ARCHIVESHISTORIQUES
DELACOMMISSION
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Vol.1976/9006

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
SecretariatCOM(76)91final
Brussels,15thMarch1976
CONFIDENTIAL
9
COMMUNICATION TOTHECOUNCIL
RequestforanassentpursuanttoArticle56§2a)oftheECSC
Treatyforthegrantofaredevelopment loanonbehalfofSIERRA
CHEMICALEUROPEB.V.fortheirfertilizerprojectatHeerlen,the
Netherlands .

CONFITEÏTTIAL
COMMUNICATION TOTHECOUNCIL
Subject:RequestforanassentpursuanttoArticle56§2(a)oftheECSC
Treatyforthegrantofaredevelopment loanonbehalfof
SIERRA.CHEMICALEUROPEB,V.fortheirfertilizerprojectat
Heerlen,theNetherlands
I.ESSENTIAL HTFORMATION "
SierraChemicalEuropeB.V.
SierraChemicalEuropeB.V.
Production ofandtradeinartificialfertilizers
Heerlen,Limburg(theNetherlands)
USp965>000(+764,400u.a.)
USi250,000(+215,000u.a.)
"Jobscreated:40jobsxfhentheprojectisfullyimplementedin
1980ofwhich15willbeofferedinpriorityto
ex-ECSCworkersoftheLimburgregion.
II.CONFORMITY WITHARTICLE56§2aOFTHE?ECSC;'TREATY
TheLimburgregionissituatedintheborderareaoftheMaastricht,
wheretheDutch,BelgianandGermanboundariesmeet.
Since1965,theDutchGovernmenthasundertakenaprogrammetophase
outthecoalminingindustryintheLinburgregion,whichisscheduled
tobecompletedbytheendof1975*
Figuresforthecoalproductionindicatethatthedecreasehasbeen
substantial:from11,572,000in1962to2,942,000tonsin1972i.e.adecreaseof75%in10years.
Thenumberofjobsintheminingindustrydecreasedcorrespondingly
from57,300in1962to22,300in1972caidwillbephasedoutin1975*
Inthiscontext,theSierraChemicalprojectformsanintegralpartof
theolosureprogrammeforDutchcoalminingintheLimburgregion.
TheprojectwillcontributetothedevelopmentoftheLimburgregion
andtheohange-overshouldnotbetoogreatsincethere-employment
oftheworkerswillnotnecessitate achangeofresidence.Beneficiary :
Project:
Location:
Investment:
Loanrequested:
"Jobscreated:

-2--Ι,-ν.«.CΛ>'
III.THEUNEERTAKING
Description : Sierra Chemical Europe B.V.
Logal Status : Limited Company
Established : 8January 1975
Registered office : Heorlen ,theMotherland
Refdstered capital :12million fl.which is100$ owned "bythe
Sierra Chemical Company ofMilpitas ,
California (USA)
IV.THEPROJECT
Itisproposed toestablish aplant fortheproduction ofcontrolled m
release fertilizers andtoestablish asales organisation forthe "
marketing oftheproducts ontheEuropean market .
Theproject wasinitiated inOctober 1975 «Production hasbeen
scheduled torise to4»200 tons in1976-and to9»200 tons in1979 *
Theproduct range inoludes throe different fertilizer formulas with
different release-rates oftheactive ingredients .
Osmocote oontrolled-release fertilizers areproduced byapplying a
polymeric coating toconventional fertilizer materials ..Thepolymerio
ooating encapsulates thematerial andallows water vapor ,topass
through tothefertilizer salts ,dissolving them .Release rates canbe
achieved which offer thecustomer feeding periods offrom three months
totwoyears ,
V. THEMARKET
Controlled-releaso fertilizers offer advantages over conventional ^produots intwoareas :(l)Thecostofproducing theorop isreduced %
byeliminating thelabour needed forrepeated applications aswith
conventional formulations and (2)Thevalue oftheorop isincreased
through higher yields achieved bytailoring therelease rate ofthe
fertilizer tothefeeding rate oftheplant andbymaintaining a
oonstant availability ofnutrients ,
"Osmocote "fertilizers aresold through aselected network of
distributors whoaropicked fortheir knowledge ofthecrops ,the
grower ,andthemethod of "growing .They oanbeapplied toavariety
ofhigh value orlabour .intensive crops ,such asgreenhouse ornursery
cultivation andtoproblem situations such astropical agriculture
subject topersistent rainfall .
Theproposed prices areconsidered tobeoompetitiYe with other
oontrolled-release fertilizers .Themarkets fortieproduction at
Heerlen arecurrently 50%ofsales toEuropean olients and50$to
Australia ,ITewZeland andSingapore ,Thelargest sties growth is,
however ,expected inEurope ,

