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COM (80) 454

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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning the opening to the public of the historical archives of the European Economic Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this file have been declassified in conformity with Article 5 of the aforementioned regulation. In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar 1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003 (ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben. COM(80)454 final

COMMISSION Brussels , 25th July 1980 OF THE EUROPEAN COMMUNITIES FOR OFFICIAL USE ONLY

General Secretariat

REQUEST FOR COUNCIL APPROVAL UNDER THE SECOND PARAGRAPH OF ARTICLE 54 OF THE ECSC TREATY FOR THE FINANCING OF INVESTMENT

PROJECTS TO INCREASE AND STABILIZE PELLET PRODUCTION AND

IMPROVE PELLET QUALITY AT THE MINE AND PROCESSING PLANT

IN (NORTH ). BY AKTIESELSKABET SYDVARANGER , (NORWAY )

( Communication from the Commission to the Council )

C0M(80 ) 454 final COMMISSION OP THE EUROPEAN COMMUNITIES

Fôr Officiai Use Only

Note to the Council

Sub ,1 feet s Request for Council approval under the second paragraph of Article 54 of the ECSC Treaty for the financing of investment • projects to increase and stabilize pellet production and improve -pellet quality at the iron ore mine -and processing plant in Kirkenes ( North Norway ) by Aktieselskabet Sydvaranger , Oslo ( Norway ).

Loan requested s Nkr 45<>0 million ( approximately 6.49 million EUA )

Borrower s Aktieselskabet Sydvaranger , Oslo (Norway ).

Project executor

Aktieselskabet Sydvaranger was founded in 1906 and, since 1910,.has "been supplying iron ore to the steel industry of Western Europe . The iron ore deposits lie on the Kirkenes peninsula in the furthermost north-eastern part of Norway . -

A total of 135 million t of iron ore has been mined since production began, necessitating the removal of 155 million t of rock . The ore is won entirely by open-cast and is transported by rail to the processing plant in Kirkenes 10 Ion away where the crushing, enrichment and pellet plants and deep-water harbour for ships of a capacity up to 140 000 . t are located .

The principal shareholder in Aktieselskabet Sydvaranger is the Norwegian State , with an interest of 51$ > "the balance of the shares being held by approximately 2 300 shareholders . 98.5$ of the share capital is in •* Norwegian hands . . Currently known iron ore reserves amount to 430 million t and can all be won by open-cast mining, with an average of no more than two tonnes of overburden having to be removed per tonne of ore . In addition, there are further large deposits , but these would have to be deep-mined. The northern deposits ( approximately 50$ of total deposits ) lie closest to the processing plant and contain approximately 31$ iron ore ( magnetite ), whereas further south the iron ore content is only some 25$ « On the basis of a projected annual pellet production of 3 million t ( 65$ Fe from 7»2 million t ore with a 28$ Fe content ), currently known iron ore deposits should permit mining by open-cast methods alone for a further 60 years . - 2 -

The following figures illustrate the trend in mining and production s

Mine overburden Concentrate Pellet Year + ore Production Production ( million t ) ( million t ) ( million t )

1974 15 2.26 1.90 1975 17 2.24 2.26 1976 20 2.19 , 2.23- 1977 20 2.04 2.15 1978 18 2.12 2.27 1979 18 2.15 2.51 1980 18 2.75 2.75 1981 20 3.00 3.00

The iron ore concentrate produced in the processing plant is used as a feedstock for the pellet plant . In previous years this necessitated the buying in of concentrate from other mines , but such purchases are not planned in the future .

Description of proiect

The company has decided on the following investments in the period 1980-81 with a view to long-term improvement of competitiveness s

1 . Extension of the capacity of the crushing plant 2 . Extension of the capacity of the enrichment plant 3 » Changes to the pellet plants 4 . Construction of a new flotation plant .

These measures , which affect various stages of production but are directly linked and should therefore be considered together , will raise pellet production capacity to 3 million tonnes per year . In addition, they will permit the production of pellets with a' low SiO ^ ( silica) content arid therefore make it possible to supply the direct-reduction plant of Norddeutsche Perro- werke GmbH ( NFW ) in Emden ( Federal Republic of Germany ) in which Aktieselskabet Sydvaranger has a 74-9f- interest . The pellets required by KPIJ must have a 70$ Fe content with a Si02 content not exceeding 3^- J the pellets currently produced by Sydvaranger still have a 5°5r Si02 content at 65 Fe .

Re 1 . Extension of the capacity of the crushing plant

Until now, only one of the two available in the coarse crushing plant could ever be used. The downstream conveyor-belt system is now being enlarged in order to permit the simultaneous operation of both units .

In addition, it is planned to construct a new and larger fine crushing and screening plant which , when operational , trill supply the grinding plant with smaller pieces of ore than, previously possible .

1 . - 3 -

Investment costs ; Mer 22.52 million Commissioning s June 1981 .

Re 2 . Extension of the capacity of th3 enrichment plant

The enrichment capacity of the plant will he increased by the con­ struction of a new ball mill in the existing mill building . The new mill will be powered by a 8 300 kT J annular motor which , is controlled automatically and therefore obviates the need to employ additional workers .

Investment costs 2 Klcr 40 . 0 . million « Completion/trial operation : January . 1981 Commissioning s July 1981 . .

Re 3 . Changes to the pellet plant

The screen system for green pellets was already modified in November 1979 in the two pellet plants commissioned in 19^9 and 1974 respectively ; in addition , the continuous grate in one plant was lengthened .- These measures increased annual capacity to a total of 3 million tonnes and , even though they were carried out before submission of the loan application , are inseparably linked with the other projects at various production stages within the framework of the overall programme .

Investment costs s Kkr 13.5" million .

Re 4 . Construction of a new flotation plant The flotation plant is to be sited between the ore mill and pellet plant and should permit reduction of the silica content of the iron ore . This will enable Aktieselskabet Sydvaranger to take into account the different requirements of its customers and supply the appropriate pellet quality in each case .

Investment costs s Mcr 41«29 million Commissioning s December 1980 .

Assessment The investment programme to step up pellet production to 3 million t/year and raise pellet quality will contribute to an improvement both in terms of quantity and quality of the supply of raw materials to the Europe&n steel industry . The company has currently already concluded multiannual supply contracts for 2.6 million t/year with Community steel companies and in the years to come will supply additional lump ore and pellets totalling some 1.5 million t to meet the annual requirements of the direct–reduction plant in Emden ( KFl ) r rhen the latter has commenced operation . In each case the company must undertake to guarantee to supply an adequate Quantity to the Community . The iforwegian State , as majority shareholder in Aktieselskabet Sydvaranger , has agreed to the supply to the Community and the financial ^ contribution therefrom . The European steel industry 's interest in this situation lies in the. fact that nine enterprises from three Community countries have already concluded long-term contracts with Aktieselskabet Sydvaranger . , - 4 -

An improvement of the supply situation appears particularly necessary in the light of the iron ore shortfall of some 15 million t in 1985 and some 120 million t in 1990 forecast for the western world. Moreover , the world's largest steel producers , the USSR, the USA and Japan, can rely in part on iron ore deposits which are to be found on their own territory or within relatively easy reach . Special efforts should therefore "be made to improve the winning of European iron ore deposits .

On the basis of these considerations , the loan application is to be viewed in a positive light , since the investment programme contributes directly and principally to the realization of the objectives laid down in the second paragraph of Article 54 of the ECSC Treaty .

The Commission has decided in principle to approve the present application . Therefore , in accordance with th6 second paragraph of Article 54 of the ECSC Treaty , it requests the Council 's assent for the granting of a loan to the value of Kkr 45«0 million to Aktieselskabet Sydvaranger , Oslo ( Norway ).