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COM(80)181
Vol.1980/0054

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(80 )181 final
Brussels,22ndApril 1980
FOROFFICIAL USEONLY
REQUEST FORASSENT ,PURSUANT TOARTICLE 56.2a OFTHE
ECSC TREATY TOGRANTING ARECONVERSION LOAN TO
"DEESIDE TITANIUM LIMITED ".U.K.
(Communication from the Commission tothe Council )
C0M(80 )181 final

COMMISSION
OFTHE
EUROPEAN COMMUNITIESINTERNAL DOCUMENT
COMMUNICATION TOTHE COUNCIL
Subject :Request forassent ,pursuant toArticle 56.2a oftheECSC Treaty
togranting areconversion Loan toDeeside .Titanium Limited -U.K.
I. ESSENTIAL INFORMATION
Appli cant
Benef iciary
Project
Location
Investment
Loan Requested
Jobs created
Interest reduction:Deeside '.Titanium Limited
:Deeside Titanium Limited
:Construction ofanew plant to
produce titanium granules
:Shotwick ,Clwyd ,Wales
:•t24.139 M
:b12Jl (18.635 MEUA )
:278 ;
:3percentage points annually for 5years
for 5MEUA
II. CONFORMITY WITH ARTICLE 56OFTHE ECSC TREATY
Theapplication isforassistance insupport ofaproject atShotwick
near Shotton inClwyd .Clwyd iscurrently suffering anunemployment
level of9.2% .(October 1979 )representing 11,966 persons registered as
unemployed (7,451 males and4,515 females ).Although theunemployment
level hasfollowed national trends and fallen slightly over the past
12months ,from 10.6% to9.2% ,Clwyd hasconsistently hadthe highest
county figures inthe U.K. Included intheabove figures are atotal
of1,335 young persons registered asunemployed with theCareers Offices ,
Provisionaladdress:RuedelaLoi200,B–1040Brussels–Téléphoné350040-358040–Telegrophicoddress:•COMEURBrussels•–
Telex:.COMEURBRU 2)877.

Eachyearapproximately 3,000newschoolleaversareseekingemployment
inClwydandanincreasingnumberofthemarebeingforcedtojointhe
ranksofthelong-termunemployed;48%oftheunemployedinClwydare
currentlyunder25yearsofageand80%havebeenunemployedformore
thansixmonths.
TherecenttrendinthestructureofemploymentinClwydhasbeenfor
adeclineinprimaryandmanufacturing industries.Thedeclineofthe
textileandcoalindustrieshashaditseffectontheemployment
situationintheNorthEastendWrexhamMaelorareas.Over3,000jobs
havebeenlostincoalminingsince1966and3,600jobslostinthe
textileindustrysince1972andinthesteelindustryitselftherehas
beenalossof2,350jobssince1974.
B.S.C.nowproposetoreducetheworkforce'atShottonfromafigureof
10,725(April1979)to4,229representing atotaljoblossthrough
closureanddemanningof6,496.Inaddition,whenjobsdirectlydepend­
entuponsteelmakingareaddedtothisfigureclosurewouldresultinat
least7,616joblosses;Asaresultofresearchundertaken onbehalfof
theClwydCountyCouncilthemajorityofthesejoblosseswilloccurin
theDeesidearea(87.5%)withtheremainderintheWrexham(11.3%)and
Rhylareas(1.2%)..
Thehighlevelofunemployment intheregioningeneral,andthe
forthcoming joblossesatShotton,underlinetheneedforpromoting
andassistingprojects,suchasthatproposedbytheapplicantwhich
willbelocatedclosetotheB.S.C.steelworksatShottonandwhich
willcreatejobopportunities forredundantsteelworkersandpossibly
encouragefurtherdevelopment ..
III.THEUNDERTAKING
IMILimited,RollsRoyceLimitedandtheNationaI"EnterpriseBoard(NEB)
have-enteredintoajointventuretoestablishanewrefiningplantat
Shotwlck toproduce5,000tonnesperannumoftitaniumgranules..For
thispurpose,DeesideTitaniumLimited,aprivatelimitedcompany,was
founded.Thesharecapitaloffc8Misheldasfollows:

-'3-
b5M(62.50%)byNationalEnterprise Board
b1.5M(18.75%)byIMILimited (
t1.5M(18.75%)byRollsRoyceLimited.
TheNationalEnterprise Boardwasestablished undertheIndustryAct1975
andcameintoexistence on20.11.75.Itisapubliccorporation which,at
31.12.1978,had17subsidiaries whichrepresented atotalinvestmentof
b1,208.99 M.Itspublicdividendcapitalat31.12.1978 amountedtob1,014.9M.
»
IMI(ImperialMetalIndustries )Limited,isanindependent U.K.registered
companyquotedontheLondonStockExchange.RollsRoyceLimitedisa100%
subsidiary oftheNationalEnterprise Board.
IV.ECONOMIC JUSTIFICATION FORTHEPROJECT
RollsRoyce'scurrentrangeofaeroengines,uponwhichbothU.K.andNATO
airforcesaredependent,usehighperformance titaniumalloyinanumber
ofcriticalareas.Thesehightemperature alloyshave,todate,been
producedbyIMIfromrawtitaniumgranulesobtainedfromICI'sBainWorks.
ThisplantistheonlyWesternEuropeanproducerofrawtitanium.Inthe
lightofICI'sdecisiontocloseBainWorksin1982itisnecessaryto
construct anewplantinordertoensureRollsRoyceacontinuing supply,
viaIMI,ofhighperformance titaniumalloys.(Theonlyotherpossible
sourceoftitaniumalloysisthroughtheuseofrawtitaniumKrollsponge
fromJapaneseorAmericansuppliers.Todate,IMIhasnotbeenableto
producehighperformance alloysfromKrollspongeand,evenifitwere
possibletodoso,itisestimatedthatitwouldtakeoversixyearsto
validateandcertificate theuseofKrollsponge.)
ICI'sBainWorks,whichthenewplantwillreplace,hasacapacityof
approximately 3,600tonnes.Thenewplantwillhaveaproduction capacity
ofabout5,000tonnesperannum.Thiscapacitywasjudgedappropriate as
worldwide demandfortitaniumalloysisexpectedtogrowstronglyover
theshortandmediumterm.Inconsequence,itisanticipated thatthere
willbeareadymarketforthatpartoftheplantoutputwhichmaynot
berequiredbyRollsRoyce..
V.THEPROJECT
Theprojectconsistsoftheconstruction ofanewplanttoproducetitanium
granulesbythesodiumreductionprocess.Thetimescheduleforthe
realisation oftheprojectisasfollows:b5M
b1.5M
b1.5M

-4-
1980:Commencement ofconstruction
1980:Plantinstallation
1981:PlantCommission
1982:Firstsaleableoutput ■
1984/85:Firstyearoffullproductionwith5,000tonsp.a,
ofsaleableproduct(grosscapacityapproximately
5,500tonsp.a.)
Fixedassetsacquiredin1980,1981willbe:
t000 1980 1981 Total
Landandbuildings 7,3472,020 9,367
Plant 11,586 3,186 14,772
18,933 5,206 24,139
VI.SOCIALCONSIDERATION
Thenewplantwillprovide278jobsofwhich192willbeforprocessworkers,
37formaintenance workersand49forstaff.Recruitment isscheduledas
follows:
1980:6(onlystaff)
1981:129
1982:52
1983:91
Itisenvisagedthatmorethan90%ofthenewjobswillfallwithinthe
competenceofex-ECSCworkers.Wagerateswillbe"fullycompetitive and
inlinewithbestcommercialpractice.
Itisintendedtoprepareandimplementtrainingschemesasappropriate .
Thisisoneofthetasksofarecentlyformedprojectmanagement team.
VII.ENVIRONMENTAL ASPECTS -
Theappropriate U.K.healthandsafetyauthorities haveexaminedand
approvedthenewplant.DeesideTitaniumLtd.pointoutthattothe
bestoftheirknowledgeICI'splantonTees-sidewhichhasoperatedfor
over20yearsaprocesssubstantially similartothatenvisagedforthe
newplant,hasnotcausedanyenvironmental problems.Theprocessused-
thereactionoftitaniumtetrachloride withsodium-takesplacewithin
sealedcontainersundercarefullycontrolledconditionsandgivesrise
tonegligiblequantitiesofsolidwaste.Theonlyliquidwasteproduct
issaltinsolutionwhichisdischargedintothesea.Nogaseouspollutant/
effluentisproduced.
./.

VIII.FINANCE
Thefinancerequiredis: (fc000)
1980 1981 1982-1985
Capital'expenditure 18,933 5,206 662
Adjustforcapitalcreditors (2,035)2,035
Workingcapital(net) (8) (26) A,398
IX.CONCLUSION16,890 7,215 5,060
Thesourcesoffinanceenvisagedare:
Equitysharecapital 6,200 1,800
ProfitbeforetaxandlRG (1,451)(3,144) (10,248)
Depreciation - - 5,972
IRG - 1,200 200
RDG - 3,592 988
Bankfinance 141 3,767 8,148
ECSCloan 12,000
16,890 7,215 5,060
TheCommissionconsidersthattherequestcomplieswithArticle56.2aof
theECSCTreatyandthattheproposedinvestmentiseconomically sound.
Inconsequence theCommissionhasapprovedaloantoDeeside.'Titanium
LimitedforitsprojectatShotwick,Wales,foramaximumamountof
t12M(+18.635MEUA)oritsequivalent amount.Interestistobereduced
by150,000EUAperyearforthefirstfiveyearsafterthepaymentor
paymentsoftheloan.
TheCommissioninvitestheCounciltogiveitsassenttotheforegoing
decision.