COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 14.11.1996 
COM(96) 575 final 
REPORT FROM THE COMMISSION 
on the Application of the Community Rules for State Aid to the 
Coal Industry in 1994 

1. Introduction 
Article 10 of Commission Decision No 3632/93/ECSC of 28 December 19931 requires 
the Commission to report each year to the Council, the European Parliament and the 
ECSC Consultative Committee on the application of the Community rules for State aid 
to the coal industry. 
This report examines the financial aid granted by France, Germany, Portugal, Spain and 
the United Kingdom to their coal industries Sn 1994. 
All Member States intending to grant aid to coal undertakings in 1994 were obliged to 
present to the Commission by 1 January 1994 information on all the measures they 
intended to take to support the coal industry directly or indirectly in 1994. 
Such measures may be considered compatible with the proper functioning of the common 
market provided they help to achieve at least one of the following objectives: 
to make, in the light of coal prices on international markets, further progress 
towards economic viability with the aim of achieving degression of aids; 
to solve the'social and regional problems created by total or partial reductions in 
the activity of production units; 
to help the coal industry adjust to environmental protection standards. 
OJL 329, 30.12.1993, p. 12. 
In accordance with Article 8 of the Decision, the following Member States submitted to 
the Commission their plans to modernize, rationalize and restructure the coal industry: 
Germany in a letter dated 29 April 1994; 
Spain in a letter dated 30 May 1994; 
France in a letter dated 9 December 1994; 
Portugal in a letter dated 5 August 1994; 
the United Kingdom in a letter dated 30 March 1994. 
Following notification of the plans the Commission delivered opinions on their 
conformity with the general and specific objectives set by Articles 2, 3 and 4 of Decision 
No 3632/93/ECSC, and in particular the Decisions adopted on 13 December 19942 for 
Germany and Spain, 19 July 19953 for France, 3 November 19944 for Portugal and 1 June 
19945 for the United Kingdom. 
In accordance with Article 9(1) of Decision No 3632/93/ECSC, the Member States also 
notified all the financial aid they intended to grant in respect of 1994. The Commission 
gave a ruling on these measures in Decisions adopted on 1 June 1994, 6 13 December 
19947 and 19 July 19958 for Germany, 13 December 19949 and 30 April 199610 for Spain, 
19 July 199511 for France, 3 November 199412 for Portugal and 1 June 1994,13 
3 November 199414 and 30 November 199415 for the United Kingdom. 
The amounts of financial aid referred to in this document are the final figures authorized 
by the Commission for 1994 under Decision No 3632/93/ECSC. This is the first report 
under Article 10 of this Decision following its entry into force on 1 January 1994. 
2 
3 
4 
5 
6 
7 
8 
9 
10 
n 
12 
13 
14 
15 OJL 385, 31.12.1994. 
OJL267, 9 11.1995, p. 46. 
OJL 379, 31.12.1994, p. 3. 
OJ L 220, 25.8.1994, p. 12. 
OJL 220, 25.8.1994, p. 10. 
OJ L 385, 31.12.1994, p. 18. 
OJL 287, 30.11.1995, p. 53. 
OJL 385, 31.12.1994, p. 31. 
OJL 259, 12.10.1996, p. 14. 
OJL 267, 9.11.1995, p. 46. 
OJL 379, 31.12.1994, p. 3. 
OJ L 220, 25.8.1994, p. 12. 
OJL 379, 31.12.1994, p. 6. 
OJL 382, 31.12.1994, p. 1. 
2. Coal Industry and Market 
2.1 Production 
In 1994 coal production in the European Union totalled 131.2 million tonnes, down 
27.6 million tonnes compared with 1993 as a result of the restructuring, rationalization 
and modernization policies implemented by the Member States. Production dropped in 
all the producer countries in 1994 from 1993, the largest falls, in absolute terms, being 
recorded in the United Kingdom (-19.7 million tonnes) and Germany (-6.6 million 
tonnes). 
Production in 1995 should be slightly up on 1994, though the downward trend seems set 
to resume in 1996. 
