Publication: Eurasia Daily Monitor Volume: 2 Issue: 57

Emotions are running high in Kazakhstan as miners protest anticipated wage cuts and layoffs at the Indian–owned Mittal Steel Company. In the past two weeks a series of rallies and pickets has rocked the otherwise dormant towns of Temirtau and Shakhtinsk in central Kazakhstan. Mittal is one of the world’s largest steel producers and employs about 50,000 people in Kazakhstan.

On March 10 local trade-union activists appealed to the Temirtau city administration for permission to organize a warning strike to demand substantial wage increases for steel-producers and miners employed by Mittal. But authorities refused to grant permission to hold a strike, fearing that it would lead to mass confusion, the authorities’ usual pretext to ward off events with unforeseeable consequences. Trade union leaders then decided to relocate to Shakhtinsk, but there, too, they experienced a setback. The legal adviser for the local trade union, Lidia Baykinish, believes that officials in Temirtau and Shakhtinsk acted unlawfully by refusing to authorize the planned strikes. Specifically, she cited Article 9 of the law “On Collective Labor Disputes and Strikes,” which grants workers every reasonable means to defend their interests if negotiations with managers fail to settle the conflict. The miners seem to be resolved to stage demonstrations and rallies in other parts of Karaganda region, with or without permission (Liter, March 11).

Mittal Steel owns the once-flourishing metallurgical giant of Kazakhstan’s industry, Karmetkombinat, as well as 11 coal pits and quarries in Karaganda region. It has also become the target of an unprecedented media attack since the end of 2004. No other industrial dispute in Kazakhstan has ever merited such venomous press coverage.

Local newspapers are unanimous in asserting that the London-based Indian steel tycoon Lakshmi Mittal defiantly ignores the demands of his miners. Not only does Mr. Mittal dodge reporters, but also the leader of the trade union at Mittal, Vyacheslav Sidorov, who has unsuccessfully tried to submit a draft labor contract that provides better social protection to workers. Mittal coal miners in Kazakhstan make an average of $120 per month, compared to Russian miners in the Kuzbass region, who bring home $346. The wages paid to miners in Shakhtinsk are not sufficient to sustain a small family (Yegemen Kazakhstan, March 11).

Tensions in the mines of Karaganda region have been building since a gas explosion at the Shakhtinsk coal mine in December claimed 23 lives (see EDM, December 7, 2004). The usually passive and overwhelmingly bureaucratized trade unions in Karaganda have suddenly swung into action to voice workers’ demands. Union leader Sidorov rebuked the company’s management for making important decisions at board meetings in London rather than before the workers in Kazakhstan (Golos, January 7).

But these verbal attacks against Mittal are rife with ambiguity. The situation leaves the distinct impression that the Federation of Trade Unions of Kazakhstan, a loyal government lackey, is trying to use the workers’ protests as an opportunity to strengthen its own position and to win popular sympathy ahead of the trade union congress scheduled for May. The two main rivals of the officially recognized Federation of Trade Unions of Kazakhstan, the independent Confederation of Free Trade Unions and the Confederation of Labor, have not played a conspicuous role in the labor dispute.

Some observers have pointed out that the Mittal workers’ most active supporters are influential government officials in Astana, people with good reason to fan the flames around Mittal Steel. In November 1995, the prime minister of Kazakhstan, Akezhan Kazhegeldin, now in exile, signed a contract granting ownership rights in the Karaganda metallurgical combine (Karmetkombinat) to Lakshmi Mittal’s LNM-Group.

The original contract expires in November of this year, but the battle over who will be the next owner, if the contract is not extended, is already brewing. The talks between Lakshmi Mittal and the government of Kazakhstan have been ongoing since the end of last year, but an agreement on extending the contract is not in sight. This uncertain situation, combined with the prospect of getting a slice of the pie, has fueled the appetites of various business groups linked to the government. This explains the hailstorm of criticism directed at Mittal Steel — it comes from potential buyers of Karmetkombinat’s assets. An unnamed official in the Ministry of Industry, when asked why the miners were taking to the streets at this particular time, enigmatically replied: “Because when they [the Kazakh government and Mittal Steel] reach an agreement and prolong the contract, the miners will have only a slim chance” (Epoha, March 11).

The situation around Mittal Steel seems to benefit everyone but the miners and steel producers. Not surprisingly, parliament has remained silent on the months-long conflict. Meanwhile, some Russian businesspeople flew to Karaganda to hire miners for coal pits in Russia’s Kemerovo region, offering them a better chance of survival. About 30 miners, lured by higher wages, have already left Karaganda (Liter, March 15). This negative trend weakens not so much the position of the Mittal managers who sacked more than 250 workers last year, as it undermines the entire coal industry in Kazakhstan, aggravating an already acute shortage of qualified workers.