Miners at the loss-making Kazakh unit of ArcelorMittal (MT.N) (ISPA.AS) will consider going on strike if the company starts laying off workers or cutting their salaries, a local trades union activist said on Wednesday, Reuters reported.
ArcelorMittal said on Tuesday it could be forced to halt production and lay off workers in Kazakhstan unless "urgent measures" were taken. It said the unit incurred a $100 million loss in the first quarter of 2009 due to low demand.
Kazakhstan's government is concerned that the deepening crisis could trigger broader discontent with President Nursultan Nazarbayev and has urged mining companies to avoid layoffs.
Pavel Shumkin, head of a trades union in Karaganda, a city at the heart of ArcelorMittal's Kazakh operations, said the mood among workers was sharply negative following the announcement.
"At the moment they are silent, just depressed. They are waiting for further steps. But they see that workers are protesting in other countries," he told Reuters by telephone.
"Workers are very unhappy. It will be a very serious situation ... if they go on strike," he added.
ArcelorMittal's local unit employs about 46,000 people.
Kazakhstan has been hit hard by the global downturn. Its banks are struggling to repay debt and people have become more outspoken in their criticism in a former Soviet country where the government allows little public debate.
Ten years ago, when Kazakhstan was still recovering from the first chaotic post-Soviet years, wage disputes set off riots in places like Karaganda, an industrial region where Nazarbayev started his political career.
ArcelorMittal has announced nearly 1,000 layoffs in the United States and another 1,000 European steel workers clashed with riot police outside its May 12 shareholders' meeting in Luxembourg in a protest over output cuts. [ID:nLC45767]
An ArcelorMittal Temirtau statement issued on Tuesday said there was a threat of layoffs but added that the company planned to avoid that by introducing limits on bonuses. [ID:LJ567082]
ArcelorMittal Temirtau spokesman Nikolai Kubrakov said the company was in talks with employees to work out a plan by the end of this month that would suit both sides. "The plan is to cut costs and make our products more competitive," he said.
The firm has said it would cut liquid steel output this year to 3.17 million tonnes from 3.43 million tonnes in 2008.
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