Table 1 
Coal production (*1000 t) 
Germany 
Spain (1) 
France 
Portugal 
United 
Kingdom 
Others 
European 
Union 1990 
76 553 
19 440 
10 487 
281 
89 301 
1 139 
197 201 1991 
72 744 
17 922 
10 127 
270 
92 712 
661 
194 436 1992 
72 153 
18 551 
9 478 
221 
83 987 
330 
184 720 1993 
64 175 
18 402 
8 576 
197 
67 463 
11 
158 824 1994 
57 623 
18 194 
7 538 
147 
47 717 
1 
131 220 1995 
58 853 
17 675 
5 976 
0 
51 937 
0 
134 441 variation 
1994/93 
% 
-10.2 
-1.1 
-12.1 
-25.4 
-29.3 
-90.9 
-17.4 i 1 
variation 
1995/94 
% 
+2.1 
-2.9 
-20.7 
-100.0 
+8.8 
-100.0 
+3.2 
Source: Eurostat 
(1) Including "black lignite" 
2.2. Employment 
The continuation of the measures to rationalize and reduce activity in the coal industry 
in most coal-producing countries led to a further drop in employment figures. At the end 
of 1994 the industry employed 93 200 underground workers, i.e. 14 200 fewer than in 
1993. The largest drop in absolute terms was in the United Kingdom (6 400), followed 
by Germany (5 000) and Spain (1 900). 
Table 2 
Underground Staff Employed at the End of the Year (*1000) 
Germany 
Spain 
France 
Portugal 
United 
Kingdom 
European 
Union 1990 
77.9 
30.6 
10.1 
0.6 
50.7 
171.8 1991 
73.2 
29.8 
8.9 
0.5 
42.3 
156.5 1992 
68.5 
27.0 
8.3 
0.5 
30.5 
135.5 1993 
62.0 
24.0 
7.9 
0.4 
13.0 
107.4 1994 
57.0 
22.1 
7.4 
0.0 
6.6 
93.2 variation 
1994/93 
% 
-8.1 
-7.9 
-6.3 
-100.0 
-49.2 
-13.2 
Source: Eurostat 
2.3. Coal Demand and Trade 
In 1994, total energy demand in the European Union was virtually unchanged (+0.7%) 
against 1993. Nonetheless, demand for solid fuels continued to fall, and much more so 
for lignite (-5.5%) than for coal (-0.8%) 
Overall, internal deliveries of coal within the European Union fell by a further 
20.6 millkm tonnes in 1994 compared with 1993. This figure is even more striking when 
it is considered that deliveries had already fallen significantly in 1993 and 1992. 
This reduction was mainly due to a levelling-off of demand from all sectors. The main 
reductions concerned deliveries to the power-generating sector. The Member States 
registering the largest drops were the United Kingdom (-15.7 million tonnes) and France 
(-5.5 million tonnes). Internal deliveries in the other countries stabilized or even rose 
slightly. 
The 1994 figure of 258.2 million tonnes is the lowest tonnage ever recorded in the 
European Union. After the upswing in 1995 the downward trend is set to continue for 
some years to come. 
Deliveries are falling in all sectors. The main reductions concern deliveries to public-
sector power stations (-13.9 million tonnes) and coking plants (-2.4 million tonnes). The 
United Kingdom has recorded a particularly large fall (-15.7 million tonnes). It should 
be noted that the biggest falls are occurring in the European Union's main coal producing 
countries, though if the United Kingdom and France were removed from the calculation 
the trend for 1994 would probably be upwards (+0.6 million tonnes). 
