ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(79)503
Vol.1979/0171

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COM(79)503final
COMMISSION Brussels,26thSeptember1979
OFTHE
EUROPEANCOMMUNITIES p0ROFFICIALUSEONLY
GeneralSecretariat
REQUEST FORASSENTINACCORDANCE WITHTHESECONDPARAGRAPH
OFARTICLE54OFTHEECSCTREATYWITHREGARDTOTHEFINANCING OF
ANINVESTMENT FORTHEINSTALLATION OFANEWSEAMLESS
TUBEROLLINGMILLBYDALMINES.p,A.,MILAN
(Communication fromtheCommission toth«Council)
COM(79)503final

Communication totheCouncil
Subject~Jrequestfor"a.ssent"~inaccordance' "withthesecondparagraphof
Article54oftheECSCTreatywithregardt©thefinancingof
aninvestmentfortheinstallation ofanewseamlesstube
rollingmillbyDalmineSpA,Milan.
Loanrequested:Lit46000million(approximately 41millionEUA)
Borrower s DalmineSpA .j
RegisteredOffice sMilan
Works: Dalmine(Bergamo),Apuania(Massa),Piombino(Leghorn),
TorreAnnunziata ,(Naples),Taranto,CostaVolpino(Bergamo)
Registeredcapital;Lit226800millioni.e.approximately 201.49millionEUA
Mainshareholder :Pinsider,asubsidiaryholdingcompanyofIRI(istituto
Ricostruzione Industriale )-holds57$oftheshares,
theremainderbeingheldbysome21000privateshareholders
Companys Thecompanyoperatesoneopen-hearthmeltingshop
(beingreplacedbyelectricfurnaces)andoneelectric
meltingshopattheDalmineworks;productionfigures
areasfollowsJ(in1000t)
197619771978
C*en-hearth steel 1908724
Electric-furnace steel 267377439
457464463
Asfarasfinishedproductsareconcerned,thecompany
specialisesintheproductionofweldedandseamless
tubesusedmainlyintheengineering ,petrochemical ,
power,construction andpublicworksindustries(aque­
ductsandthetransportingofenergy).

-2-
Productionoffinishedproductsiscentredonsixworkss
-Dalmine(Bergamo)andApuania(Massa)forseamlesstubes
-Piombino(Leghorn),TorreAnnunziata(Naples)and
Tarantoforweldedtubes
-CostaVolpino(Bergamo)forweldedandseamlesstubes.
DalmineSpAisthe.leadingfirminItalyintheproduction
ofseamlesstubesandaccountsfor57$ofnational
production .
"1976""1977" 1978
(in1000t) DalmineItalyDalmineItalyDalmineItaly
Seamlesstubes 505810459770 479836
Weldedtubes 3152600 3102270 2942336
82034107693040 7733172
Description oftheproiect
Thecompanyintends,bymeansoftheDalmineproject,toreplaceits
equipmentforproducingseamlesstubeswithdiameterbetween76mmand
339mmbyanewmbdernrollingmill.Thepresentequipmentconsistsof
threerollingmillswhicharenowobsolete-twoatthesameworkswhich
datefromthe1930sandathirdinMassawhichdatesfromthe1940s.
Productioncapacityofthenewrollingmillwouldbe370000t/year
-150000t/yearmorethantheproductioncapacityoftheplantclosed
down.
Advancedtechnology,inparticularthecombination oftwonew
processesthePressPiercingMillandtheMultistandPipeMill-should
makeitpossibletoachievehighratesofdrawing,.totproducetubesofmore
exactdimensions (especiallyinthecaseofthethinnesttubes)andto
achieveahigheroutputthanthatoftraditionalrollingmills.
Certainchangesintheprogrammehaveoccurredwithregardtocost
andsomeoftheworksinvolved,sothatthecostswhichwereinitially
estimatedatLit146300millionin1975axenowmadeupasfollowss

-3-
Cost (inLit .1000million )
Structures andbuildings 26.5
Rolling mills (including engineering ,-power
network ,heat -processing and --semi-finishing -- . .
equipment ,etc) 120.1
Infrastructure and services 8.2
Start-up costs 29.8
Interest during construction 14.1
198.7
Thecompany hasdecided toinclude anewprogramme atMassa asa
........ ......... * •
corollary totheinstallation ofthenewrolling"miIl at"Dalmine.' Since
theMassa plant specializes infinishing operations required mainly fordeep
underground tubes ,itwill need tobemodernized andextended toaccommodate
newsupplies from Dalmine .Itisestimated that this programme will cost
Lit24000million .Total expenditure would therefore come toLit 222700
million .
Steel supplies totherolling mills
.Itisplanned that 90foofsupplies tothenewmill will beinthe
form ofcontinuously cast bars and10$intheform ofrolled bars forhigh-
quality products .
Thecompany hastherefore started tomodernize itssteel production
methods byinstalling a70tUHPelectric furnace ,ade-gassing furnace
andacontinuous casting line .Electric furnace steel production capacity
hasrisen from some 280000t/year to480000t/year .This newproduction
capacity replaced anequivalent open-hearth steel production capacity
which was shut down .
Trends inthe tube market
World steel tubeproduction -including welded andseamless tubes -reached
some63million tonnes in1978 ;seamless steel tubeproduction represented
approximately onethird ofthis total -i.e. 23million tonnes .

