: any type of liquid that leaves a system, such as pipes, channels or reservoirs. Industrial effluents are defined as the discharge of pollutants by industrial sources. Effluent standard is the quantity and quality of effluents allowed to be discharged into a body of water. FSC: aacronym for Forest Stewardship Council, an organization that certifies the responsible management of Brazilian forest using established criteria for ecological safeguards, social benefits and economic viability. Global Reporting Initiative (GRI): an international agreement with the mission of creating and disseminating the Guide for Preparing Sustainability Reports, applicable globally and voluntarily by organizations that wish to disclose the economic, environmental and social aspects of their activities, products and services. EBITDA: Earnings Before Interests, Taxes, Depreciation and Amortization. Demonstrates the company’s performance by only taking into consideration the gains generated by its main activity. GMB: acronym for Group Management Board, which meets every week to manage the ArcelorMittal Group operations. It includes the implementation of strategies set forth by the Board, which closely overviews the works, and the monitoring of the adoption of measures determined for each regional business units. Ecotoxicity: quality control indicator for effluents and impacts on aquatic organisms. Greenhouse effect: natural phenomenon that keeps the Earth warm, preventing sun rays from being deflected from the Earth and into space. However, due to the increase emissions of CO2 and other gases, such as methane and CFC, the greenhouse effect has been on the rise, leading to the global warming phenomenon. Ibama: Brazilian Institute for the Environment and Renewable Natural Resources. NGO: a non-governmental organization whose non-profit activities are focused on public actions, especially on services considered important for social development. Opacity: measurement of the coefficient of light absorption of emitted gases; the more opaque, the higher the presence of particulate matter. A dark smoke indicates pollution caused by improper maintenance of engines. Public hearing: meeting with society representatives for presenting and discussing projects that impact the environment and which is part of the licensing process of these projects by environmental agencies. Rehabilitated area: environmental area rehabilitated by remediation, decontamination or contention/isolation of contaminated areas, allowing new uses without any risk to human health and ensuring economic productivity and social functions. Specific consumption: measurement of the consumption of an element (such as energy or water) for obtaining a specific product. Steel slag: steelmaking byproduct resulting from the accumulation of various elements that should not be present in the final product. It is composed of various oxides, such as CaO and MgO, and is expandable due to their chemical reactions. Its limitations are basically: heterogeneity, high content of free lime and absence of hydraulic activity. Stakeholders: interested parties, that is, individuals or organizations involved directly or indirectly, or whose interests could be positively or negatively affected by the company’s activities. Sustainability: according to the document entitled Our Common Future, also known as the Brundtland report, of the United Nations (UN), published in 1987, is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” UN: acronym for United Nations, international institution formed by sovereign states created with the goal of promoting peace and safety in the world, fostering cordial relations between nations; promoting social progress, better living standards and human rights. Report Profile SUSTAINABILITY REPORT 2008 ArcelorMittal Brasil 52 Awards and Recognitions The Best Companies to Work for (Top 10) – Guia Você S/A and Revista Exame The Best in People Management – Valor Econômico newspaper Época Prize on Climate Change (Leading Company category) – PriceWaterhouseCoopers and Época magazine Environmental Benchmarking Ranking Brazil – Mais Atitude Instituto Socioambiental Minas Gerais Award on Environmental Management – Brazilian Quality Union (UBQ) Credits Action for Water Award – Inter-municipal Council, Drainage Basins of Rivers Piracicaba, Capivari and Jundiaí (PCJ) Ecology Award 2008 – Espírito Santo State Secretariat of the Environment and Water Resources and State Institute for the Environment ArcelorMittal Brasil Findes Consuma Award 2008 (Social Responsibility category) – Federation of Industries, Espírito Santo Corporate Center: Av. Carandaí, 1115 CEP 30130-915 – Belo Horizonte – MG – Brazil Tel. + 55 31 3219-1122 Socio-Environmental Commitment Certificate – Instituto Falcão Bauer de Qualidade IFBQ Ecological Label – Instituto Falcão Bauer da Qualidade Green Profile Medal – partnership Prosul Consultoria Ambiental, Editora L. and Casa da Moeda do Brasil Fritz Muller Prize (Environmental Management category) – Santa Catarina Foundation for the Environment (Fatma) Expressão Award on Ecology (Tourism and Life Quality category) – Editora Expressão ADBV Citizen Company Award (Environmental Preservation category) – Brazilian Association of Sales and Marketing Managers, Santa Catarina Ilafa Advertising Award 2008 (Web Page category) – Latin American Iron and Steel Institute (Ilafa) Make a Difference Award (Social Purpose category) – O Globo newspaper Health and Safety Top Management Award (Bronze category) – Brazilian Safety Agency UN Human Settlements Programme, for practices improving living conditions of populations – United Nations General Coordination: Office of Communication and Institutional Relations Information and indicator: Working Group – Communication for Sustainability Contents, edition and design: Report Comunicação Photos: ArcelorMittal Archives Specific or complementary information for each subsidiary may be obtained on the Internet at www.arcelor.com/br. For questions, comments or complaints, please contact the Office of Communication and Institutional Relations, ArcelorMittal Brasil, email comunicacao.corporativa@arcelormittal.com.br