The loan serves to co-finance the EUR 1 billion expansion project at Outokumpu's Tornio stainless steel mill. The investment project that will be completed in mid 2005 will see the Tornio capacities more than double to 1.65 million tonnes in melting and hot rolling and 1.2 million tonnes in cold rolling mill capacity annually. The Tornio integrated stainless steel mill is located at the northern end of Gulf of Botnia in Northern Finland.
The Tornio expansion project forms part of the company's wider optimisation programme aiming to rationalise stainless steel production at its various locations in Finland, Sweden and the UK. The optimisation of process and product mix across its different EU-plants will increase economies of scale and contribute to sustained improved profitability at world-class levels.
The Bank has already participated in the financing of the investment programme earlier with a loan of EUR 200 million signed in December 2001.
Tornio, at the Finnish-Swedish border in Lapland, is located in an Objective 1 region for EU Structural Funds assistance. The Tornio mill is of strategic importance both for Tornio and the nearby town of Kemi, as Outokumpu currently employs about 2,300 people in the area and its management estimates that some 5,000 jobs in local industries and services depend on the plant operations; i.e. some 12.5% of employment in the area. The overall expansion of the mill is projected to create about 320 permanent new jobs.
When signing the finance contract, EIB Vice President Sauli Niinistö said: One of the EIB's main tasks is to lend support to economically less developed regions. This industrial project is an example of how these regions are attractive for firms competing in the global market place. The investment project fits in well with the EU's regional development policy. The EIB is therefore pleased to provide long-term funds on most beneficial terms and conditions for this project.
The European Investment Bank, the long term financing institution of the EU finances economically viable investment projects fostering EU integration. The Bank has extended loans to Finland amounting to EUR 3.9 billion since 1999. In recent years this lending has concentrated on supporting investments consistent with EIB's key objective of fostering a knowledge and innovation-based society based on the conclusions of the EU Lisbon Summit in 2000. The EIB's approach to implementation of the Lisbon Strategy is focused on the links between knowledge creation and the market. It involves all phases of the education cycle, Research and Development, the transformation of innovation into investment, productivity gains and increased competitiveness of the European economy.
Recent lending in the context of the Lisbon strategy has covered primary, secondary and higher education throughout Finland through lending to the principal municipalities and Senate Properties. In addition loans have been extended to a number of Science Parks (Turku, Helsinki, Oulu, Espoo and Vantaa). The first EIB loan in Finland supporting industrial R&D was granted to Wärtsilä Oyj at the end of 2003 in respect of its R&D effort to improve engine performance in terms of energy efficiency and emission levels. This was followed by a recent loan to Metso Corporation in respect of their R&D investments relating to papermaking machines and automation.
In addition, financing provided by the EIB through its regular financial partners allows it to support SMEs throughout the country (in cooperation with Finnvera and Oko Bank) and small and medium-sized infrastructure projects carried out by smaller municipalities in sectors such as energy, infrastructure, urban renewal, environment, health and education (in cooperation with Municipality Finance and Oko Bank).