Annual report and accounts 2012

Health, safety and environmental risks

Severstal operates industrial facilities that harbour heavy metals or hazardous substances which may present significant risks to the health or safety of neighbouring populations and to the environment. In this respect, we have in the past, and may in the future, incur liabilities for having caused injury or damage to persons or property, or for polluting the environment.

Although we have made provisions for such potential liabilities, there can be no assurance that the amounts covered by such provisions will be sufficient in the future, due to the intrinsic uncertainties involved in projecting expenditures and liabilities relating to health, safety and the environment. Achieving environmental compliance at sites that are currently in operation, or that have been decommissioned, entails a risk that could generate substantial financial costs for us. The competent authorities have made, are making, or may in the future make, specific requests that we carry out environmental improvement works. These include cleaning up and rehabilitating sites, and controlling emissions at sites where we are currently operating, or where we have operated in the past. Fulfilling these obligations, we may incur significant costs, which could have a material adverse effect on our business, financial position and operational results.

Additional or stricter environmental rules and regulations may significantly increase the cost of compliance. Our steel-making plants and mining operations involve potential environmental problems, including the generation of pollutants and the storage and disposal of wastes and other hazardous materials. As a result, we must comply with stringent regulatory requirements necessitating the commitment of significant financial resources, and we expect that the global trend towards stricter environmental laws and regulations will continue. Any significant increase in the
cost of complying with such environmental rules and regulations in the future could have a material adverse effect on our business, financial position and operational results.

Mitigating factors:

  • We adopted a unified health, safety and environmental (HSE) protection policy in 2008. This policy includes efficient HSE management systems and standards, setting objectives and targets, and identifying, assessing and managing HSE hazards and risks. It also sets obligations for Severstal, such as:
    • Strive to work without fatal accidents
    • Decrease by 30% accidents with losses of labour capacity
    • Decrease accidents with time losses
    • Develop and implement effective HSE management systems
    • Initiate an HSE internal control system.
  • To ensure compliance with the HSE policy Severstal will:
    • Introduce annual HSE planning
    • Promote an HSE culture by implementing HSE audits
    • Extend managers’ responsibility for organising and supporting the HSE system and controls on all levels
    • Use leading experience and technologies for prevention and to decrease our negative impact on the environment
    • Initiate staff coaching, adaptation, etc.
  • Severstal conducted the centralised monitoring and efficiency analysis of implemented HSE activities. Immediate corrective measures were taken where deficiencies were identified. 
  • Severstal HSE activities comply with international legislation, laws and norms in operating regions, provided terms conditions and client expectations. Severstal provides:
    • Compulsory insurance of employees against accidents and professional diseases
    • Compulsory insurance of company responsibilities
    • Insurance against equipment shutdowns and lost revenues risks.