Industrial loans which may be granted pursuant to Article 54, second paragraph, of the Treaty establishing the European Coal and Steel Community for investment aimed at promoting the consumption of Community steel(85/C 121/03)

I. INTRODUCTION Article 54, second paragraph, of the Treaty establishing the European Coal and Steel Community allows the Commission, with the unanimous assent of the Council, to grant loans to assist the financing of works and installations which contribute directly and primarily to increasing the production, reducing the production costs or facilitating the marketing of the products referred to in Annex 1 of the ECSC Treaty. In view of the serious structural crisis facing the European steel industry, the Commission has decided to support investment which may be expected to promote the consumption of Community steel. At its 227th meeting held on 6 and 7 May 1982, the ECSC Consultative Committee requested the Commission to contribute within the scope afforded by the ECSC Treaty and, in particular, Article 54, towards eliminating the current problems facing the steel sector by means of determined and systematic efforts to promote investments which may be expected to stimulate the marketing of European steel products. The Commission has therefore decided to grant loans pursuant to Article 54, second paragraph, of the Treaty under the conditions described below, subject to the availability of funds. II. WORKING PRINCIPLES Industrial loans to finance investment aimed at promoting the consumption of Community steel may be granted directly, or indirectly through financial agents under a global ECSC loan. Loan applications must be sent either to the Commission (1) in the case of direct loans or to a financial agent in receipt of a global loan, in the case of other loans. The granting of loans under Article 54, second paragraph, shall be at the discretion of the Commission, acting with the unanimous assent of the Council. A. Direct loans 1. The investment project The following types of investment project aimed at increasing or, in the case of restructuring, maintaining the level of consumption of Community steel may qualify: - projects aimed at introducing new applications for steel; -projects aimed at improving the competetivity of steel in relation to any other products; -projects by undertakings for which the cost of steel purchased, reflected in the price of the finished product, accounts for: (a) at least 50 % of the total cost of raw materials (including steel) or, if this provision cannot be applied for technical reasons, (b) at least 20 % of the total cost of the constituents (including raw materials) of the finished project, or, if this provision cannot be applied for technical reasons, (c) at least 5 % of the selling price of the finished product. The term 'steel' refers to the products defined in Annex I of the ECSC Treaty (see Annex) . Only expenditure on installations directly connected with continuous use of steel will be considered. Applications should relate to investment projects on which work has not been started or is still in progress, and which as a rule can be completed within three years. 2. The borower A body wishing to take advantage of a ECSC loan must be properly constituted in due legal form. Its activities, its size and any connection with parent or subsidiary firms or other shareholders must be made known. 3. Economic aspects The Commission will assess the economic aspects of the industrial project, principally in terms of the contribution the investment will make to the consumption of Community steel and of the technical and financial prospects for its implementation, its viability, the market outlook for the products and the situation in the sector concerned. 4. Financial aspects The Commission will assess the financial situation of the borrower and of any parent companies. The value of the guarantees offered will likewise be assessed. 5. Environmental considerations An analysis may be made of any significant effects on the environment from emissions and waste produced by the project. Projects must in any event meet the requirements of Community legislation on the environment. 6. The loan The maximum loan is set at 50 % of the investment value of the project (excluding working-capital requirements) . B. Global Loans The principle behind global loans to finance investments aimed at promoting the consumption of Community steel is to grant smaller loans via an intermediate national or regional finance organization. Save with the prior consent of the Commission, the total investment value of projects for which an individual loan is sought under a global loan may not exceed 15 million ECU. The fundamental objectives of the policy on global loans are the same as those for direct loans; the difference lies in the size of the loan and the degree of administrative decentralization, which occurs at two levels: - firstly, at Community institution level. Once the Council has given its assent to a global loan, each individual loan can be approved by the Commission; -secondly, between the Commission and the national or regional agency. Subject to the final assent of the Commission, the agency is responsible for negotiating individual loans with borrowers and evaluating projects (on the same basis as the Commission uses for evaluating direct loans) , and will forward its recommendations to the Commission. The agency will also advise the Commission of any national aids granted for the project. III. REPORTS AND MONITORING Borrowers are to send the Commission periodical reports on the progress of investment projects and the consumption of Community steel. The Commission will make selective inspection visits to the projects to ensure they are being carried out as planned. (1) Commission of the European Communities, Directorate-General 'Credit and Investment', Jean Monnet Building, Luxembourg (Grand Duchy) .