Optimization of Transportation

Обращение гендиректора компании АрселорМиттал Лакшми Миттала

Уважаемые коллеги, Четыре года назад мы стали свидетелями того, как период самого мощного роста в последнее время

внезапно завершился. Тогда мы полагали, что столкнулись с глобальным, но краткосрочным финансовым кризисом …

… Однако в 2012 г. мы убедились, что ситуация лучше не становится, а в последние месяцы основные показатели мировой экономики ухудшились…

…Совершенно ясно, что перед нами стоят сложные задачи. Важно, чтобы вы понимали: мы знаем какие это задачи и уверены, что знаем как их решить. Правление Группы и Управляющий комитет определили четкую стратегию, направленную на преодоление этих вызовов, и при поддержке наших руководителей и сотрудников я полагаю, что мы успешно реализуем данную стратегию.

…Не менее важно быть рентабельными: ни один бизнес не может стабильно работать без прибыли. Это необходимое условие для инвестиций и роста, для работы с заинтересованными сторонами и усиления бизнеса в целом. Поэтому мне бы хотелось, чтобы все мы искали возможности повысить нашу рентабельность, увеличивая доходы компании или повышая конкурентоспособность по затратам.

Я уверен, что наша компания снова встанет на путь развития и роста.

Mr Mittal’s

message to employees

Dear colleagues, It is now four years since the biggest growth period in recent times came to an abrupt end. At the

time, we defined this global event as a short-term financial crisis. Our response was to cut costs, preserve cash and focus on our customers…

…However 2012 has shown us that this is no longer the case and in recent months global economic indicators have deteriorated…

… It is clear then that we face challenges. What is important for you to know is that we understand what these challenges are and we are confident that we know the solution. The GMB and management committee have defined a clear strategy to surmount these challenges and with the support of our leadership and employees I know that we will successfully implement that strategy…

… It is equally important to be profitable: no business can be sustainable without profit. It is a prerequisite for investment and growth, to take care of all our stakeholders and to strengthen the business in general. I would therefore like to see all of us looking for opportunities to boost our profitability, be it through top-line growth or improving our cost competitiveness…

… I am sure that this company will be back on a roadmap of progress and growth.

3

Optimization of transportation.

Coal DepartmentTeam #4

Coal Division

4

Team

GU-CHUAN-HAISergey

PROGRESS team, Coal department

team Coordinator

SULTANOVKirillShakhtinskaya mine, Coal Department

OSTAPENKODmitriy

Transportation department, Steel Department

CHERNETSKIYVyacheslavKostenko mine, Coal Department

JAKSYBAEVAyjarkyn

Shakhtinskaya mine, Coal Department

KALININAnatoliy

Kostenko mineCoal Department

PRUDILNIKAndrey

Tentekskaya mine, Coal Department

TALOVSKIYIlyaTEAM LEADERProgress teamCoal Department

13

Comfortable Tomorrow

“To Do” list

Today’s

Mine Number of busesIn property of mines

7

7778

888

Tentekskaya

Lenina

Kazakhstanskaya

Abayskaya

Saranskaya

Kostenko

Kuzembaeva

Shakhtinskaya

Total 60 Buses

2009 2010 2011

the cost of passenger transportation

From year to year number of employees of coal department decreased

number of emloyees

Meanwhile grows

in inverse proportion

Where’s the logic? What can we do today ? To be Comfortable Tomorrow!

TODAY

TO FEEL COMFORTABLE TOMORROW

How can we find right ?

2012 ?

2009 2010 2011

DECISSION

Company , our

2009 2010 2011

PROBLEM SOLUTION

2012,2013 …

BRAINSTORMING: many suggestions

CIRCULAR TRANSPORTATION

PILOT PROJECT,for two mines:

Kazakhstanskaya,Lenina

Preference

Current buses occupation analysis

MAX 47% (35 places) MIN 53% (40 places)

OCCUPIED AVAILABLE

MAX 47% (35 places) MIN 53% (40 places)

OCCUPIED AVAILABLE

Lenina mine Kazakhstanskaya mine

…Also was analyzed

22

Novodolinka

Abay

Lenina mine

Kazakhstanskayamine

3 km3~5 min

CURRENT ROUTES

1

1

1

23

Lenina mine

Kazakhstanskaya mine

3 km3~5 min

Shakhtinsk

Shakhtinsk CURRENT ROUTES

3

3

HOW can we achieve right result?

•Occupation Video analysis (addendum)•Occupation driver’s analysis (addendum)•Private vehicles analysis (addendum)•Meetings with mines and transport department management

«Circular transportation»is the best option

to implementWITHOUT TROUBLES

for the route between both mines

New scheeme of Between Abay, Novodolinka to Lenina mine Kazakhstanskaya mine

26Kazakhstanskaya mine

Novodolinka

3~

5 m

inute

s

3 k

m

Abay

Lenina mine

NEW SCHEEME OF CIRCULAR TRANSPORTATION

WE DO NOT NEEDTWO BUSES!!!

3 = 1

Our scheeme of new routeShakhtinsk-Lenina mine-Kazakhstanskaya mine

27Kazakhstanskaya mine

Shakhtinsk

3-5

min

ute

s

3 k

m

Lenina mine

Arrival time will be not changed

CIRCULAR TRANSPORTATION

WE DO NOT NEEDTHREE BUSES!!!

