Ceisteanna—Questions. Oral Answers. - Investment in Irish Steel.

Wednesday, 15 February 1995

Dáil Éireann Debate
Vol. 449 No. 2

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  6.  Mrs. O'Rourke  Information on Mary O'Rourke  Zoom on Mary O'Rourke   asked the Minister for Enterprise and Employment  Information on Richard Bruton  Zoom on Richard Bruton   the amount of subsidisation, finance or equity contributed to or held by the Government in Irish Steel from 1983 to 1994; and the plans, if any, he has for the company in regard to further finance interest from other sources. [3344/95]

  16.  Miss Harney  Information on Mary Harney  Zoom on Mary Harney   asked the Minister for Enterprise and Employment  Information on Richard Bruton  Zoom on Richard Bruton   the level of the Government's proposed capital injection to Irish Steel; the amount per job that this represents; if EU approval has been given for this proposal; and if he will make a statement on the matter. [3391/95]

Minister for Enterprise and Employment (Mr. R. Bruton): Information on Richard Bruton  Zoom on Richard Bruton  I propose to take Questions Nos. 6 and 16 together.

In my written reply to Deputy O'Rourke on 26 January, I set out the details of Government financing and subsidies for Irish Steel in the years 1983 to 1994. The total equity currently held by the Government is £125 million, £25 million of which was held prior to 1983.

As part of its viability plan submitted to my Department the company has sought a capital injection of £40 million and a loan guarantee of £10 million. The amount per job that the capital injection represents is £125,000. It is not easy to determine the cost of the loan guarantee but if this is regarded as similar to the capital injection it would bring the total amount per job to £156,250.

Clearly the cost of the proposed viability plan is quite significant. [417] Against this, however, the cost of closure is also likely to be significant. In that context, the Government is carefully assessing the company's application for funding and I am hopeful that the assessment can be concluded at an early date.

In conjunction with its assessment of the company's application for funds, the Government is currently examining the possibility of securing a strategic partner for Irish Steel. Any such partner would have to be capable of contributing to the financial success of the company and also to securing economies for the company through improved marketing and rationalisation of the product range.

Any proposed aid to Irish Steel is of course subject to European Union approval. In considering applications for aid in the steel industry, the European Commission applies the criterion that the company should attain viability within a three year time span. In assessing viability, the Commission specifies the gross operating margin which steel companies must achieve under normal market conditions in order to attain lasting financial viability. In submitting any application to the Commission for approval of aid to Irish Steel, it is important that the Government be in a position to satisfy the Commission that viability can be attained on the basis of the criteria set down by the Commission. The Government assessment of the company's application for funding is also being considered in this context.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I thank the Minister for the reply. A similar reply could have been given last April, August, October or December. We on this side of the House wish to remain helpful about the whole issue of Irish Steel. How does the Minister explain, two months into office, the delay in considering the viability plan and in attracting a strategic partner? What urgency is being injected into the plan to get a strategic partner and how many strategic partners have been identified? The Minister [418] may say it is a matter of market sensitivity, but we read in the papers every day about the would-be suitors for Irish Steel and, since they are floated in the papers, the Minister may wish to float them in the Dáil also. First, why is there a delay in this matter; second, when will a decision be made; third, who are the likely suitors and, four, when will the Minister go to Europe with his begging bowl.

Mr. R. Bruton: Information on Richard Bruton  Zoom on Richard Bruton  I will deal with the Deputies' questions seriatim. On the question of delays, clearly any incoming Government needs to give very careful consideration to a project which is so important to the Cobh area. I make no apology for giving very careful consideration to the issue. There has been no undue delay in this matter. The company has set itself ambitious production targets which are part of its viability plan and is seeking time to assess its ability to meet those targets which are clearly of crucial importance in terms of the Government's consideration of the issue.

The Government will consider this issue at an early date. As the Deputy correctly said, the number of suitors is not a matter which I want to discuss in public but I can say that my Department is taking steps to ensure it has the necessary expertise available to it to assess proposals as they are put forward and that no time is lost in dealing with those who have expressed an interest in the matter. On the question of going to Europe with the begging bowl, this does not arise as the Commission would not allocate funds to such a project.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I used the phrase “begging bowl” in a metaphorical sense; I meant the Commission's begging bowl to allow funding——

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  It is our begging bowl, it is our money.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  The Minister referred to the ambitious production targets which the company has set for [419] itself. I have been informed that production levels dropped during the last quarter of 1994 and January 1995. I appreciate the Minister's points about market sensitivity but somebody in his Department is giving very graphic and comprehensive information about proposed suitors for Irish Steel. They are not coy in doing this as the names are often published. The names should be given to us in the House.

Mr. R. Bruton: Information on Richard Bruton  Zoom on Richard Bruton  I assure the Deputy that no information about potential companies interested in participating with Irish Steel in this project is being released from my Department.

Mr. Cowen: Information on Brian Cowen  Zoom on Brian Cowen  How does the Minister know?

Mr. E. O'Keeffe: Information on Ned O'Keeffe  Zoom on Ned O'Keeffe  There might be leaks.

Mrs. O'Rourke: Information on Mary O'Rourke  Zoom on Mary O'Rourke  I asked the Minister about production targets.

Mr. R. Bruton: Information on Richard Bruton  Zoom on Richard Bruton  The company is concerned about its ability to meet production targets and is very anxious to be in a position to guarantee the Government that it has the capacity to meet those targets which are clearly a critical element in the viability plan put forward to the Government for consideration.


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