Table 3 
Internal deliveries of coal (Million tonnes) 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United 
Kingdom 
Eur. Union 1990 
14.9 
10.1 
80.3 
1.4 
30.2 
30.4 
3.2 
2.1 
0.2 
14.9 
5.0 
107.9 
300.5 1991 
14.0 
12.8 
87.0 
2.0 
31.2 
31.9 
3.1 
19.3 
0.2 
13.3 
4.4 
112.4 
331.6 1992 
13,2 
11.4 
82.8 
1.9 
32.9 
31.5 
3.4 
17.5 
0.3 
12.7 
4.5 
102.7 
314.8 1993 
11.1 
10:2 
75.2 
2.3 
30.8 
26.8 
3.1 
14.9 
0.3 
13.5 
4.8 
85.7 
278.8 1994 
11.6 
11.6 
75.0 
2.4 
29.5 
21.3 
3.0 
14.4 
0.3 
13.9 
5.1 
70.0 
258.2 1995 
13.7 
12.9 
76.2 
1.5 
31.8 
22.6 
2.6 
17.4 
0.2 
14.1 
6.0 
75.2 
274.2 variation 
1994/93 
% 
+4.5 
+13.7 
-0.3 
+4.3 
-4.2 
-20.5 
-3.2 
-3.4 
0.0 
+3.0 
+6.3 
-18.3 
-7.4 variation 
1995/94 
% 
+18.1 
+ 11.2 
+ 1.6 
-37.5 
+7.8 
+6.1 
-13.3 
+20.8 
-33.3 
+1.4 
+17.6 
+7.4 
+6.2 
Source: Eurostat 
Coal imports from third countries rose slightly by 1.3 million tonnes in 1994 to a level 
of 118.1 million tonnes. This is attributable to a rise in consumption in certain sectors, 
notably steel, though most of the Community's coal producers were too uncompetitive to 
benefit from it. 
Table 4 
Imports of coal from third countries (Million tonnes) 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Eur. Union 1990 
13.2 
9.7 
8.6 
1.4 
9.8 
17.3 
2.6 
19.5 
0.2 
16.5 
4.5 
12.7 
115.9 1991 
13.3 
12.6 
13.7 
1.4 
12.0 
20.2 
2.7 
19.2 
0.2 
15.2. 
4.1 
19.1 
133.6 1992 
13.1 
11.8 
14.2 
2.1 
13.7 
21.4 
2.7 
17.6 
0.3 
14.7 
4.4 
19.8 
135.9 1993 
11.4 
10.3 
12.6 
1.3 
12.3 
13.9 
2.7 
14.3 
0.2 
14.9 
4.8 
18.1 
116.8 1994 
13.5 
10.0 
13.9 
1.4 
12.2 
12.0 
2.2 
15.4 
0.2 
16.0 
5.3 
16.0 
118.1 1995 
13.6 
12.8 
15.0 
1.3 
12.4 
9.8 
2.5 
18.8 
0.1 
17.1 
5.9 
14.9 
124.3 variation 
1994/93 
% 
18.4 
-2.9 
10.3 
7.7 
-0.8 
-13.7 
-18.5 
7.7 
0.0 
7.4 
10.4 
-11.6 
1.1 variation 
1995/94 
% 
0.7 
28.0 
7.9 
-7.1 
1.6 
-18.3 
13.6 
22.1 
-50.0 
6.9 
11.3 
-6.9 
5.2 
Source: Eurostat 
Table 5 
Intra-Community Trade in Coal (exports) (*000 t) 
Year 
1990 
1991 
1992 
1993 
1994 
1995 Belgium 
668 
606 
622 
620 
924 
793 Germany 
4 906 
3 188 
1 510 
915 
1 121 
1 203 Spain 
2 
0 
0 
0 
0 
0 France 
460 
490 
444 
426 
397 
292 Netherlands 
2 335 
2 363 
2 029 
2 243 
2 612 
2 823 United 
Kingdom 
1 559 
1 520 
840 
946 
961 
630 Others 
37 
51 
54 
28 
27 
10 Total 
9 967 
8 218 
5 499 
5 178 
6 042 
5 751 
Source: Eurostat and market report 
Trade in coal within the European Union, including internal movements of coal of 
third-country origin in free circulation, rose by 0.9 million tonnes in 1994. This trend 
is attributable essentially to the rise in imports (see above). 
2.4. Financial situation of European Union coal producers 
For the European Union as a whole, the average cost of production rose from 
ECU 114/tce in 1993 to ECU 119/tce in 1994, i.e. an increase of 5%. In fact, the 
increases recorded in France and Germany largely offset the reductions in cost observed 
in other producer countries. It should be mentioned that production costs in the United 
Kingdom fell appreciably in 1994. 
