ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(76)408
Vol.1976/0122

Disclaimer
Conformément aurèglement(CEE,Euratom)n°354/83duConseildu1erfévrier1983
concernantl'ouvertureaupublicdesarchiveshistoriquesdelaCommunauté économique
européenneetdelaCommunautéeuropéennedel'énergieatomique(JOL43du15.2.1983,
p.1),telquemodifiéparlerèglement(CE,Euratom)n°1700/2003du22septembre2003
(JOL243du27.9.2003,p.1),cedossierestouvertaupublic.Lecaséchéant,lesdocuments
classifiésprésentsdanscedossierontétédéclassifiésconformément àl'article5dudit
règlement.
InaccordancewithCouncilRegulation(EEC,Euratom)No354/83of1February1983
concerningtheopeningtothepublicofthehistoricalarchivesoftheEuropeanEconomic
CommunityandtheEuropeanAtomicEnergyCommunity(OJL43,15.2.1983,p.1),as
amendedbyRegulation(EC,Euratom)No1700/2003of22September2003(OJL243,
27.9.2003,p.1),thisfileisopentothepublic.Wherenecessary,classifieddocumentsinthis
filehavebeendeclassified inconformitywithArticle5oftheaforementioned regulation.
InÜbereinstimmung mitderVerordnung(EWG,Euratom)Nr.354/83desRatesvom1.
Februar1983überdieFreigabederhistorischen ArchivederEuropäischen
Wirtschaftsgemeinschaft undderEuropäischen Atomgemeinschaft (ABI.L43vom15.2.1983,
S.1),geändertdurchdieVerordnung(EG,Euratom)Nr.1700/2003vom22.September2003
(ABI.L243vom27.9.2003,S.1),istdieseDateiderÖffentlichkeitzugänglich.Soweit
erforderlich,wurdendieVerschlusssachen indieserDateiinÜbereinstimmung mitArtikel5
dergenanntenVerordnungfreigegeben.

COMMISSION OFTHEEUROPEAN COMMUNITIES
\ I 1
CON(76)408final.
!Brussels.26July1976
\
■
COMMUNICATION FROMTHECOMMISSION TOTHECOUNCIL
! IRequestforanopinionunderArticle54,secondparagraph,
oftheECSCTreatyregardingtheproposedpartfinancingof
aprogrammeofHawleyCharbonFrance,theFrenchcoalandsteel
jointventurecomprisingtheacquisition of80%ofthecapital
oftheHawleyCoalMiningCorporation (H.C.M.C.)intheUnited
States.
\ •
V
C0NC76)408final.

Doc.No.2262/76e
Communication totheCouncil
Subject;RequestforanopinionunderArticle54ssecondparagraph,
oftheECSCTreatyregardingtheproposedpartfinancingof
aprogrammeofH&wleyChartonFrance,theFrenchcoal
andstealjointventurecomprisingtheacquisitionof80%
ofthecapitaloftheHawlc-yCoalMiningCorporation (H.C.M.C.)
intheUnitedStates.
Loanrequested:AtotalofUS$12.0million(approx.10.9millioneua)
Borrower:USINCR (51.2ofthetotal)
S0LMER (29.3%ofthetotal)
Soc.Met.deNormandie (3.9%ofthetotal)
Charbonnages deFranca(15.6%ofthetotal).
1.titsstructureofeawleyckaebonfrajtce
TheenergysituationresultingfromtheeventsofOctober1973
ledAssociationTechniquedeIsImportationCharbonniere (ATIC-Technical
AssociationforCoalImports),Paris,tointensifyitseffortstoprovide
theFrenchcokingcoalmarketwithgreatersecuritysupply.Inparticular,
ATICwasincontactwithanAmericanCompany,theHavleyCoalMining
Corporation ,theholderofexclusiveminingrightsforminesinVfeet
Virginia.Thiscompany,whichwasalreadylinkedtoUSINORthrough
ATICbyalong-termcontractconcludedin1971forthesupplyofcoking
coal,wasintendingtoincreaseitsdeliveries .
Underthosecircuasttoices themainFrenchironandsteelcompanies
whichimportcokingcoalfromnon-membercountries,USIoTOR,SOLMER
andSocieteMetallurgique deNormandie,togetherwithCharbonnages de
France,whichalsowishedcoobtainsuchsupplies,feltitnecessary
tosetup,attheendof197^andearlyin1975,a.jointventurenetted
"EawleyCharbonFrance"withaviewNtoacquiringan80%interestin
HawleyCoalMiningCorporationintheUnitedStates.Theremainder
oftheshares,i.e.,20%ofthecapital,weretoremaininthehands
ofHawlt-yFuelCorporation ,asubsidiaryofBelgoPetroleum.Thisope-:
rationwascarriedoutbymeansofapaymentofUS$36million,broken
downasfollows:

