ARCHIVES HISTORIQUES
DELACOMMISSION
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DOCUMENTS "COM"
COM(77)115
Vol.1977/9004

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Conformément aurèglement (CEE, Euratom) n°354/83 duConseil du1erfévrier 1983
concernant l'ouverture aupublic desarchives historiques delaCommunauté économique
européenne etdelaCommunauté européenne del'énergie atomique (JOL43du15.2.1983,
p.1),telquemodifié par lerèglement (CE, Euratom) n°1700/2003 du22septembre 2003
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Inaccordance with Council Regulation (EEC, Euratom) No354/83 of1February 1983
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Community andtheEuropean Atomic Energy Community (OJL43,15.2.1983, p.1),as
amended byRegulation (EC, Euratom) No1700/2003 of22September 2003 (OJL243,
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filehave been declassified inconformity with Article 5oftheaforementioned regulation.
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COM(77)115final.
COMMISSION Brussels,6April1977-
OFTHE
EUROPEAN COMMUNITIES FOROFFICIALUSEONLY
GeneralSecretariat
RequestforCouncilassentinaccordancewithArticle54»second
paragraphoftheECSCTreatyforthefinancingofapelletization
plantwithacapacityof3millionpelletsperyear,toheerected
"byItabrasco(Brazil)
(Communication fromtheCommissiontotheCouncil)
C0M(77)115final.

NotefortheCouncil
Subject:RequestforCouncilassentin-accordancewithArticle54»second
paragraphoftheECSCTreatyforthefinancing
ofapelletization plantwithacapacityof3millionpelletsper
year,tobeerectedbyItabrasco,(j;razil). *
Loanrequested:ZUS20million(approx.e.u.a.17»B6million)
Borrower:FinsiderInternational S.A.,Luxembourg
I.CapitalstructureofItabrasco
•*Itabrascowasformedon27April1973-withthename"CompanhiaItalo
BrasileiradePelotizaQaoItabrasco 11andwithitsregisteredofficeatVito­ria(State'ofEspiritoSanto,Brazil).Originallyitscapitalcomprised
72000shares(64800ordinaryand7200preferredshares)withatotalvalue
ofCr§*72million.Attheshareholders generalmeetingon2iApril1975itwasdecidedtoincreasetheCompany'scapitalto*Cr144million(corres
pondingto.%US16millionatarateof1*USto9Cr£).Itabrasco's
capitaJLcanbebrokendownasfollows:'
-50,9$heldbythfeCompanhiaValedoRioDoce(CVRD)f350fwhichis
ovmedbythestateofBrazil; *■
-49,1c/oheldbyFinsiderInternational S.A.,Luxembourg(awholly-owned
subsidiaryofFinsiderSpA,Rome).TheIstitutoRicostruzione Industriale
(iRl),anitalian .governmentorganization ,holds55ofthesharesof
FinsiderSpA.
TheBrazilianGovernmenthasgrantedconsiderable taxconcessions
to'Itabrasco,suchasexemptionfromimportdutiesforpelletizingequipment
andexemption,upto1988»fromtaxonincome^fromitsexportedproducts.

Thecompany objective ofTtabrasco
TheFmsider Group decided toparticipate mthesetting upofthis
newundertaking tohelp toguarantee rawmaterial supplies ,mainly forthe
iron andsteel works ofItalsider (Finsider group ).Tothis endalong-term
supply contract vrassigned byItabrasco andItalsider providing for the
supply of2.5million tonnes ofpellets (iron content 64-65 /•>)<■ Theiron
ore (pellet-feed )required forthis will beprovided bythemines ofCVRD ,
which hasconcluded along-term contract tosupply Itabrasco with the iron -
ore inquestion .
CVRD istheforemost producer ofiron oreinBrazil (average iron
content 65%,andreserves areestimated at4000million tonnes (itabira
mines ,.State ofMinas Gerais ).CVRD 'sproduction ,almost allofwhich is
export c/d(95%)iisgiven inthefollowing table :
1973 1974 1975
'(inmillion t) ; 30.3 42.7 52.2
ThePinsider group' s•supplies ofimported iron oreamounted to
16.7 million tin1975 >5»4 ofwhich came from South America (Brazil
accoVtnting for3.2million t).
Description ofthe -project
Thenewpelletization plant "will beinstalled near the port ofPonta
doTubarao andwill benefit from existing infrastructures such asindustrial
anddrinking water ,electricity andrailways ,which were create# when CVRD 's
first twopelletization plants were constructed .The'siting oftheplant
near thewharves ,which maybeused byships of250.000 t,isfurther justifi
bythefact that virtually theentire production oftheplant will beexporte
Thepelletization plant assuch will consist ofastraight-grate
furnace with asurface area of450m^andaoapacity of400t/handwill be
constructed byItalimpianti under licence from Lurgi-Dravo .Apart from this ,
d;he plant will mainly comprise arawmaterials bay ,twosilos each of900 t,
Tjriquetting -andhomogenization plants and apellet store .
Therawmaterial (pellet-feed ),which will have aniron content of .
66-67 %(inthedrystate )will besupplied bytheconcentration works situa­
tednear theItabira Mines (State ofIlinas Gerais )owned byCVRD .Theplant
will bemanaged bythemanagerial staff ofCVRD ,ijhonave already gained wido
experience inthis field andwhowill assume responsibility forrecruiting
newpersonnel (200)andfortheprovision ofservices ,materials andinfra­
structures' ingeneral .
Thecapital cost oftheproject isgiven below (inmillions of US).
Plant 54.2
Freight anatransport 7«3
Buildings andassembly work 16.7
First-year interest 2.0
Other expenses (start-up ,general costs etc)3^4
Contingencies /• 3.0
Work started in1974 and .will becompleted mearly 1977 *
610/77e

IVConclusion
>*■ Thenewpelletization plant ,which will have acapacity of3million
t/year ,should help toimprove rawmaterial supplies forthecompanies in
theFinsider group .
Such .inimprovement would appear particularly necessary atatime
when theworld' smajor steel producers ,theUSSR ,theUnited States and
Japan ,have iron oredeposits attheir disposal either within their own
frontiers orrelatively close athand inindustrialized countries (United
States-Canada ,Japan-Australia ,etc.)*
This joint venture wasundertaken with theBrazilian company CVRD
"because thequality andquantity ofBrazilian reserves make Brazil one ofthe
foremost suppliers ofiron oretoCommunity undertakings .Moreovsf ,CVRD .
which isBrazil 'sbiggest producer ofiron ore ,isalready linked toItal-
sider (ofthePinsider group )bylong-terra contracts forthesupply of
pellets andconcentration fines .Finally ,Finsider 1sparticipation inthis
newventure will enable ittoobtain supplies onmore favourable terms than
onthe international market .
Theapplioation should beaccepted because ofthe above reasons
andbecause theinvestment programme makes adirect andmajor contribution
towards achieving theobjectives setoutin-Article 54fparagraph 2ofthe
ECSC Treaty .
TheCommission ha3decided inprinciple infavour of /-granting the
loan .Therefore ,inaccordance with Article 54»paragrpah 2ofthe TSCSC
Treaty ,ithereby requests the assent oftheCouncil tothegranting ofa
loan of US20million toFinsider International S.A. ,Luxembourg .
Comments
This isthesecond loan requested byFinsider International S.i..The
first loan (June 1975 )wasforthefinancing ofaproject .ofBong riinlnft
Co.,Monrovia (Liberia ). .
610/77e
y