Table 6 
Financial situation of the coal industry 
Production costs (1) 
ECU/tce 
Germany 
Spain 
France 
Portugal 
United 
Kingdom 
EU average 1991 
138 
154 
91 
103 
74 
109 1992 
143 
147 
100 
121 
71 
112 1993 
151 
131 
110 
112 
62 
114 1994 
154 
127 
125 
107 
52 
119 1994/ 
1993 
% 
+ 2% 
- 3 % 
+ 13 % 
- 4% 
- 17% 
+ 5 % Returns 
ECU/tce 
1991 
126 
109 
60 
72 
73 
97 1992 
131 
109 
56 
78 
71 
101 1993 
136 
97 
62 
72 
60 
99 1994 
138 
98 
55 
69 
51 
101 1994/ 
1993 
% 
+ 2 % 
+ 1 % 
- 11 % 
- 4% 
- 14 % 
+ 2 % Difference 
ECU/tce 
1991 
-12 
-45 
-32 
-31 
-0 
-12 1992 
-12 
-39 
-45 
-43 
-0 
-12 1993 
-15 
-34 
-49 
-40 
-2 
-15 1994 
- 16 
-29 
-70 
- M 
- 1 
- 18 
(1) Overall costs, including capital and depreciation costs 
Returns rose by 2% throughout the Union in 1994. Given the smaller increase in average 
returns in relation to production costs, which rose by 5%, it can be stated that the 
situation of the coal industry deteriorated in 1994. 
Mention should be made of the considerable differences in returns between the different 
producer countries. To a great extent these are due to indirect consumption-aid 
mechanisms in certain countries. In accordance with Articles 2(9) and 9(7) of the 
Decision, these mechanisms must be abolished by 31 December 1996. 
A considerable proportion of mines in the European Union showed (often appreciable) 
improvements in productivity, due largely to the restructuring and rationalization of the 
industry. The least productive pits are the first to be closed, and when the decision to 
close a pit in the relatively near future is taken, underground preparation work is reduced 
to a strict minimum, releasing workers for production or reducing the number of 
underground workers. Productivity increases in both cases. 
Table 7 
Underground Output per Man/hour (kg) 
Germany 
Spain 
France 
United 
Kingdom 
European Union 1990 
673 
341 
634 
704 
628 1991 
681 
315 
727 
801 
665 1992 
698 
328 
743 
919 
703 1993 
706 
402 
824 
1.416 
743 1994 
707 
421 
653 
1.857 
773 1994/93 
% 
0.1 
4.7 
-20.8 
31.1 
4.0 
Source: Ëurostat 
3. Financial aid scheduled for the coal industry 
This report covers the measures set out in Article 1 of Decision No 3632/93/ECSC, viz. 
any direct or indirect measure or support by public authorities linked to 
production, marketing and external trade which, even if it is not a burden on 
public budgets, gives an economic advantage to coal undertakings by reducing 
the costs which they would normally have to bear; 
the allocation, for the direct or indirect benefit of the coal industry, of the 
charges rendered compulsory as a result of State intervention, without any 
distinction being drawn between aid granted by the State and aid granted by 
public or private bodies appointed by the State to administer such aid; 
aid elements contained in financing measures taken by Member States in respect 
of coal undertakings which are not regarded as risk capital provided to a 
company under standard market-economy practice. 
While the reports drafted within the framework of Decision No 2064/86/ECSC 
distinguished between aid linked to current production and aid not linked to current 
production, the present report introduces the more precise classification of aid set out in 
Articles 3, 4, 5, 6 and 7 of Decision No 3632/93/ECSC - in other words, it distinguishes 
between operating aid, aid for the reduction of activity, aid to cover exceptional costs, aid 
for research and development and aid for environmental protection. 
A breakdown of the overall amount of aid granted by the Member States among these 
different categories of aid also gives a fairly clear idea of the coal policy being pursued 
at national level and of the progress being made in the modernization, rationalization and 
restructuring process. 
