Mittal faces union's ire as steel takeover looms

Tuesday, 16 December 2003, 20:30 IST
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JOHANNESBURG: London-based steel magnate Lakshmi N. Mittal is facing the ire of a trade union here that is upset about 2,000 proposed retrenchments at the former state-owned South African steel giant Iscor. The opposition comes just as Mittal is poised to take a controlling interest in Iscor through the acquisition of the next tranche of shares due to his company LNM in terms of a business assistance agreement signed two years ago. The agreement saw LNM introducing technologies and opening new markets for Iscor that turned around the company's ailing fortunes. Mittal already holds 47 percent of Iscor, and this is expected to rise to over 50 percent soon when a further five percent is allocated to LNM, which had agreed to effect savings of 700 million rands in return for a 10 percent stake in Iscor. Half this saving has already been effected. LNM's efforts have been lauded, as Iscor's share price went up despite a drop in headline earnings of 41 percent year-on-year for the third quarter and a collapse in worldwide steel demand. But the trade union, Solidarity, representing mainly white mining and industrial workers, has objected to the share allocation to LNM, estimated to be worth a billion rands, while 2,000 workers are expected to lose their jobs. Iscor has defended the job shedding, citing falling export earnings. Iscor's annual profits rose 185 percent in 2003, which was largely attributed to the implementation of the business assistance agreement with LNM. Analysts here said the basis for Solidarity's objections were not good, as the entire deal with Mittal's LNM had been widely publicised for the past two years. The impact that LNM's agreement had made on the profitability of Iscor also spoke for itself. Iscor currently employs 13,200 people, of whom 3,776 are members of Solidarity. Its closest rival is the National Union of Mineworkers, which has 3,494 members.
Source: IANS