-4-
ProductiontrendsintheConnunitywereasshowninthefollowingtables
TubeProduction(inmilliontonnes)
Welded1216 1977 1978
Countrv SeamlessTotalWeldedSeamlessTotalWeldedSeamlessTotal
FRGermany 2.691.864.552.431.804.232.782.084.86
France 1.37O.581.951.290.531.821.520.592.11
Italy 2.600.813.412.270.773.042.330.843.17
Netherlands 0.20 0.200.23 0.230.24 0.24
Belgium 0.200.05"0.250.160.040.200.200.080.20
Luxembourg 0.09 0.090.11 0.110.12 0.12
UnitedKingdom0.900.511.410.810.501.310.830.541.37
Denmark 0.05 0.050.05 0.050.05- 0.05
Total8.103.8111.917.353.6410.998.074.1312.20
TubeconsumptionintheCommunity–talcingallcategoriestogether–
willprobablyincreasefrom12.1milliontonnesin1972to15.0milliontonnes
in1980thento17•4milliontonnesin1985Jamongststeelusersthetubes
sectorislikelytoshowanannualrateofincreaseof3$between1980and
1985.
TheproportionoftubeproductionexportedoutsidetheCommunityto
thirdcountrieswas48^in1978(ascomparedwith41^in1977).Theincrease
inexportsofseamlesstubesinparticular wasduetothefactthatthey
areusedlargelyinconnectionwithrecentdevelopments intheenergy
sector.Infact,thesetubes,whichhadinthepastlostgroundtov/elded
tubes,arenowpracticallyirreplaceable inactivitieswherethereis
rapidgrowth:oilsearch,submarineoilandgaspipelines,thepetrochemical ,
powerandengineeringindustries,traditionalelectricpowerstationsand
nuclearpowerstations,etc.Inviewoftheconsiderable investments
plannedbysomethirdcountries(theMiddleEast,theUSSR,EastEuropean
countriesanddevelopingcountries)inparticularforoilsearch,foreign
demandforthistypeofproductislikelytocontinuetoincrease.
Theconsiderations whichledDalminetoimplementitsinvestment
programmeseemtobeinlinewithmarkettrendsandforecasts.Trends
intheproportionofproductionexportedwouldbeasfollows:

-5-
_1973 26£
_1974 '30j!.
-1978 45$
_oncethenewrolling
mill"becomes
operational 55^(estimatedfigure)
Dalminehasformanyyearsoccupiedanimportantpositioninthe
Italianmarket,strengthened byspecialization agreementslinkingthe
companywithItalsiderandothercompaniesinthegroup.
Theimprovedcompetitiveness expectedplusincreasedproduction
capacityshouldenablethecompanytokeeppacewithtrendsindemand-
particularlyexternaldemand-intheseamlesstubesector.
Forthefollowingreasonsthemaindirecteffectoftheinvestment
willthereforebetofacilitatethemarketingofsteel:
-theinvestmentistobemadeintheprimaryprocessingsector;the
rollingmillplannedwilluseproductscoveredbytheECSCTreaty(rolled
billetsorcontinuouscastbillets);
-productswillbeproducedwhosecostpriceconsistsprincipallyofthe
costofthesteelused;
-itisexpectedthattheproportionofproductsexportedwillincrease
(from30$tosome55^).Accordingtomarketsurveyscarriedoutby
Dalmine,theexpectedincreaseinexternaldemandwillbelinkedin
particularwithasteppingupofthesearchforoil,anincreasein
thedemandforgasandoilpipelinesajidanincreaseinthenumberof
nuclearandtraditional powerstations.
Since,inaccordancewiththesecondparagraphofArticle54ofthe
ECSCTreatytheinvestmentprogrammewillcontributedirectlyandprimarily
tofacilitatingthemarketingofsteel,aninitialloanofLit36000million
wasgrantedtothecompany(assentoftheCouncilobtainedatthe405th
meetingheldon27July1976).Inaddition,theEuropeanInvestmentBank
hasgrantedaloanofLit28000million,bringingtheCommunityloansto
atotalofLit64000million.

-6-
Taking account ofthe considerable increase inthe cost ofthe
programme (Lit223000million ),theCommission hasdecided inprinciple
infavour ofgranting asecond loan ofLit46000million (total loans do
notexceed 50$ofthecosts ).
Consequently ,theCommission requests theassent oftheCouncil in
accordance with the second paragraph ofArticle 54oftheECSC Treaty
forthegranting ofaloan ofLit46000million ,oritsequivalent ,
totheDalmine SpAcompany .