Table 8 
Breakdown of aid 
Germany 
- linked to current production* 
- not linked to current production ** 
Spain 
- linked to current production* 
- not linked to current production ** 
France 
- linked to current production * 
- not linked to current production ** 
Portugal 
- linked to current production" 
- not linked to current production ** 
United Kingdom 
- linked to current production* 
- not linked to current production ** 
E.U.TOTAL 
- linked to current production* 
- not linked to current production** Decision No 2064/86/ECSC 
1990 
ECU million 
4 576.5 
200.6 
499.2 
0 
166.2 
792.2 
4.6 
0.0 
0.0 
103.5 
5 327.1 
1 096.3 1991 
4 502.7 
247.5 
667.4 
267.0 
165.3 
783.2 
4.5 
0.0 
0.0 
13.7 
5 401.1 
1 312.6 1992 
4 497.7 
246.7 
463.3 
108.9 
186.9 
774.6 
5.8 
0.0 
0.0 
13.1 
5 194.6 
1 145.0 1993 
4 462,6 
256.3 
373.3 
0 
190.2 
818.1 
6.4 
1.0 
1.9 
12.4 
5 034.4 
! 087.8 Decision No 
3632/93/ECSC 
1994 
4 845.8**" 
181.4 
730.8 
145.3 
298.0 
614.8 
1.8 
3.6 
20,1 
870.0 
5 896,5 
1 815.1 
*• aid granted under Articles 3, 4, 5 and 6 of Decision No 2064/86/ECSC and under 
Articles 3 and 4 of Decision No 3632/93/ECSC 
**. inherited liabilities under Decision No 2064/86/ECSC and aid granted under 
Articles 5, 6 and 7 of Decision No 3632/93/ECSC 
***. no account taken of the activation of DM 5 350 million (ECU 2 779 million) 
from a credit line to cover compensation fund debts in the context of the German 
Law of 19 July 1994 guaranteeing Coal Supplies for Power Stations 
10 
Compared with 1993 there is above all a clear increase in aid linked to production, except 
in Portugal, where extraction activity ceased completely at the end of 1994. The detailed 
situation in each Member State is as follows: 
3.1 Germany 
In 1993 the Commission authorized a total of DM 8 639 700 000 (ECU 4 462 600 000) 
of financial aid relating to current production. In 1994 it authorized operating aid 
(Article 3 of Decision No 3632/93/ECSC) totalling DM 14 677 700 000 
(ECU 7 624 800 000), i.e. an increase of 71%. The two biggest items within this total 
were: 
a financial measure worth DM 5 800 million in connection with the Third 
Electricity-from-Coal Law to cover the amounts agreed between coal and 
electricity producers under the Jahrhundertvertrag, 
activation of DM 5 350 million, out of a credit line totalling DM 6 000 million, 
in the context of the German Law of 19 July 1994 guaranteeing Coal Supplies 
for Power Stations and amending the Third German Electricity-from-Coal Law.16 
This credit line is intended to cover the deficit in the compensation fund existing 
at 31 December 1993. It thus represents a clearing of the debts accumulated by 
the fund in previous years. 
Even disregarding the activation of the credit line, it must be stressed that the aid 
situation has not got any better, despite an appreciable fallback in production. In 
Decision 94/1070/ECSC of 13 December 1994 on German aid to the coal industry for 
199417 the Commission reiterated the need for measures to be taken in accordance with 
Article 9(7) of Decision No 3632/93/ECSC to bring the rules on aid for coal intended 
for electricity production into line with the provisions of the new framework Decision. 
In this context, the German Constitutional Court, in a decision reached at the end of 
1994, declared the levy known as the Kohlepfennig to be anti-constitutional and 
prohibited it as from 31 December 1995. The Court reached its judgment on the 
following grounds. By choosing to raise finances through a special contribution, the 
legislator had departed from three fundamental principles of financial organization. In 
making these fiscal rules, he had assumed legislative powers beyond the scope of 
financial organization; in view of the non-budgetary nature of the proceeds of the special 
contribution, he had called into question the budgetary powers of the Parliament; he had 
undermined the principle of equality in taxation by shifting the charge to the taxpayer 
from the common fiscal charge to a special charge. 
16 BGBlof 28.7.1994, p. 1618. 
17 OJL 385, 31.12.1994, p. 18. 
11 
The Constitutional Court considered a special contribution of this type to be permissible 
only if strict constitutional conditions are observed. Further, it may be collected only 
from a category which has a particular interest in what is to be financed and which, ipso 
facto, has an inherent responsibility in terms of financing. Where financing is not the 
specific responsibility of a particular category it must be borne by the collectivity, i.e. 
through tax proceeds. 
The German authorities have since adopted a new law on aid for coal intended for 
electricity production. This Law includes aid in the budget and abolishes the 
Kohlepfennig. 
