Announcement of World Bank Lends Five Million Dollars to Peru for Steel Making Expansion on July 17, 1980

. \ ---~= · FOR IMMEDIATE RELEASE · ~orldBank 181 8H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/7 July 17, 1980 WORLD BANK LENDS $5 MILLION TO PERU FOR STEEL MAKING EXPANSION The World Bank has approved a $5 mill ion loan to Peru to help finance a tech- nical assistance project aimed at supporting the expansion of the Chimbote steel mill, the only integrated steel plant in the country. This is the first World Bank operation which will assist the iron and steel subsector in the country. With an estimated total cost of $6 mill ion, the technical assistance project aims to strengthen the Empresa Siderurgica del Peru's (SIDERPERU) project execution and plant operation capability. SIDERPERU is the state-owned steel company of Peru. The project is expected to enable SIDERPERU to install and manage successfully a two-stage lt00,000 metric tons per year (tpy) expansion of the Chimbote steel mill. The mill has an annual production capacity of about 500,000 tons of crude steel, • which represents 90% of Peru's steel making capacity . Domestic steel production has not been able to satisfy internal demand and in recent years the country has been importing about 30% of its steel requirements. With the initial production from SIDERPERU's first-stage expansion now getting un- derway, domestic steel production in 1984 is expected to total about 630,000 tons compared with a projected consumption of 777,000 tons. By 1990, production is expected to increase to 1 mill ion tons and consumptfon to about 1.2 million tons a year. The technical assistance project includes project management services for instal- lation of the 200,000 tpy first stage of the expansion program, the p~eparation of a feasibility study for the 200,000 tpy second-stage and coal transportation and electric system studies, and a training program for SIDERPERU personnel. The SIDERPERU steel expansion program is expected to replace 500,000 tpy of imported scrap, with a current total cost of $80 million per year with locally produced sponge iron. The country wi 11 thus have a more reliable and lower cost source of steel-making raw materials than imported scrap steel, the supply of which has been restricted at times. The $5 million World Bank loan was extended to SIDERPERU with the guarantee of the Government of the Republic of Peru. It is for a term of 10 years, including 3! years of grace, with interest at 8.25% per annum. • NOTE: Money figures are expressed in U.S. dollar equivalents .