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.