Madeleine Wackernagel
THE European Commission has not blocked a $74-million loan to the Saldanha Steel project, merely reserved judgment, says Erwan Four, the European Union’s ambassador to South Africa. The EC has sent the file back to the European Investment Bank, says Four, for further consideration; the EIB will review the issue and then decide whether to go ahead at a later stage.
Discussions between the EIB and Saldanha Steel have been going on for months, says Saldanha’s executive chairman Bernard Smith, but he has still not heard through official channels why the loan was sent back to the drawing-board. Even so, the company did not budget for it, so if it falls away, it “will be unfortunate, but not the end of the world”.
As the world’s biggest player on the capital markets, the EIB can command very advantageous lending rates; as a result, every potential loan has to be thoroughly investigated. But before a decision can be taken, all loan considerations have to be rubber-stamped by the EC, and there is speculation that a faction within the commission is balking at the prospect of lending to a potential competitor.
In addition, the European steel industry has been going through a difficult restructuring, resulting in significant lay- offs, so it may not be politic to lend to a competitor outside the EU.
But, says Four, steel would form part of the free trade agreement with South Africa. Talks are currently stalled by South Africa’s objections to the EU’s stand on agricultural products.
“We are very keen to discuss the nitty- gritty of the free trade agreement as soon as possible,” says Four.
“We need to send a clear message to potential investors, both in Europe and South Africa, about our future trade relations, and the quicker we reach a clear agreement, the stronger the message to business partners,” says Four.