6 = 3

Lenina

Kazakhstanskaya

Occupied 86% Available 14%

AVERAGE OCCUPATION – 75%

RESULT

9 = 4

5 - free

RESULT

…

are less for more than

LOSSES

400 THOUSANDS US $

AND THAT IS ONLY PER 2 mines, and we’ve got…

Tomorrow’s “TO DO” list

• Tentekskaya mine + Shakhtinskaya mine ~ 0,5 mln US $• Karaganda region Transportation~ 1 mln US $• Abayskaya+ CWP “Vostochnaya” ~ 0,1 mln US $• Freight transport ~ 1,2 mln US $

TOTAL ~ 3 million US $

Our development is within the bounds of transportation law as per the Republic of Kazakhstan

Bus (Class 1): Busin which there are seats, as well as areas outside the pass intended for standing passengers. The design of these buses provide the ability to move passengers in accordance with frequent stops.? Intercity (Class II): Bus, designed and equipped for long-distance transport. The bus pass this class is no areas specifically designed for standing passengers, but it can carry passengers standing in the aisle at a short distance....4.2.2 To include transportation commuting outside the city limits (settlement) to a distance of 50 kilometers.? Commuter services are operated by buses of class I and II.4.3.2 To include transportation commuting outside the city limits (settlement) to a distance of 50 kilometers.

promises nothing but FAILURE unless we make

"Today is the FIRST day of the rest of your life..."

"TODAY THE LAST OF YOUR PAST!"

ADDENDUM

Occupation analysis, technological shifts

67%%33

1.N.Dolinka-Lenina mine

OCCUPATION

33 %=25 persons

73%

%27

OCCUPATION

27 %=20 persons

2. N.Dolinka-Kazahstanskaya mine

72%

%28

3. Abay-Kazakhstanskaya mine

OCCUPATION

28 %=21 persons

Passport bus occupation 75 persons

27%

%83

Expected occupation (MAX) Abay-N.Dolinka-Lenina-Kazakhstanskaya

(Technological shift)

OCCUPATION

83% (62 persons)

Current situation

Proposed rout scheme Abay-N.Dolinka-Lenina mine-Kazakhstanskaya mine

36

Kazakhstanskaya

N.Dolinka

3~

5 м

ин.

3 км

Abay NEWStart time

10.5516.5522.55

Lenina

NEWARRIVAL TIME12.0518.0500.05

PRESENTStart time

11.1517.1523.15

START TIMEWILL BE NOT CHANGED

PRESENT ARRIVAL TIME11.5517.5523.55

+10min+10min+10min

START and ARRIVAL TIME WILL BE NOT CHANGED

+20мin+20min+20min

Lenina

+20мin+20мin+20мin

Kazakhstanskaya

Previously was no route Kazakhstanskaya-ABAY

Present ARRIVAL TIME22.1504.1510.15

NEW ARRIVAL TIME22.3504.3510.35

PRESENTSTART TIME11.2017.2023.20

NEW START TIME11.3017.3023.30

LeninaKazakhstanskaya

-10min-10min-10min

PRESENT ARRIVAL TIME21.5004.5009.50

NEW ARRIVAL TIME22.0005.0010.00

+10min+10min+10min

START TIME

21.4504.4509.45

ARRIVAL TIMEWILL BE NOT CHANGED

ARRIVAL TIME22.0005.0010.00

NEW START TIME11.3017.3023.30

Arrivaltime12.1518.1500.15

START TIMEWILL BE NOT CHANGED

Starttime21.3504.3509.35

Occupation analysis, technological shift. Shakhtinsk 3 routes

69%

%31

1 rout-Kazakhstanskaya

47%

%53

1 route Lenina

53%

%47

2 route Kazakhstanskaya

64%

%36

2 route Lenina

53%

%47

3 route Kazakhstanskaya

63%

%37

3 route Lenina

26%

%84

Expected occupation,after implementetion of circular transportation

27%

%83

26%

%84

Current scheme of transportationShakhtinsk-LeninaShakhtinsk- Kazakhstanskaya

38

Lenina

Kazakhstanskaya

Shakhtinsk

ShakhtinskLENINA

Kazakhstanskaya

Start time11.4517.4523.45

Kazakhstanskaya LeninaStart time11.3517.3523.55

New Start time11.4517.4523.45

-10min-10min-10min

New Arrival time22.1505.1510.15

Start time21.3504.3509.35

Start time21.4504.4509.45

Lenina

Arrival time12.0518.0500.05

Arrival time12.1518.1500.15

Start time21.3504.3509.35

Arrivaltime12.1518.1500.15

Start time21.4504.4509.45

Arrival time12.0518.0500.05

Present start time11.3517.3523.55

Arrival22.1505.1510.15

Arrival22.0505.0510.05

Present arrival time22.0505.0510.05

Kazakhstanskaya

+10min+10min+10min

Start and Arrival timeWILL BE NOT CHANGED

3~5 min 3 km

ProposalShakhtinsk – Lenina –Kazakhstanskaya (3 routes)

Thank you!!!