VI,SOCIALASPECTSv:
Theapplicanthassubmittedthefollowingplanfortheirworkforce
developments
Year No.ofemployees
1975 10
1976 20
1979 40
Atleast15ofthesejobswillbeofferedinprioritytoex-ECSC
workersoftheLimburgregion.Inordertofulfilthisrequirement,
thefirmisincontactwiththeBegeleidingscommissie Coordinatie
Mijnsluiting ,whichhasconfirmedthatenoughex-ECSCworkersare
availablein1975197^inorderthattherequirednumberof
ex-ECSCworkersoanbehired*
VII.ETTVIHCIIMEITTALASPECTS
Coatedfertilizersprovideamajorkeytoincreasedyieldsofornamental
andfoodcrops.Cdnverrtiomalfertilizers,evenwhentheyareohemically
oorreot,aresubjecttoforceswhichdiminishtheireffectiveness ,
suchas:
Mis-use,includingbothuncler-useandover-use,with
subsequentburningofplants
Leachingandfixation
Pealc-and-valleyfluctuations inplantnutrientlevels
Climateandsoilstresses
Theneedforfrequentre-application
Environmental pollutioncreatedbyover-useofsolublechemicals
Inthiscontextthe"osmocote"coatedfertilizers canbeconsidered
asamajorimprovement overconventionalfertilizers.
Thecoating,whichisbiodegradable ,isacopolymerofdicyclopenta *
dieneandmodifiedlinseedandthecoatingprocessiselectrically
powered.Therearethereforenoenvironmental orpollutionproblems
inconnectionwiththeproductionprocessitself.
VIII.FBTAiïCIAL ASPECTS
SierraChemicalCompanyisaprivatecompanywithheadquarters in
Milpitas,California(USA),
Itcommencedoperationsin1967asasuccessortotheLeslie-Agrifora
Corporation fromwhichSierraChemicalacquiredsolerightstopatents
forseveraltabletedfertilizers.Inaddition,patentedprocesses
forthemanufactureofOsmocotewerepurchasedfromtheArcher-Daniels ,
MidlandCorporation.

ThesummarizedfinancingplanfortheprojectatHeerlenisas
followst
Requirements J5*000Sources $'000
Site 149Mortgage 427
Plantbuilding 420Investmentpremium 204
Maohineryandother
equipment346ECSCLoan 250
Totalfixedinvestment 915Short-termcredits 212
Intangibles 4.500 Common-stock 1.000
Workingcapital 212Paid-insurplus
4.5?4
5.627
08SSSSSS5.627
Thediscountedrateofreturnontheinvestmenthasbeenestimated
at25-30$»whichissatisfactory .
CONCLUSIONS
^a)TheCommission }afterconsideringthecaseinallitsvarious
aspects,considersthattherequestcomplieswithArticle56
pfpara.2(a)oftheECSCTreatyandthattheproposedinvestment
iseconomically sound.Inconsequence ,theCommissionhasapproved
aloantoSierraChemioalEuropeB.V,foramaximumamountof
US$250,000(+215,000vua.)oritsequivalentvalue.•Fobanil
amountofrup»3.<-2l'5;b©6 -■■iEcuPoj>BtorUnits*ofiAooount .therateof,t-
interfestvillb$^re$uaed "by3percentagepointsforthefirst
fiveyearsafterthepaymentorpayments#
l■• ■;-•i:..■/•:!r.vct-O.
(b)TheOommissiofl'tSvites theCounciltogiveitsassenttothe
foregoingdeoision*