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Journalism of Courage
Lenin still guards the entrance to Ukraine’s biggest steel plant, but the flags that flutter beside him identify a new king in this town.
Indian-born billionaire Lakshmi Mittal extended his steel empire — already the world’s largest — when his company paid $4.8 bn for the Kryvorizhstal plant at an auction last year, becoming the single biggest foreign investor in Ukraine.
Now, life could be about to change for many of the 700,000 residents of this dusty, central city. Kryviy Rih will get a more efficient steel plant, but street protests that greeted the new owner’s arrival betray a resistance to change.
It’s a scene familiar to Narendra Chaudhary, general director of Mittal Steel Kryviy Rih and a 40-year steel veteran.
‘‘The influence of a steel plant is not limited to the unit itself. Its arteries and veins go all around society at this stage of economic development,’’ said Chaudhary, who has headed Mittal Steel plants in Kazakhstan and Romania.
‘‘Our behaviour here is being closely watched. Mittal Steel could be an agent of change in the economy,’’ he said.
Ukraine is hoping to reignite the economy after growth slowed to 2.6 per cent last year from a record 12.1 per cent in 2004. With commodity prices at record highs, the country’s iron ore and coal resources, used to make steel, are central to this.
President Viktor Yushchenko hailed last October’s sale to Mittal as the start of a new economic era. The auction was meant to lure back Western investors made wary by turmoil during his first nine months in office.
But some plant workers fear foreign ownership will mean fewer jobs and benefits — even though they won pledges that Mittal would honour some investment obligations for five years.
Kryvorizhstal employs 57,000 people. With the average worker supporting a family of four, 228,000 people depend on the plant.
‘‘Within the framework of these restrictions, wherever there is a possibility to make the whole number smaller, we shall do that. But we don’t have complete freedom to reorganise the operation and significantly reduce the number,’’ Chaudhary said.
Murad Grigoryan, a 44-year-old taxi driver and floor tiler, has reservations about the sale.Sitting behind the wheel of a 1971 Lada, he said: ‘‘It would be like me selling my car and letting someone else drive. I’d make a quick buck but I wouldn’t have the right to go where I want any more.’’
It’s an argument heard elsewhere in Kryviy Rih, a mainly Russian-speaking city whose political loyalties lie with Viktor Yanukovich, the defeated presidential candidate during Ukraine’s ‘‘Orange Revolution’’ in 2004.
Opponents of the Kryviy Rih sale argue a better long-term bet would have been to retain ownership of the plant.
Artyom Sinenko, 26, who works in Kryviy Rih’s only bowling alley, said the government used to pay about 10 per cent of the cost of a family holiday on the Black Sea for plant employees. Such traditional benefits, he said, are now under threat.
Chaudhary puts the average annual cost to the company of one employee, including salary and other benefits, at about $5,000. And he says wages have increased since Mittal arrived.
‘‘We gave an increase of four to 4.5 per cent from the day we came. Subsequently, we’ve also brought in additional medical insurance cover for all the employees,’’ he said.
— Robin Paxton
