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The permanent closure of blast furnace III at Bremen by the end of August 1994
at the latest was the key factor in a capacity reduction programme agreed by
the Commission and Klöckner Stahl (KS) in June 1993 following a partial
write-off of the latter's debts.

The closure of the blast furnace, entailing a 500 kt/year reduction in the
MPP capacity (maximum possible production) of the hot strip mill at Bremen, is
regarded as an important contribution to the overall effort to restructure the
steel industry.  The new owners were thus informed that any other solution
they put forward should make the same if not a better contribution to
restructuring.

In exchange for the undertaking given by KS to halt the MPP of 500 KT/year of
hot-rolled coils at the Bremen plant, the Arbed group suggested the permanent
closure of hot strip mill IX at its Esch-Belval plant by the end of June 1995
at the latest. This mill has an MPP of 600 kt/year and has operated regularly
in recent years.  In the last six years, it has produced hot-rolled strip,
almost exactly the same product as the wide strip produced at Bremen.

The quantitative effect of the alternative closure on the market is better
than the original commitment since the closure will be permanent and output
from the rolling mill will no longer be marketed. In addition, although the
plant in the original Bremen commitment has only a limited MPP, a return to
the traditional output could not be completely ruled out, even though the
utilization rate would have to be unusually high.

When the Commission approved the agreement, it noted that KS agreed to reduce
the MPP still further should it enter into a new partnership.  As the MPP
exceeds the original capacity reduction by 100 kt/year, the difference may be
regarded as fulfilling the commitment.

The permanent closure of strip mill IX at Esch-Belval must be notified under
Decision 3010/91/ECSC but the Commission insists that it be brought forward to
the end of 1994, notably in order to coincide with the efforts expected of
other steel manufacturers. Under these conditions, the definitive closure of
a whole production unit is certainly preferable to a capacity cut at Bremen
which would leave production facilities intact.

The Commission has decided not to object, pursuant to Decision 3010/91/ECSC,
to the withdrawal by Klöckner Stahl GmbH of its commitment of 8 March 1994 to
close blast furnace III at Bremen, on condition that:

(a)  ProfilArbed SA undertakes, in accordance  with the above-mentioned
Decision, to close strip mill IX at Esch-Belval definitively;

(b)  strip mill IX ceases  to produce by  no later than the  end of
December 1994 and not end June 1995 as initially proposed by Arbed. The
mill must then be scrapped or sold outside Europe to a country not in
competition with the European Union;

(c)     Sidmar NV agrees, pursuant to the above-mentioned Decision, to the
  permanent closure of the slab mill at Gand by end June 1997 at the
  latest.  It must also agree not to build a second continuous
  casting facility for slabs for at least five years from the date
  of closure of the slab mill;

(d)  ProfilArbed SA agrees by the end of 1995 at the latest, pursuant to the
abovementioned Decision, to replace its L-D steel melting shop at
Esch-Belval with an electric melting shop with an MPP not exceeding
1 500 kt/year;

(e)  until output at rolling mill IX at Esch-Belvan begins, Klöckner Stahl
agrees to limit production of hot-rolled coil at the Bremen hot strip
mill to 2 640 kt/year and not to exceed 3 360 kt/year, including rolling
to order;

(f)     Klöckner Stahl undertakes not to invest, save by prior agreement
  with the Commission, in maintenance or other plant, in order to
  maintain the bottleneck identified in the SNV expert report
  ("Einschleusungslogistik für die Warmbreitbankstrasse der Hütte
  Bremen, 8.3.1984, Studiengesellschaft Nahverkehr mbH) which limits
  the quantity of slabs coming from outside for processing to
  1 020 kt/year;

(g)  Klöckner Stahl GmbH cuts its MPP of cold-rolled strip and sheet products
by 500 kt/year by reducing MPP at its Bremen plant from 1500 to
1000 kt/year as follows:
        300 kt/year before the end of June 1996
        200 kt/year before the end of June 1998.

This cut in MPP will be obtained by the permanent closure and scrapping of an
appropriate number of DX-type annealing furnaces at the Bremen plant.

The Commission will carry out six-monthly inspections over the relevant period
to verify compliance with the above-mentioned conditions.

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