With regard to aid for the sale of coal and coke to the Community steel industry, the 
amounts authorized for 1994 in Decisions 94/1070/ECSC18 and 95/499/ECSC19 show 
relative stability compared with the previous year (a total of DM 3 232 million compared 
with 3 248 million for 1993). 
The remaining operating aid authorized in 1994 was: 
aid totalling DM 110 million to maintain the underground workforce 
(Bergmannsprûmie)\ 
aid totalling DM 127.8 million for compensation between coalfields; 
aid totalling DM 57.9 million for compensation for coal with a low volatile 
matter content. 
Being degressive, all three measures comply with the objectives and criteria set out in 
Article 2 of Decision No 3632/93/ECSC. 
By Decision 94/573/ECSC of 1 June 199420 the Commission also authorized, under 
Article 5 of Decision No 3632/93/ECSC, aid totalling DM 179.1 million to RuhrKohle 
AG and aid totalling DM 170.1 million to the companies Ruhrkohle AG, Saarbergwerke 
AG, Gewerkschaft Auguste Viktoria, Sophia Jacoba GmbH and Preussag, to cover 
exceptional costs. These included: 
social welfare benefits resulting from workers taking early retirement; 
supply of free coal to workers who lost their jobs as a result of restructuring; 
exceptional expenditure on workers who lost their jobs as a result of 
restructuring; 
exceptional intrinsic depreciation resulting from restructuring; 
backfilling of pits; 
the costs of pumping out pits closed down since 1967. 
18 
19 
20 OJL 385, 31.12.1994, p. 18. 
OJL 287, 30.11.1995, p. 53. 
OJL 220, 25.8.1994, p. 10. 
12 
3.2 Spain 
The operating aid and aid for the reduction of activity authorized by the Commission in 
respect of 1994 totalled Pta 39 581 million (ECU 249 million) and Pta 76 561 million 
(ECU 481.8 million) respectively, i.e. Pta 116 142 million in all, compared with financial 
measures relating to current production totalling Pta 55 657 million in respect of 1993 
In Decision 94/1072/ECSC of 13 December 1994 authorizing the granting by Spain of 
aid to the coal industry in respect of 1994,21 the Commission assessed this aid in the 
context of the modernization, rationalization, restructuring and activity-reduction plan for 
the coal industry covering the period from 1 January 1994 to 31 December 1997, which 
Spain notified to the Commission by letter of 30 May 1994 and amended by letter of 
7 November 1994. 
The plan is designed to make the coal industry more competitive and thereby lead to the 
degression of aids. It lays down restructuring, rationalization and modernization measures 
which coal undertakings must implement to reduce their production costs over the period 
1994-97 in order to receive the operating aid provided for in Article 3 of Decision 
No 3632/93/ECSC. 
Undertakings which are unable to reduce their production costs or which, despite reducing 
them, are still far from achieving economic viability, must be included in an activity-
reduction plan as provided for in Article 4 of Decision No 3632/93/ECSC. 
For undertakings receiving operating aid within the meaning of Article 3 of the Decision, 
Spain has introduced the objective of a 2% annual reduction in production costs at 
constant prices over the period 1994-97. Aid to these undertakings is financed, as in 
Germany, through a levy on electricity billing. 
Undertakings or production units receiving aid for the reduction of activity by virtue of 
Article 4, viz. the Hunosa, Minas de Figaredo SA and Mina de la Camocha companies, 
will be required gradually to reduce their production capacity through partial or total 
closure. The aid granted to these companies is financed through the State budgets. 
21 OJL 385, 31.12.1994, p. 31. 
13 
In assessing the plan put forward by the Spanish Government, the Commission noted that 
in view of the unfavourable geological conditions of Spain's coalfields, which limit the 
possibility of modernization and rationalization, aid can be significantly reduced only 
through restructuring, or through the progressive and continuous reduction in mining 
activity by the undertakings in question. 
The Commission also reiterated the need for measures to be taken in accordance with 
Article 9(7) to bring the aid schemes into line with the provisions of the Decision. 
Subsequently, the Commission also took note of Spain's undertaking to bring the aid 
schemes in force during the transitional period provided for in Article 2(2) into line with 
the provisions laid down in that Article. 
