ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(81)785
Vol.1981/0222

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(81)785 final
Brussels.15December 1981
FOROFFICIALUSEONLY
COMMUNICATION FROM THECOMMISSION TOTHECOUNCIL
RequestfortheCouncil'sassent,underthesecondparagraph
ofArticle54oftheECSCTreaty,tothepartialfinancing
ofaninvestment programmetobecarriedoutbytheOaky
CreekJointVenturefortheannualproductionof2.25million
tonnesofcokingcoal
C0M(81)785final

Nc~stotheCouncil
SubjectjRequestfortheCouncil'sassent,underthesecondparagraphof
Article54oftheECSCTreaty,tothepartialfinancingofan
investmentprogrammetobecarriedoutbytheOakyCreekJoint
Venturefortheannualproductionof2.25milliontonnesof
cokingcoal
Loanrequesteds A$I50million(approx.174.95miHi°nECU)
Borrowers;ThepartnersintheOakyCreekJointVenture,through
theintermediary ofagroupofbanks
ThaOakyCreekproiect"JointVenture"
OakyCreekisacokingcoalminesituatedintheStateofQueensland ,
approximately 300kmfromtheportofHayPoint(Mackay)ontheeastcoast
ofAustralia .
Theprospecting andworkingconcessionfortheminecoversatotalareaof
12723hectares,andhasbeengrantedbytheAustralianauthoritiesunder
theMiningAct,1968-1979 »oftheStateofQueensland.Theconcessionisvalid
-for21years.
Thedifficultsituationinthesupplyofcokingcoalledthreesteelcompanies,
EstelHoogovens WJ,ItalsiderSpAandEmpresaNacionalSiderurgica SA
(Ensidesa)toconcludeajointventureagreementwithMountIsaMinesLtd
(ISA)forthejointexploitationofthemine.Individualcompanies'shares
intheventureareasfollows;
–MountIsaMinesLtd(ISA),Brisbane,Queensland 79«0>-Efitel–Delfstoffen BV(awholly-ownedsubsidiary
ofEstelHoogovensBV) 8.5'fa
–ItalsiderSpA,Genoa 7-5h-EmpresallacionalSiderúrgica SA(Snsidesa),
Madrid 5,0,0
100.0!o
4012/81en

MountIsaMinesLtdiswholyownedbyMIMHoldingLtd,oneoftheleading
Australiangroupsintheminingsector(turnoverA#878million).Amongst
othermines,thecompanyworkstheMountIsaminesproducingcopper
(160000t/yr),lead(15O000t/yr),silver(440000kg/^rr)andzinc(110000t/yr)
Ensidesa,whicliisstate-owned ^,isthelargeststeelmanufacturerinSpainwithanoutputof5milliont/yr,40$ofthecountiy*stotalproduction.
Productionandreserves ^
The"OakyCreek"projectisforanopen-castmine,forwhichinitialwork
willtakeuntilmid-1983.Acertainamountofwork,isalreadyfinished,and
thepreliminary workisexpectedtotoecompletedonschedule.
Annualproductionisexpectedtobeintheregionof2.25milliontonnes.
Reservesforopencastminingareoftheorderof90milliontonnes,which
givesaworkinglifeofapproximately 40yearsattheproposedrateof
working;therearefurtherundergroundreservesof145milliontonnes.
Thecokingcoalisofgoodquality,andhasthefollowingmeancharacteristics ;
-inherentmoisture1.2fo;volatilematter28.9fixedcarbon61.9
ash8%;sulphur0,8fa;totalmoisturecontent9-5i°maximum;
Crucibleswellingnumber8–8.5.
InadditiontheJointVentureiscontemplating increasliTg'output to3million
t/yearwiththeproductionof0.75milliontonnesofsteamcoal,butno
decisiononthishasyetbeentaken.
Supplycontracts
TheEuropeanc'QpanieshaveconcludedfApplycontractswihtheJointVenture
f-orthefollou"'"^annualquantitiesofcokingcoals
-Estel 500000t
-Italsider 700000t
-Ensidesa 500000t
1-700000t.
Taesecontractsareforfifteenyearsfromtheyearinwhichtheminestartsproduction (1983).
ThepriceofthecoalwillbefixedbyreferencetotheEuropean'market
price,thoughforthefirsteightyearsaminimumprice,calculatedonthe
basisofthecostpriceforannualproductionof1.5t&illiontonnes,
willenableinvestmentandfinancingcoststobemet.
4012/81en

-3-
Itshould "be"borneinmindthatthecompaniesparticipating intheJoint
Venturewillatthesametimebenefitfromtheminingprofitsandfrom
advantageous supplyterms.
The"balanceoftheproduction-550000tonnes-willproSablybesoldon
theJapanesemarket.
Thelong-termsupplycontractswillrepresentthefollowingpercentages
oftheEuropeancompanies'annualcoking"coalrequirements s
-Estel 17h
–Italsider 10%
-Ensidesa 12h
Projectdescription andcosts
Toenabletheminetoachieveannualproductionof2.25milliontonnesof
washedcoal,majorworkswillberequiredcostingatotalAft343.3million.
Twomaincategoriesofinvestmentcanbedistinguished ?thoseofan
industrialnature(A)andinfrastructure (B).
A.Industrialinvestment (totalcostM171.2million)
-coalwinningandtransferequipment
-mineralpreparation andwashingfacilities
-siteworks.
B.Infrastructure works(TotalcostAft127.6million)
-railwayconnections-secondloadingwharfatHayPoint(Mackay)forvesselsupto150000dwt-constructionofhousingforminepersonnel(approx.3000individuals).
Tothecosts"istedunderAandBimisJbeaddedinterimloaninterest
(A$30million),andworkingcapital(A$14-5million).Ofthetotalcost
ofAt343.3million,30'joistobebornefromownresourcesbythepartners
intheJointVenture,inproportiontotheirpercentageinvolvement ,and
theremaining70'/£willbemet.fromlongtermborrowing.
Estimatesofincomeandexpenditurefor.theprojectindicateasatisfactory
levelofprofitability .
Conclusion
Completingthisprojecttoproduce2.25milliontonnesofcokingcoalper
yearfromtheOakyCreekmineshouldleadtoanimprovementinthesupplies
ofcokingcoaltotwoCommunitysteelcompanies,ItalsiderandEstel.An
improvementofthiskindseemsparticularlynecessaryinthelightofthese
companies'requirements forimportedrawmaterials.
4012/81en

ThedecisiontoembarkonajointventurewithanAustralian company,
MountIsaMinesLtd,stemsfromthefactthatby*reasonofthequalityof
itsdepositsandthequantityofitsreservesAustraliaisoneofthe
Community'sprincipalsuppliersofcokingcoal.Participation inthisnew
venturewillfurthermore enabletheCommunitycompaniestoobtainsupplies
onmorefavourabletermsthanthosenormallymetontheinternational
market.
Theforegoingleadstotheconclusionthatafavourableopinionshouldbe
given,sincetheinvestmentprogrammecontributesdirectlyandprincipally
totheachievement oftheobjectivessetoutinArticle54,second
paragraph,oftheECSCTreaty.
TheCommissionhasdecidedinprincipleinfavourofgrantingtheloan
requested,and,inaccordancewithArticle54,secondparagraphofthe
ECSCTreaty,requeststheassentoftheCounciltothegrantingofaloan
ofA$150000000oritsequivalentinanothercurrencytothepartners
intheOakyCreekJointVenture,throughtheintermediary ofagroup
ofbanks.
4012/81en