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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
Secretariat.Brussels,2ndMarch1976
COM(76)73Final
CONFIDENTIAL
COMMUNICATION FROMTHECOMMISSION TOTHECOUNCIL
Request forareconversion loan under Article 56
oftheECSC Treaty forItalsider S.p.A. ,Italy
(Lovere project )
COM (76)70Final

COMMISSION
OPTHE
"EUROPE AITCOIÏIU1IITIESDOC.XVI/265/75-E
Brussels ,
COrTSTIElTTIAL
COMMUITICATIOIT TOTHE COUNCIL
Subject :Request forareconversion loan under Article 56oftheECSC
Treaty forITALSIIER S.p.A. ,Italy (Lovere project )
I. ESSENTIAL IHK)RI4ATI01T
Mernber State :
Promoter :
Location ;
Investment :
Proposed loan :
Employment :
II.THE C0MPA1TY
Title :
Legal status :
Headquarters :
Capital :
Plants ;
Total personnel !Italy
Italsider S„p.A.
Expansion andmodernisation ofexisting heavy
engineering works producing railway bogies .
Lovere (Lombardia )
(i)foundry andforging 5t786 million lira
(ii)heavy engineering andrailway bogies
8,497 million lira ;
total 14,300 million lira (+16.3 mua)
4,300 million lira (+4*86 mua )
Maintenance of202jobs andconversion of68
steel workers tothenewactivities intheheavy
engineering works .Recruitment of41newworkers
forheavy engineering andrailway bogy shops .
ITALSIDER S.p.A.
Società perAzioni
ViaCorsica ,4-16128 Genova
262,000,000 lira
theprincipal shareholder isFinsider with 56.!
Taranto ,Bagnoli ,Genova-Corg.igliano ,Trieste ,
Marghera ,Valdamo ,Savona andLovere
52,000 people
Italsider isthelargest Italian steel company and isamong theten
largest steel companies intheworld .In1974 Italsider produced
86%ofItaly 'sfoundry products ,46%ofsteel andhotrolled products
and50i°ofcold rolled products .

-2- XYI/265/75-E
Thecompany'sfouryear(1975-78)developmentplanprovidesfora
globalinvestmentof630,000millionlirafortheimprovementinthe
qualityofproductionandtheexpansionofcapacity.Thisplan
includesthethreereconversion projectsforwhichfinancialsupport
hasbeenrequestedunderArticle56oftheEGSCTreaty.Theseinvolve
theGenova-Cornigliano ,LovereandValdarnoplants.
III.THEPROJECT
TheplantatLovereisprimarilyconcernedwithmakingrailway
equipmentforwhichItalsideristhemaindomesticsuppliertothe
nationalItalianrailwaycompany.In197433/&ofrailwayequipment
andl8c/oofforgingswereexported,andItalsiderintendstocontinue
toexportasignificantproportionofitsproductionatLovere.
AsaresultofmoredemandingqualitystandardsrequiredbytheItalian
railways,ithasbeenfoundnecessarytoreplacetheexistingsix
electricfurnacesbyonenewfurnace.Thetotalcostofthispart
oftheprojectis28,300millionlirainadditiontotheprojectwhich
hasbeenpresentedtoECSC.
Theexpansionoftheengineering works,costing14,300millionlira
comprisesdevelopments inthefoundryandforgingplantsandexpansion
ofheavyengineering andrailwaybogeymanufacture .
TheItalianRailwayCompany'smodernisation programme,andplanned
growthofexportsassuresamarketfortheseproducts.
IV.EMPLOYMENT ASPECTS
Asaresultofthisdevelopment 68peoplewillhavetoleavethesteel
worksandberetrainedandredeployedinthosepartsoftheplantwhere
employmentrequirements areexpanding.
TheCompanyhasdevelopedathoroughretrainingprogrammewherebya
substantialpartofthelabourforcewillprogresstomorehighly
qualifiedandbetterremuneratedactivities.Itisplannedthat41
newjobswillalsobefilledfromoutsidethecompany.
Thereareveryfewalternative employmentopportunities forthese
peoplewithintheLovereplant.Furthermore ,Lovereisrecognised
asalessdevelopedareainItaly;63%oftheactivepopulationis
workinginindustryandtheItalsiderplant,whichemploysmorethan
2,800peopleintotalisthelargestsingleemployerinthearea.
Agriculturerecessionandstagnationinindustrialinvestmenthave
resultedinanoverallreductionofabout400jobsopportunities in
thearea.
./•

-3- XVI/265/75-E
V.FTKAl'TCIALCOITSIÏÏHRATIOÎTS
Italsider'sfinancialstructureisveryunbalanced "becauseofits
largeindebtedness ?itsownresourcesonlycoveraverysmallpartof
fixedinvestment .Thissituationisduetotheconsiderable
borrowingthatthecompanyhasbeenmakingtocompletethesteel­
makingcomplexatTaranto.However,the1973and.1974resultscan
beconsideredsatisfactory sinceitisthefirsttimesince1969
thataprofithasbeenmade.Furthermore ,theallocationto
amortisation whichwasdoubledbetween1972End1973wasfurther
increasedin1974.Thefinancingplanfortheinvestmentprojects
forwhichtheproposedloanshavebeenrequestedshowsthatabout
ofrequirementswillbecoveredbyinternalcashgenerationand50fo
byincreasedmediumandlong-termborrowing.
VI.CONKMIITY WITHARTICLE56OFTHEECSCTREATY
Theproposedprojectisconsideredtoprovideeconomically sound
employmentopportunities forthepeopleconcernedsinceItalsider
will,asaresult,beproducingahighqualityproductforwhich
thereisanassuredmarket.ItisconsideredthatArticle56can
beappliedinthiscasesincethecompanyisinvestinginanew
activity,namelytheexpansionofitsheavyengineering andrailway
equipmentplantinordertomaintainthejobopportunities which
wouldotherwisebelostasaresultoftheirbeingobligedto
modernisetheirsteel-malcing .
VII.CONCLUSION
(a)TheCommissionhasapprovedareconversionloanunderArticle56
oftheECSCTreatyforItalsiderS.p.A.inanamountof
4,300millionlira(+4o86mua)oritsequivalent.For'anamount
ofupto1,25millionEuropeanUnitsofAccounttherateof
interest -willbereduced -by3percentagepointsforthefirst
fiveyearsafterthepaymentorpayments.
(b)TheCouncilisrequestedtogiveitsassenttothiseffect.