Clabecq aid package to be given the go-ahead

Date: 30/10/1997

By Chris Johnstone

SLIMMED-down public help as part of a heavily amended package to rescue bankrupt Belgian steelmaker Clabecq should be cleared by the European Commission next week.

Competition officials have decided that the new deal, involving heavy investments by Italian-Swiss company Duferco and a much smaller participation by the Walloon region, should not be subjected to a state aid probe. Instead, Namur's stake in Clabecq will be cleared as the action of a normal market investor.

However, a more comprehensive notice than usual is likely to be published by the Commission next Wednesday (5 November) setting out details of the package with explanations of the stance adopted by competition officials.

“They are not envisaging opening a procedure from a state aid point of view. The Belgians have been very careful to make sure that all areas of concern have been dealt with,” said one steel expert.

An earlier proposal by Walloon holding company Société Wallonne pour la Sidérurgie (SWS) to rescue Clabecq on its own with a 37.5- million-ecu cash injection was rejected by the Commission as amounting to state aid.

This time round, private steel stockist and seller Duferco is taking on the main burden by injecting 25 million ecu, with the SWS only contributing 8.7 million ecu. Duferco will also underwrite most of the credit guarantees needed to assure Clabecq's future.

Earlier ambitious plans setting aside public funds for the clean-up of the Clabecq site and redevelopment of parts of it have been shelved, said a steel-sector source. Duferco has also guaranteed to take care of any pollution claims associated with the site.

Approval for the new Clabecq plan will not be accompanied by the heavy cuts in capacity associated with other rescue packages for the sector which have been treated as subsidies. Duferco intends to produce around 1 million tonnes of steel a year on the Tubize site outside Brussels.

Most of Clabecq's production is concentrated on steel plates, a low-margin market which is already well-supplied, with manufacturers from central Europe and Russia competing with EU producers. This has led many steel-market analysts to question the long-term future of the plant.

The UK Steel Association, which warned the Commission and national governments before the summer that they should live up to past promises and take a tough line on Clabecq, says it will wait for the Commission decision before deciding whether or not to launch a complaint.