Safety at Kazakhstan's mines is back in the spotlight after 2008 opened with a disaster that claimed 30 lives the second large-scale fatal mine explosion within 18 months. Authorities have acted quickly to stem an outcry over safety standards, ordering the company operating the mines, steel giant ArcelorMittal, to improve safety procedures.
A government commission investigating the accident at the Abay mine in the Karaganda Region in Kazakhstan's industrial heartland reported its preliminary findings on January 29, just 18 days after the accident. The likely cause was a methane explosion that started a fire, according to the preliminary report. It went on to make 41 recommendations to ArcelorMittal Temirtau which operates eight mines in Kazakhstan to bolster safety. They include installing gas monitoring machines and drawing up a methane-extraction program.
The report assigned blame for the blast to three technical staff, including the mine's chief engineer, Nikolay Tsvetkov. Emergencies Minister Vladimir Bozhko singled out ArcelorMittal Temirtau's CEO, Satish Taparia, as responsible for safe working conditions, raising the possibility that a senior foreign company executive may face prosecution for safety breaches. The investigation can only be completed when the accident site, currently sealed off, is reopened.
This is not the first time ArcelorMittal has come under fire over mine safety. An explosion at its Lenin mine in September 2006 left 41 dead. In the aftermath of that tragedy, eight of the company's middle managers and technical staff received prison terms of up to three-and-a-half years for safety violations. Some victims' families expressed dissatisfaction that senior executives' heads did not roll. [For background see the Eurasia Insight archive].
After that accident, ArcelorMittal run by London-based billionaire Lakshmi Mittal - launched a $70 million dollar investment program in the mines. Some 50 percent of planned new equipment had been purchased, but "unfortunately we are clearly running late," Kanif Kashapov, technical director at ArcelorMittal Temirtau's coal department, said in remarks quoted by the Kazakhstan Today news agency on January 13.
Safety is the company's top priority, its president, Mittal said after the Abay explosion: "I deeply regret that there has been an accident in one of our mines in Kazakhstan," said Mittal, who visited family members of some of the victims. "There has been a significant capital expenditure, change in operating practices and a change in management to improve health and safety at our mines in Kazakhstan over the past years."
ArcelorMittal did not respond to requests for comment, but in 2007 a spokesman told EurasiaNet that since acquiring the mines in 1996 the company has invested $2 billion, and has hired the DuPont consultancy to conduct safety training.
ArcelorMittal has also been granted a $100-million-dollar EBRD credit to improve safety. "The loan is being spent on modernization (including modern methane monitoring systems and ventilation systems) and on training to introduce a new health and safety culture," an EBRD spokesman told EurasiaNet by e-mail.
Some non-governmental organization watchdogs are calling for better oversight of funds spent by ArcelorMittal on safety. "[Mittal] comes here; he says he's allocating huge money, but he doesn't oversee where it goes," Natalya Tomilova head of the Committee for Miners' Families, told EurasiaNet by telephone from the mining town of Shakhtinsk.
Tomilova also says money actually received by families of the victims of the 2006 Lenin mine accident was far below the $3.4 million ArcelorMittal said it paid out. Corruption is widely believed to be responsible for the discrepancy. "Lakshmi Mittal is fulfilling his commitments to us; he allocates huge sums but it's being stolen here," Tomilova said "Now we'll see how the commitments are fulfilled at Abay mine."
ArcelorMittal has pledged to pay out some $7 million for the Abay tragedy, with families of the deceased receiving 10 years' salary plus one-off payments for education and housing, as well as assistance in repaying bank loans.
The threat of industrial unrest receded after negotiations ended on January 26 with a deal to raise salaries. "This means that the salary of a miner or tunnel worker will be in the region of 200,000 tenge [per month] if coal extraction targets are met," Marat Mirgayazov, head of the Korgau miners' union, said in remarks quoted by Interfax-Kazakhstan. The figure worth roughly $1,600 - is well above average national salaries.
Dissatisfaction over working conditions has not been confined to ArcelorMittal miners and affiliated staff. Industrial unrest sparked by the Abay mine accident spread to a facility owned by the Kazakhmys copper giant in the town of Satpayev, also in Karaganda Region, with reports of miners downing tools and refusing to leave the pit after their shift, demanding better pay and conditions.
A Kazakhmys spokesman was unable to confirm or deny reports that miners had spent the night in the mine, but said the incident was localized. "There wasn't a strike; there were some discussions with some workers about some conditions. It's not ongoing," he told EurasiaNet by telephone from London. Kazakhmys's management signed a deal with trade unions February 3, Interfax-Kazakhstan reported, raising miners' salaries by around 50 percent to 200,000 tenge.
On January 24, President Nursultan Nazarbayev visited Zhezkazgan, site of Kazakhmys's headquarters, to attend a forum on corporate responsibility. The president had some pointed words for mining executives. "I demand that more attention be given to laborers' working conditions and safety procedures be rigorously observed," he said. "Above all both the legal and moral responsibility for people's lives and health lies on you."
Nazarbayev added that the state was taking on ever more social obligations, and called on companies to follow suit. "Now, it is the turn of business," he said. "The need is now ripe to define and adopt principles of corporate social responsibility."
The presidential remarks, coming in the aftermath of a renegotiation in Kazakhstan's favor of an agreement with foreign investors developing the Kashagan oil field, are indicative of the rising expectation inside the halls of power in Astana concerning the responsibilities and obligations of foreign corporate investors. [For background see the Eurasia Insight archive]. Nazarbayev singled out some major Kazakhstani businesses including Kazakhmys and the KazMunaiGaz energy company as examples of responsible entrepreneurship, and took a swipe at foreign investors, calling on them to help build a "congenial, socially non-conflicting environment" and allow trade unions to operate freely.
With the Abay mine disaster once more putting foreign investors in the spotlight, the government may well use the opportunity to make more demands on them.
Joanna Lillis is a freelance writer who specializes in Central Asia.