The European Investment Bank provided USD 70 million loan to CST (Companhia Siderúgica de Tubarão) for the construction and operation of a blast furnace in Brazil. The investment will allow accommodating for exports to match increased demand mainly from NAFTA and Asian markets. Exports will contribute to consolidate Brazil's economic performance.
The additional capacity for the production of steel slabs will be installed in the existing integrated steel plant in the municipality of Serra, in the South-Eastern Espirito Santo State. CST is the main employer in Espirito Santo and generates some 15% of the domestic output value and 30% of its exports. World demand for steel slab has been growing at 8% per annum. CST accounts for some 40% of Brazil's total steel exports.
The EIB loan represents some 6% of the total project investment and is extended for up to 12 years. The construction of the project is starting in this second semester of 2004, with full production capacity expected by early 2006.
CST is 30 % owned by Arcelor, itself created by the merger of Aceralia (Spain), Arbed (Luxembourg) and Usinor (France). CST is a listed company established in 1976 that was privatised in 1992.
The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 2.48 billion during 2000-2006 to support capital investment projects. The EIB was set up in 1958 to finance investment furthering EU integration. It lends for regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.
In 2003, the EIB provided loans totalling EUR 42 billion. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB can pass on to project promoters the excellent conditions it obtains on the markets. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions.