(Bloomberg) -- ArcelorMittal SA shares fell as much as 5.5% after the Kazakh government announced plans to take over the company's operations in the country after its worst mining accident in recent history.
At least 45 workers were killed in an underground coal mine fire at the Kostenko facility that began on Saturday, according to Kazakhstan's emergency ministry. Following the disaster, the country's government said it had earlier reached a preliminary agreement with the steel giant.
It's unclear whether Kazakhstan plans to pay ArcelorMittal for its assets there, which include a two steel plants, coal and iron ore mines. Those operations have been hit by a series of deadly accidents since the firm acquired them in the mid-1990s, leading to persistent pressure from the government to increase investment in the facilities.
“Despite the considerable efforts made to stabilize the situation, we agreed with the government of Kazakhstan to find a new way forward,” Aditya Mittal, ArcelorMittal's chief executive officer, said in a statement. “We had signed a principle agreement last week before this tragic accident.”
Shares trimmed losses, dropping 4.3% at 3:42 p.m. in Amsterdam.
Read More: Kazakhstan Assumes ArcelorMittal Operations Amid Deadly Fire
The tragedy adds to the woes of the steelmaker, whose shares are down about 18% this year amid weak demand in key markets. Production at its giant Ukrainian plant, which is close to the frontline of the war with Russia, has also been repeatedly disrupted.
“We expect the severity of this incident, combined with confirmation of the nationalisation, to result in a negative share price reaction even after recent weakness,” UBS Group AG analysts including Andrew Jones wrote in a note. Despite the asset recently being cash-flow negative, they “see a risk that the stock de-rates on ESG concerns.”
Kazakhstan accounted for about 5% of ArcelorMittal's steel production last year. The Luxembourg-headquartered company is the world's biggest steelmaker outside of China.
(Updates with comments from Mittal and UBS in third and sixth paragraph)
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