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DOCUMENTS "COM"
COM(80)454
Vol.1980/0158

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(80)454 final
Brussels,25thJuly1980
FOROFFICIAL USEONLY
REQUESTFORCOUNCILAPPROVAL UNDERTHESECONDPARAGRAPH OF
ARTICLE54OFTHEECSCTREATYFORTHEFINANCING OFINVESTMENT
PROJECTS TOINCREASE ANDSTABILIZE PELLETPRODUCTION AND
IMPROVEPELLETQUALITYATTHEIRONOREMINEANDPROCESSING PLANT
INKIRKENES (NORTHNORWAY).BY
AKTIESELSKABET SYDVARANGER,OSLO(NORWAY)
(Communication fromtheCommission totheCouncil)
C0M(80)454final

COMMISSION OPTHE
EUROPEAN COMMUNITIES
FôrOfficiaiUseOnly
NotetotheCouncil
Sub,1feetsRequestforCouncilapprovalunderthesecondparagraphof
Article54oftheECSCTreatyforthefinancingofinvestment
•projectstoincreaseandstabilizepelletproductionandimprove
-pelletqualityattheironoremine-andprocessingplantin
Kirkenes(NorthNorway)byAktieselskabet Sydvaranger,Oslo(Norway).
Loanrequested sNkr45<>0million(approximately 6.49millionEUA)
BorrowersAktieselskabet Sydvaranger,Oslo(Norway).
Projectexecutor
Aktieselskabet Sydvaranger wasfoundedin1906and,since1910,.has
"beensupplyingironoretothesteelindustryofWesternEurope.Theiron
oredepositslieontheKirkenespeninsulainthefurthermostnorth-eastern
partofNorway. -
Atotalof135milliontofironorehasbeenminedsinceproduction
began,necessitating theremovalof155milliontofrock.Theoreiswon
entirelybyopen-castminingandistransported byrailtotheprocessing
plantinKirkenes10Ionawaywherethecrushing,enrichmentandpellet
plantsanddeep-waterharbourforshipsofacapacityupto140000.tare
located.
TheprincipalshareholderinAktieselskabet SydvarangeristheNorwegian
State,withaninterestof51$>"thebalanceofthesharesbeingheldby
approximately 2300shareholders .98.5$ofthesharecapitalisin •*
Norwegianhands. .
Currentlyknownironorereservesamountto430milliontandcanall
bewonbyopen-castmining,withanaverageofnomorethantwotonnesof
overburdenhavingtoberemovedpertonneofore.Inaddition,thereare
furtherlargedeposits,butthesewouldhavetobedeep-mined.
Thenortherndeposits(approximately 50$oftotaldeposits)lieclosest
totheprocessingplantandcontainapproximately 31$ironore(magnetite),
whereasfurthersouththeironorecontentisonlysome25$«Onthebasis
ofaprojectedannualpelletproductionof3milliont(65$Fefrom7»2milliont
orewitha28$Fecontent),currentlyknownironoredepositsshouldpermit
miningbyopen-castmethodsaloneforafurther60years.

-2-
Thefollowingfiguresillustratethetrendinminingandproduction s
Mineoverburden
Year+ore
(milliont)Concentrate Pellet
Production Production
(milliont)(milliont)
1974
1975
1976
1977
1978
1979
1980
198115
17
20
20
18
18
18
202.26
2.24
2.19,
2.04
2.12
2.15
2.75
3.001.90
2.26
2.23-
2.15
2.27
2.51
2.75
3.00
Theironoreconcentrateproducedintheprocessingplantisusedasa
feedstockforthepelletplant.Inpreviousyearsthisnecessitated the
buyinginofconcentrate fromothermines,butsuchpurchasesarenotplanned
inthefuture.
Description ofproiect
Thecompanyhasdecidedonthefollowinginvestmentsintheperiod
1980-81withaviewtolong-termimprovementofcompetitiveness s
1.Extensionofthecapacityofthecrushingplant
2.Extensionofthecapacityoftheenrichmentplant
3»Changestothepelletplants
4.Construction ofanewflotationplant.
Thesemeasures,whichaffectvariousstagesofproductionbutare
directlylinkedandshouldthereforebeconsideredtogether,willraisepellet
productioncapacityto3milliontonnesperyear.Inaddition,theywill
permittheproductionofpelletswitha'lowSiO^(silica)contentaridtherefore
makeitpossibletosupplythedirect-reduction plantofNorddeutsche Perro-
werkeGmbH(NFW)inEmden(FederalRepublicofGermany)inwhichAktieselskabet
Sydvarangerhasa74-9f-interest.ThepelletsrequiredbyKPIJmusthavea
70$FecontentwithaSi02contentnotexceeding3^-Jthepelletscurrently
producedbySydvarangerstillhavea5°5rSi02contentat65Fe.
Re1.Extensionofthecapacityofthecrushingplant
Untilnow,onlyoneofthetwoavailablecrushersinthecoarse
crushingplantcouldeverbeused.Thedownstreamconveyor-belt systemis
nowbeingenlargedinordertopermitthesimultaneous operationofboth
units.
Inaddition,itisplannedtoconstructanewandlargerfinecrushing
andscreeningplantwhich,whenoperational ,trillsupplythegrindingplant
withsmallerpiecesoforethan,previouslypossible.
1.

