Integrated Annual Report 2016
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Our strategy, our stakeholders and our creation of value

Strategic objectives

Here we show how, in 2016, our four key strategic objectives addressed our most material issues and our key risks, what these mean for our key stakeholders, and how we measure our performance on achieving our strategic objectives.

All stakeholders benefit in the medium to long term from a safer, profitable, more sustainable ArcelorMittal South Africa. In our online report we detail who our material stakeholders are, why they are important, what matters to them and how we engage with them.

Keeping our
people safe

Material issues, top risks and KPIs   Key 2016 actions   Stakeholders impacted   Impact on stakeholders   Other areas impacted  

Workplace
safety


  • Risk
    7

  • KPI
    1
  • KPI
    2
  • KPI
    3
  We embedded a culture of being aware of, and reporting on, serious occurrences as
well as a culture of team members taking responsibility for each other’s safety.
 
  • Employees
  • Contractors
  Our safety performance this year was mixed; we suffered three fatalities, Vanderbijlpark, in particular, performed well while, overall, long steel disappointed. Our lost time injury frequency rate deteriorated while our total injury rate improved.   Creating a high performance
culture

Creating social value
 
  All three fatalities suffered this year were of contractor employees. Tougher penalties for safety non-conformance
were instituted while the execution of non-conformance report procedures was tightened.
 
  • Contractors
  279 contractor supervisors and employees were formally cautioned this year and one contractor blacklisted for unsatisfactory safety performance. Contractor employees identified as being high risk were required to be redeployed.      

To see how we performed against our key performance indicators on this strategic objective.

Driving
profitability

Material issues, top risks and KPIs   Key 2016 actions   Stakeholders impacted   Impact on stakeholders   Other areas impacted  
Liquidity
  • Risk
    1
  • Risk
    2
  • Risk
    3
  • Risk
    4
  • Risk
    5
  • Risk
    10

  • KPI
    4
  • KPI
    7
  • KPI
    8
  We remained liquid thanks to ongoing support from the ArcelorMittal group, by far our largest funder. At the time of reporting we were close to finalising a R3.5 billion borrowing-based facility with a tenure of 36 months. This year various cash optimisation initiatives were implemented.  
  • Shareholders
  • Lenders
  • Suppliers
  Our secured ability to meet our short-term financial obligations will positively impact shareholders, suppliers and employees.   Creating a high performance
culture
 
Optimising our industrial
footprint
  • Risk
    3
  • Risk
    5
  • Risk
    6
  • Risk
    9

  • KPI
    4
  • KPI
    5
  • KPI
    6
  This year we spent R2 018 million to maintain and modernise our production facilities while various process interventions at Vanderbijlpark resulted in combined (unaudited) savings of R754 million.  
  • Shareholders
  • Employees
  • Trade unions
  • Suppliers
  • Customers
  • Contractors
  By optimising our production processes we benefit all stakeholders with an interest in our survival and growth. Customers will benefit from improved pricing and better products.   Creating a high performance
culture
 
Unsustainable input costs
  • Risk
    5
  • Risk
    9
  • Risk
    10

  • KPI
    4
  Our export pricing-based agreement with Kumba Iron Ore was closely managed to derive maximum benefit. We also increased (rand denominated) iron ore sourcing from other suppliers while achieving procurement savings of R860 million.  
  • Suppliers
  • Contractors
  • Shareholders
  Commodity suppliers will benefit from the sustainability of our business and some suppliers, including contractors, received expanded work scopes. We must ensure that customers benefit from our cost savings.   Creating social value  
Protection against unfair
imports
  • Risk
    2
  • Risk
    3

  • KPI
    4
  We pursued, with the relevant authorities, tariff, safeguard and localisation measures, a majority of which were in place at year-end.  
  • Employees
  • Government
  • Customers
  • Suppliers
  • Communities
  Protection measures will positively impact our ability to stay in business, benefiting a wide range of stakeholders. Fair pricing will work to the advantage of customers. Localisation for state infrastructure projects, announced in January 2017, will benefit, especially, the downstream.   Creating social value  
Customer focus and
a fair price for steel
  • Risk
    2
  • Risk
    3
  • Risk
    6

  • KPI
    9
  A fair price for (flat) steel products was applied by ourselves from April. We established teams to focus on niche customer needs and improved on-time deliveries.  
  • Employees
  • Government
  • Suppliers
  • Customers
  • Communities
  Customers will benefit from more predictable, more competitive pricing. This year we paid R479 million in export and other rebates while complaints dropped and on-time deliveries improved (although not nearly enough).   Creating social value

Creating a highperformance culture
 

To see how we performed against our key performance indicators on this strategic objective.

Creating
social value

Material issues, top risks and KPIs   Key 2016 actions   Stakeholders impacted   Impact on stakeholders   Other areas impacted  
B-BBEE
compliance
  • KPI
    10
  • KPI
    11
  In November shareholders approved our landmark B-BBEE ownership transaction.  
  • Shareholders
  • Employees
  • Government
  • Communities
  New value will be created for HDSA shareholders, employees and, ultimately, our local communities. Employees now own 6.6% of the company and, in future, local community groups will have a 5% interest.   Driving
profitability

Creating a highperformance
culture
 
Competition Commission
issues
  In 2016 we almost doubled (to 1 107) the number of emerging businesses registered on our database, inaugurated an incubation hub and spent R16 million on enterprise and supplier development, and R17.5 million on socio-economic development.  
  • Suppliers
  • Communities
  We will increase the business we do with emerging small businesses while empowering them through enterprise and supplier development. Our CSI initiatives now largely address economic opportunities for our communities.   Driving profitability  
Competition Commission
issues
  • KPI
    13
  • Risk
    2
  • Risk
    3
  This year we spent R2 019 million to
maintain and modernise our production facilities while various process interventions at Vanderbijlpark resulted in combined (unaudited) savings of R754 million.
 
  • Shareholders
  • Employees
  • Trade unions
  • Suppliers
  • Customers
  • Contractors
  The settlement draws a line under issues that have negatively affected our relations with government and regulators. These parties will now have a say in both our pricing and capital expenditure.   Driving profitability  
Environmental
compliance
  • Risk
    8
  • KPI
    12
  This year we spent R2 019 million to
maintain and modernise our production facilities while various process interventions at Vanderbijlpark resulted in combined (unaudited) savings of R754 million.
 
  • Shareholders
  • Employees
  • Trade unions
  • Suppliers
  • Customers
  • Contractors
  We achieved considerable success this year on, especially, reducing water abstraction and effluent discharge.   Driving profitability

Keeping our people safe
 

To see how we performed against our key performance indicators on this strategic objective.

Creating a high-performance culture

Material issues, top risks and KPIs   Key 2016 actions   Stakeholders impacted   Impact on stakeholders   Other areas impacted  
Training for a new operating
reality

  • Risk
    6
  • Risk
    7

  • KPI
    14
  • KPI
    15
  • KPI
    16
  This year we spent R184 million on training and skills development. A total of 548 managers took part in leadership programmes while we offered apprenticeships to 546 individuals, an investment which will have a wider impact on society, especially as the country invests more in infrastructural development.  
  • Employees
  Leaders are being equipped with new skills while being imbued with the tenets of values-based leadership, which will transform our corporate culture. Critical technical skills are being developed.   Driving
profitability

Keeping our people safe
 

To see how we performed against our key performance indicators on this strategic objective.


© ArcelorMittal 2017