-2-
USINOR
SOIMBR
NORMANDIE
CHARBONNAGES DEFRANCE51.2*
29.3%
3.9%
15.6$
ThebulkofthecokingcoalsuppliesareintendedfortheDunkirk
andFosplantsandforcertaincokingplantsbelongingtocollieries
inthenorthofthecountry,
II.THEMINESOFTHEH.C.M.C.
TheworkablecoalreservesoftheH.C.M.C.areestimatedtobe
asfollows: !
theBlueBoymine -22.7latons
theEmpiremine. 18.?mtons
theBeardsForkmine20.7mtons
othermines 16.3mtons
Theabovereservesconsistofcokingcoalswithalowcontent
ofcombustible substances.
TheBlueBoymineisdevotedentirelytounderground miningwhere­
astheEmpiremine,althoughessentiallysimilar,includesanopencast
section.
Inviewofthegreatsimilarityin'theminingconditionsencountered
thecompany'spolicyonundergroundminingistostandardizeworkings
withregardbothtotheequipmentusedandtothetrainingandinter*
changeability ofpersonnel. 1
During1975productionrosetoabout725*000t.
III.SUPPLIESTOPARTICIPATING COMPLIES
Acoalsal.esagreementwasconcludedin197^betweenHawleyCoal
andATIC(actingonbehalfoftheparticipants inHawleyCharbonFrance)
andHawleyFuel,theAmericanminorityshareholder .Underthecontract -
HawleyCoalundertooktosellATICSO%ofitseraproductionandthat
ofitssubcontractors ,anamountcorresponding totheshareofthe
capitalheldbytheFrenchcompanies.
Furthermore ,HawleyCoalhasalsosoldtoHawleyCharbonFrance,
underacontractconcludedpriortotheequityacquisition ,thepro­
portionoftheproductionwhichwouldnormallyhavegonetotheAmerican
shareholder.Fortheirparttheparticipants inHawleyCharbonFrance .
haveundertakentobuyuportoarrangeforthesaleofthe.coalproduced
byHawleyCoal.78.221tons
2262/76e

-3-
Coal prices arenormally fixed annually onthe "basis ofaverage
prices regarded asrepresentative forthemarket andapplied bythe
major American coal exporters . ...
During 1975 deliveries ofcoking coal supplies from Hawley Coal
rose toabout 600,000 t,avery substantial proportion ofitsproduction .
Supplies inthecoming years will depend onHawley Coal 'sproduc­
tion .Itseems likely that ,asin1975 ,theFrench partners will not
only absorb their share ofEawley Coal 'sproduction ,butwill also
buyuptheshare oftheproduction towhich the .American shareholder
would normally beentitled .Theproduction share tobetaken up .by
theFrench undertakings infact represents only alimited part oftheir
requirements ofimported coking coal .In1976 imports areexpected -
tobeasfollows : •
-Blue Boy 600,C00 t
-Empire 300 .»COQt
.'900x00 t
Insubsequent years supplies should increase inline with the
expected growth inproduction .
Theproduction cost ofcoking coal must undoubtedly have been
higher than wasinitially forecast .Anumber ofsocial factors ,in
■particular theincrease inpersonnel forsafety reasons demanded bytheminers'
unions ,have increased thewage costs ofHawley Coal asinother under­
takings inthesector .However ,the cost hasremained lower than the
representative selling prices onthe .American market and ,byaneven
larger margin ,than theproduction cost ofCommunity coal ofcomparable
quality .Furthermore ,thecoal inquestion ishighly suited tocoking
andimproves thequality ofthecoal with which itismixed .■
Theselling prices forAmerican coal ereexpected toberevised
in1976 .This would improve Hanleys Coal 'scompetitiveness .
1Iv «PIAMZ5D 'INVESTMENTS ■ '
Thevarious investment programmes provide foranincrease inpro­
duction capacity atthetwomaan collieries ofBlue BoyandEmpire
andtoalesser extent atBeards Fork .In1975 expenditure amounted
toabout US$6million .Theprogramme approved for1976 involves a
sumofabout US012.5 million .
xTheinvestment isdesigned :
-toincrease production potential frcti 700,000 t/year in1975 to
1.3million t/year in 1976 ^
-tomodernize andstandardize mining techniquss attheBlue Boy
aridEmpire mines .
Thepurpose ofthese investments istoprovide similarly manned
teams with theequipment necessary tocarry outcomplete coal-getting
andclearing operations .
2262 /76e

-4-
Assessment
Theparticipation inHawloy Coal bythe .aforementioned ,steel andcoal mining
companies appears tobeinconformity with Community interests ,forthe
following reasons : y
-Quantitatively ,thepurpose oftheacquisition istoimprove the
...security ofsupplies tothe companies concerned ;
-ftegarding prices ,itisnowpossible forthem to .obtain their coal
atprices very close toproduction cost .Itstrengthens their competitive
ability intheAmerican coal market bymaking them more familiar with the
structure ofproduction andtransport costs 5
-TheFrench companies' participation inthecapital "ofHawley Goal was
acquired exclusively with theobjective ofimproving their supplies of
coking coal .Infact ,under theprovisions ofalong-term contract drawn
upin1974 between Hawley Ctoal ,ontheonehand ,andATIG ,.which wasacting
asaiithorized representative oftheFrench shareholders ,ontheother ,Hawley
Coal agreed tosell ormake arrangements tosell 80%ofitsproduction to
ATIC ,afigure which corresponds totheFrench companies' ,share ofits
capital .
Theabove considerations >would suggest that afavourable view should be
taken of .theloan application given that theprogramme involved will
contribute directly andprimarily totheachievement ofthe -objectives
outlined byArticle 54paragraph 2ofthe3CSC Treaty .
TheCommission hastaken afavourable decision inprinciple toextend the
loan requested .Inconsequence ,inconformity with Article 54jparagraph 2
oftheECSC Treaty ,theCommission requests theassent -oftheCouncil with
aview tothegranting ofatotal loan ofUS <£12million ,tobemade to
thefollowing companies :
Usinor
Solmer
Charbonnages deFrance
Société Métallurgique deNormandieUS«
US$
US$
us$6,120.000
3,480,000
1,920,000
480,000(51%)
(29%)
(16J6)
(4%)
2262/76e