-3-
Investment costs ;Mer 22.52 million
Commissioning sJune 1981 .
Re2.Extension ofthe capacity ofth3 enrichment plant
Theenrichment capacity oftheplant will heincreased bythecon­
struction ofanewball mill intheexisting mill building .Thenewmill
will bepowered bya8300kTJSiemens annular motor which ,iscontrolled
automatically andtherefore obviates theneed toemploy additional workers .
Investment costs 2Klcr 40.0.million
«
Completion /trial operation :January .1981
Commissioning sJuly 1981 . .
Re3.Changes tothe pellet plant
The screen system forgreen pellets wasalready modified inNovember 1979
inthetwopellet plants commissioned in19^9 and1974 respectively ;inaddition ,
thecontinuous grate inoneplant waslengthened .-These measures increased
annual capacity toatotal of3million tonnes and ,even though they were
carried outbefore submission oftheloan application ,areinseparably linked
with the other projects atvarious production stages within theframework of
the overall programme .
Investment costs sKkr 13.5 "million .
Re4.Construction ofanew flotation plant
Theflotation plant istobesited between theoremill andpellet
plant andshould permit reduction ofthesilica content oftheiron ore .This
will enable Aktieselskabet Sydvaranger totake into account thedifferent
requirements ofitscustomers andsupply theappropriate pellet quality in
each case .
Investment costs sMcr41«29 million
Commissioning sDecember 1980 .
Assessment
Theinvestment programme tostepuppellet production to3million t/year
andraise pellet quality will contribute toanimprovement both interms
ofquantity andquality ofthesupply ofrawmaterials totheEurope&n steel
industry .Thecompany hascurrently already concluded multiannual supply contracts
for2.6million t/year with Community steel companies andintheyears tocome
will supply additional lump oreandpellets totalling some 1.5million ttomeet
theannual requirements ofthedirect –reduction plant inEmden (KFl)rrhenthe
latter hascommenced operation .Ineach case thecompany must undertake to
guarantee tosupply anadequate Quantity totheCommunity .
Theiforwegian State ,asmajority shareholder inAktieselskabet Sydvaranger ,
hasagreed tothesupply totheCommunity andthefinancial ^contribution therefrom .
TheEuropean steel industry 'sinterest inthis situation lies inthe .fact that
nine enterprises from three Community countries have already concluded long-term
contracts with Aktieselskabet Sydvaranger .,

-4-
Animprovement ofthesupplysituationappearsparticularly necessary
inthelightoftheironoreshortfallofsome15milliontin1985andsome
120milliontin1990forecastforthewesternworld.Moreover,theworld's
largeststeelproducers,theUSSR,theUSAandJapan,canrelyinparton
ironoredepositswhicharetobefoundontheirownterritoryorwithin
relativelyeasyreach.Specialeffortsshouldtherefore "bemadetoimprove
thewinningofEuropeanironoredeposits.
Onthebasisoftheseconsiderations ,theloanapplicationistobe
viewedinapositivelight,sincetheinvestmentprogrammecontributes
directlyandprincipallytotherealization oftheobjectiveslaiddownin
thesecondparagraphofArticle54oftheECSCTreaty.
TheCommissionhasdecidedinprincipletoapprovethepresent
application .Therefore,inaccordancewithth6secondparagraphofArticle54
oftheECSCTreaty,itrequeststheCouncil'sassentforthegrantingofa
loantothevalueofKkr45«0milliontoAktieselskabet Sydvaranger ,Oslo
(Norway).