THE SCOOP | Leaked Report Highlights Pollution Problems at ArcelorMittal’s Bosnian Steelworks

Locals rarely celebrate the closure of a big employer. But some in the central Bosnian town of Zenica rejoiced recently when the steel giant ArcelorMittal S.A. announced it was shutting down a major part of its sprawling, socialist-era plant.

Residents have long blamed pollution on ArcelorMittal, which has its global headquarters in Luxembourg and is an official sponsor of this summer’s Olympic Games in Paris.

A Bosnia-Herzegovina government inspection report obtained by OCCRP provides evidence supporting their claims. The 2023 report from the federal Ministry of Environment shows the company for years neglected to implement recommended measures against pollution.

Nikhil Mehta, CEO of AMZ, the ArcelorMittal subsidiary that operates in Zenica, said part of the problem is perception: The company inherited issues when it purchased the plant, and was too optimistic in promising numerous measures to mitigate pollution.

"We were over-ambitious to complete everything," Mehta said in an interview with the Center for Investigative Journalism (CIN), OCCRP’s reporting partner in Bosnia-Herzegovina.

Nikhil Mehta, the CEO of AMZ, ArcelorMittal’s subsidiary in Bosnia-Herzegovina. (Photo: Dženat Dreković/CIN)

The inspection report obtained by reporters reveals that the company failed to introduce certain technology, and comply with other directives to stop pollution from spilling into the local environment.

“There is no recognition of the intention to implement these measures within the given deadline,” reads the report.

In an emailed response to questions, AMZ admitted that it had failed to address issues raised in the inspection report as directed.

“While we acknowledge that some of the measures have been implemented later than the recommended timeframe, we are addressing all of the measures outlined in the inspector’s report,” the company said.

AMZ added that “a number of these requirements are no longer valid, as they related to the now-closed coke plant.”

The company announced in March that it would close down the facility, which superheats coal to turn it into “coke,” a fuel used to make steel.

“Following this closure, diffuse emissions from ArcelorMittal Zenica have decreased by 80%,” the company said in its email to OCCRP.

Samir Lemeš, head of the local environmental organization Eko Forum Zenica, welcomed AMZ’s decision to close its coking plant. He said the company’s other facilities have been gradually adapted to meet environmental standards, but the coke plant was operating “entirely outside” regulations.

“They made a decision that it is more profitable for them –– to close that plant, to demolish it, rather than to invest in it,” Lemeš said.

In its March announcement, AMZ said it had “concluded that further upgrading is not feasible and would not satisfy environmental standards,” adding that it would begin purchasing coke from other sources.

The closure of the coke plant marks the latest major change for a steelworks that has been in operation for more than 130 years.

The Zenica steelworks first opened at the tail-end of the 19th century, when Bosnia-Herzegovina was a restive part of Austro-Hungarian empire. It expanded as production boomed under the socialist government that led Yugoslavia from the end of World War II.

A part of ArcelorMittal's steelworks in Zenica, Bosnia-Herzegovina. (Photo: Dženat Dreković/CIN)

But the steelworks ground to a halt during the war from 1992 to 1995, when Bosnia-Herzegovina split from the former Yugoslavia. As the new country struggled to rebuild its economy, Indian billionaire Lakshmi Mittal bought the Zenica steelworks in 2004.

Two years later, Mittal’s company merged with the European giant Arcelor, becoming one of the world’s largest steel producers. Today, ArcelorMittal has a presence in more than 60 countries and a workforce of around 154,000 people.

While it has come under criticism from environmental groups, ArcelorMittal has spoken publicly of its commitment to decarbonization, a process aimed at curbing global warming. ArcelorMittal produced the “low-carbon” steel used to make the Olympic torch, which is now winding its way through France in the run-up to the summer games.

In Zenica, hopes for economic recovery were dampened by pollution that left it the sixth most toxic city in Europe, according to the 2023 World Air Quality Report by the environmental group Greenpeace.

Zenica’s soil has also been contaminated, according to a study by Bosnia-Herzegovina’s Federal Institute for Agropedology. Testing between 2011 and 2015 found heavy metal pollution in the soil surrounding AMZ’s facilities. The institute’s report discouraged cultivating crops or raising livestock in the vicinity.

In March, reporters from CIN brought soil samples to the institute from more than 50 different locations in the area surrounding AMZ’s plant, including gardens, schools, and health clinics. The samples were found to be heavily contaminated with pollutants including arsenic and lead.

The contaminants were spewed into the air as part of the steel production process, said the institute’s Ahmedin Salčinović.

"They come with the wind and fall to the ground and stay there. Plants, especially lettuce, spinach, and vegetables, when taking nutrients from the soil, also take in heavy metals,” said Salčinović.

AMZ blamed the soil contamination on previous operators of the steelworks, particularly  in the 1980s when, it said, the plant used poor quality iron ore.

“The iron ore that is used by AMZ… has a superior chemical composition and our data from air emission monitoring shows that all emissions of heavy metals are below the ELV (emissions limit value),” the company said.

The inspection report obtained by reporters lists a number of problems at the Zenica steelworks that it says were never dealt with.

The inspector noted that slag –– a residue left from the smelting of iron ore –– was being dumped in landfills that ArcelorMittal had not obtained permits for. The inspector concluded that while the company had stated its intentions to establish a non-hazardous disposal site, “the intention to reach it in the near future is not recognized as an environmentally sound solution.”

Mehta, AMZ’s CEO, said in an interview that the company is still working on the permit process to build a waste storage site in the steelworks area.

The inspection report also mentioned poor maintenance at the steelworks, and other deficiencies including a failure to implement measures aimed at reducingemissions. The report found that AMZ had failed to meet deadlines for the implementation of at least 13 of the 15 measures as required by law.

According to documents accessed by OCCRP and CIN through a Freedom of Information (FOI) request, a total of 87 environmental inspections were carried out by authorities at AMZ facilities, leading to at least 46 violations. From 2019 to 2024, AMZ was fined a total of $79,751 as a consequence.

“These punishments are largely symbolic,” said Lemeš, the environmental activist from Zenica, noting the relatively low amounts.

Among other violations, the company was fined for failing to maintain a system to treat wastewater generated by steel production. That failure may have led to the discharge of sludge into the Bosna River, one of the country’s three largest fresh waterways, according to documents obtained through the FOI request.

In its email, AMZ said it had taken action after a spill in 2023, and that “no discharge is possible in future from this location.”

The Bosnia-Herzegovina Minister of Environment and Tourism, Nasiha Pozder, said AMZ was fined each time an illegal discharge occurred.

“It seems those penalties serve their interests more than complying with the requirements from the environmental permit,” she said.

The permit includes regulations set by the environment ministry to control emissions, manage waste, and ensure that operations do not harm its surrounding environment.

Nasiha Pozder, Minister of Environment and Tourism for Bosnia-Herzegovina. (Photo: Dženat Dreković/CIN)

AMZ said it was operating according to its environmental permit, and that it had invested 107 million euros ($115 million) in “environmental protection projects in production facilities” since taking over the steelworks in 2004.

AMZ added that its “contribution to the business of the country since 2004 amounts to almost 250 million euros ($269 million), plus 30 million euros ($32 million) for salaries and taxes of its workers on a yearly basis.”

Dejan Knežević, a spokesperson for the environment ministry, agreed that AMZ is critical to Bosnia-Herzegovina’s economic well being.

“The economic and social importance of AMZ is unquestionable,” he said in a written response to questions.

But, he added, the company’s importance “cannot and must not be an excuse for negligence regarding the health of citizens and the state of the environment.”