I move: "That the Bill be now read a Second Time."
The object of the present Bill is to raise the ceiling of borrowings which may be guaranteed by the Minister, with the consent of the Minister for Finance, for Irish Steel Holdings Ltd. The present limit is £1 million and the proposal before the Dáil is to increase it to £3 million.
The Dáil is aware that Irish Steel Holdings Ltd. is a wholly owned State company with equity capital of £6 million subscribed by the Minister for Finance. It manufactures steel, principally re-inforcing steels for the construction industry, from basic raw materials, operating on a single open hearth furnace.
Following advice from external consultants who made a thorough study of the company's operations and potential, the company is embarking on a major expansion of its steel-making capacity. The principal item in this programme is the installation of a second furnace, which will be an electric arc furnace, and there will be additions and modifications of the rolling mills and other parts of the undertaking.
The expansion now commencing almost double the basic output of steel ingots, bringing it up to between 135,000 and 150,000 tons per annum. The main point of it is however, that it will introduce processing by electric arc furnace for the first time. This will give faster and more flexible production and will also open up the possibility of getting into the more lucrative side of the trade in special steels for the export market. It must be said however that, while this expansion will give a greatly increased capacity for ingot production, the addition to the employment force will be a modest one.
The important thing is that it introduces a new and up-to-date method of steel production, and holds out the prospect of putting the company's unit costs of production at a competitive level in the coming free trade era. We all hope that this development into the electric arc furnace method will be only the first of further expansions, but this will depend on the efforts of everybody connected with the company to make it an efficient and competitive undertaking.
The cost of the present programme will be in the region of £3 million. The company is proposing to finance this from its own resources and from borrowing over a fairly short term. The company at present has borrowings of £½ million guaranteed by the State. The Bill before the House will lift the limit of guarantee up to £3 million, although not all of this will be required for the present transaction. The company itself has built up some resources from its profits particularly over the past three years.
There are other related amendments to the Principal Act made in the Bill. Section 2 (b) is for the purpose of being able to give a State guarantee where credit is got from a supplier of equipment on a deferred payment system instead of outright loan. Section 3 (1) is to deal with the position in which this company got its original guarantees for loans under the State Guarantees Act, 1954, and to bring all these guarantees into the one group. This will enable a single statement of guaranteed borrowings by this company to be given annually to the Oireachtas. More details about this can be given at a later stage if required. I am confident that the object of the Bill commends itself to the Dáil, and I recommend the Bill for its approval.