Patria brings a detailed analysis: Zenica's residents sacrificed for ArcelorMittal's profit

One of the most common excuses used by those who want to justify the enormous air pollution in Zenica goes something like this: "The steel mill has been here for over 100 years, it has always polluted, but it employs thousands of workers".

Samir Lemeš, president of the Eko forum Zenica association, asks if the operation of the steel mill in socialist Yugoslavia can really be compared to the current era of global capitalism?

Lemeš, together with Patria's photojournalist Armin Durgut, conducted a detailed analysis of life in and outside the gates of the steel mill from its inception in 1892 to the present day. They present comprehensive reports on why it is important for this giant to offer Zenica's residents cleaner air, in addition to salaries.

First steel production in Zenica in 1892.

The history of steel production in Zenica began in 1892, when Austro-Hungarian industrialists Leon Bondy, Moritz and Adolf von Schmit, and Hans von Peng founded the company "Eisen und Stahlgewerkschaft Zenica".

The steel mill experienced its expansion after World War II, when steel production capacities increased from 100,000 tons (1940) to over 2 million tons (1988) of steel annually.

Such a steel mill was part of the socialist equivalent of today's corporations, called the Mining-Metallurgical Combine "RMK Zenica". With 60,000 employees, RMK included other steel mills, mines, metal processing plants, transport companies, wholesale businesses, etc., in addition to the Zenica steel mill.

As part of the combine, the Zenica steel mill employed over 20,000 people, which, in addition to the established term "mother steel mill", led to the demise of all forms of entrepreneurship in Zenica, as it was assumed that one did not have to worry about employment.

Upon finishing school, a job in the steel mill was guaranteed, regardless of profession, as the combine always needed fitters, carpenters, masons, engineers, economists, lawyers, doctors, etc. In addition to expanding production capacities, investments were also made in workers' standards, so the money earned by the steel mill funded workers' resorts, mountain lodges, health centers, and even the Hotel Zenit in Neum, which until recently bore the logo of the steel mill, or RMK Zenica.

First privatizations and aggression

In the early nineties, the privatization of parts of the combine began. Thus, RMK promet, RMK inženjering, and the RMK business system were separated from the combine, and production in the steel mill was halted in mid-1992 due to war operations.

After the war, the Bosnian-Herzegovinian authorities lacked the capacity to restart production in the steel mill, so in 1998, they practically gave away the largest part of the steel mill to the Kuwait Investment Agency KIA, in exchange for the write-off of the pre-war debt of SFRY for Kuwaiti oil.

Zenica gained nothing from this "privatization" except for an investment in an electric arc furnace for melting scrap iron, in a new company named "BH Steel d.o.o. Zenica". As the Kuwaiti agency did not have much experience in steel production, there were no significant investments, nor were they interested in initiating integrated steel production. Such production involves the preparation of agglomerates from iron ore, coke production, iron production in a blast furnace, and steel production. These are all very dirty technologies that heavily pollute the environment.

At that time, at the beginning of the 21st century, some significant changes occurred in the global market, which Bosnians were unaware of. The global automotive industry increased demand for steel that was not recycled but came from integrated production, and the Chinese Communist Party adopted a new strategy for foreign investment, leading to a drastic increase in the demand and price of steel on the world market.

Bosnians were unaware of this, but Indian tycoon Lakshmi Mittal knew it very well and began buying steel mills around the globe. In August 2004, an agreement was signed whereby KIA sold its ownership stake to LNM, a company owned by Mittal, making Mittal the owner of 92% of the steel mill.

Through subsequent acquisitions, LNM became ArcelorMittal, which is today a global leader in steel production. The recapitalization agreement, which is still hidden from the public, stipulated the initiation of integrated production with a capacity of 2 million tons of steel annually, investments in increased capacity and environmental protection, and the employment of at least 4,500 workers.

Integrated production was indeed launched in 2008, but the investments were much lower than planned. Thus, today we have enormous pollution of air, water, and soil in Zenica, less than one million tons are produced annually instead of the planned 2 million, and fewer than 2,500 workers are employed.

Increased production but also increased concentration of pollutants in Zenica's air

Production increases every year; ArcelorMittal Zenica is among the top 3 exporters along with Elektroprivreda BiH and Aluminij Mostar, but with the increase in production, the concentration of pollutants in Zenica's air also increases.

ArcelorMittal has used every possible excuse for delaying investments in environmental protection, from the recession, the age of the facilities, to the inability of domestic contractors to implement demanding projects.

A particular problem is the implementation of Bosnian-Herzegovinian environmental protection regulations, which are very similar to European regulations on paper, but their practical implementation is almost an impossible mission.

Thousands of obstacles are placed in the way of implementing these regulations, from delays in issuing environmental permits, inaction of the inspectorate, to falsification of data on actual air pollution. An environmental permit, as the only legal instrument the state can use against polluters, includes a list of projects by which production will be adapted to regulations within five years, and pollution will be brought within permissible limits.

However, instead of sanctioning project delays and enormous pollution, the inspectorate boasts about minor fines for faulty fire extinguishers, incorrect labeling of electrical installations, or delays in paying water fees.

Unqualified personnel who do not understand metallurgical processes are regularly engaged as inspectors, so for years, the operation of metallurgical facilities was checked by a civil engineer and an architect.

Environmental permits for five plants have already expired, and the largest and most expensive projects have not been realized.

The recovery of the global market from the recession, as well as the increase in steel prices due to the appreciation of the US dollar, has been paid for by Zenica residents since January 2015 with increased air pollution. Although the air pollution monitoring devices are more often out of order than working, Zenica residents can see with the naked eye and feel with their noses that the air is becoming increasingly polluted.

Even the announced major investments and several ceremonial starts of the same projects cannot alleviate the feeling that Zenica has been sacrificed.

ArcelorMittal's investments have been reduced to renovating park benches

Just as the Zenica steel mill was part of the RMK combine in the SFRY, today it is part of the global corporation ArcelorMittal.

Such large systems are formed precisely to optimally use resources, but there is a huge difference in the approach used in the socialist combine and the capitalist corporation. Although the socialist combine was inefficient, bureaucratized, and burdened with numerous unproductive costs, there was still room for investments in workers' standards. Free healthcare, summer and winter vacations outside the city, sports and cultural activities, investments in housing and other infrastructure, and personnel training were taken for granted in the combine, whereas today, in the corporation, they are a distant dream and reduced to sponsoring park benches, theater glass, and cycling races.

Even the recent investment in the reconstruction of a village road destroyed by a landslide is of symbolic value compared to pre-war investments. What was presented to the public as a humane and altruistic act is, in fact, a pragmatic investment in road communication for its own workers. Namely, very few employees walk to work at the steel mill. Most employees commute from villages tens of kilometers away, so the reconstructed road will mostly be used by those who drive to work at the steel mill.

The main problem hindering larger investments in environmental protection in Zenica is profitability.

Namely, to invest hundreds of millions of euros in these projects, such a steel mill must produce and sell at least 2 million tons of steel annually. It currently produces only one million and it is not profitable for them to invest in environmental protection. These projects are expensive, which is why the global corporation constantly postpones them. However, this fact cannot be used as an excuse, because the lungs of Zenica's children cannot and must not pay for the inability of the commercial service of the Zenica steel mill, or the global corporation, to sell that much steel.

Therefore, it is very important to constantly pressure the corporation to invest more and faster. This pressure cannot be exerted by citizens alone, not even through non-governmental organizations, domestic or international, but must be done by the state, through ministries and inspectorates, and ultimately through the prosecutor's office and courts, because environmental pollution is a criminal offense under the Criminal Code of BiH.