In the same Decision the Commission authorized aid to cover exceptional charges 
(Article 5), viz: 
aid of Pta 14 715 million to cover exceptional welfare costs paid to workers who 
lost their jobs as a result of the measures to modernize, rationalize, restructure 
and reduce the activity of the Spanish coal industry; 
aid of Pta 8 374 million to cover the technical costs of closing down mining 
installations. 
The Commission underlines that this financial aid was made necessary by the process of 
modernizing, rationalizing and restructuring the Spanish coal industry and must therefore 
be considered to be related not to current production but to inherited liabilities. 
In Decision 96/591/ECSC of 30 April 199622 the Commission also authorized 
supplementary financial aid by Spain to the coal industry in respect of 1994. This aid, 
totalling Pta 10 362 million, was authorized in the light of the second indent of 
Article 3(1) of Decision No 3632/93/ECSC, which lays down that the aid actually paid 
must be subject to annual correction, based on actual costs and revenue. 
22 OJL 259, 12.10.1996, p. 14. 
14 
3.3 France 
In 1993 the amount of direct financial aid authorized by the Commission - representing 
all aid relating to current production - was FF 1 262 million (ECU 190.2 million), i.e 
FF 147.15 (ECU 22.18) per tonne. For 1994 the Commission authorized aid of FF 1 962 
million (ECU 298 million) to cover operating losses. While aid relating to current 
production has clearly increased, on account of higher production costs resulting, in 
particular, from geological difficulties, it should be stressed that the authorization in 
respect of 1994 was given under Article 4 of Decision No 3632/93/ECSC, since this aid 
goes towards the activity-reduction plan of the Charbonnages de France company, which 
is due to cease all mining by 2005. 
France notified the Commission on 9 December 1994 of the broad outlines of its plan to 
reduce activity in its coal industry. In Decision 95/465/ECSC of 19 July 1995 
authorizing France to grant aid to the coal industry for 199423 the Commission examined 
France's financial aid in the context of this activity-reduction plan. It noted that, aware 
of the economic and social impact of implementing Decision No 3632/93/ECSC, the 
French authorities embarked on a wide general debate with all sides involved in the 
coalmining sector. This consultation process resulted in the drawing up and signing of 
a national pact for coal between Charbonnages de France and the trade union 
organizations. 
The Commission recognizes that if this plan provides for the complete cessation of 
coalmining only by 2005 it is because the acute nature of the social and regional 
problems did not allow the French authorities to hold to the deadline of 2002 set in 
Decision No 3632/93/ECSC. The main thing, however, is that the French authorities have 
realized there is no prospect of the French coal industry becoming competitive in the 
middle or long term and have begun resolutely on the programme of activity reduction 
and closure. 
In addition to the aid for the reduction of activity, the Commission also authorized aid 
totalling FF 4 032 million to cover exceptional charges under Article 5 of Decision 
No 3632/93/ECSC and aid totalling FF 15 million for research and development under 
Article 6 of the Decision. 
The aid to cover exceptional costs (inherited liabilities) covers costs which are explicitly 
mentioned in the Annex to Decision No 3632/93/ECSC, viz: 
FF 636 million towards the costs of paying social welfare benefits resulting from 
the pensioning off of workers before they reach the statutory retirement age; 
23 OJL 267, 9.11.1995, p. 46. 
15 
FF 252 million as exceptional expenditure on workers who lose their jobs as a 
result of restructuring and rationalization; 
FF 64 million as payment towards residual costs resulting from administrative, 
legal or tax provisions; 
FF 147 million towards additional work resulting from restructuring; 
FF 22 million towards mining damage caused by pits previously in service, 
FF 44 million towards exceptional intrinsic depreciation resulting from the 
restructuring of the industry; 
FF 2 867 million towards the increase in the contributions, outside the statutory 
system, to cover social security costs as a result of the drop, following 
restructuring, in the number of contributors. 
The aid for research and development concerns the improvement of mining technology, 
the improvement of safety and working conditions, the extension of remote monitoring 
and, where the utilization of coal is concerned, such aspects as the upgrading of ash, the 
analysis of gaseous pollutants and the development of fluidized bed combustion. 
3.4 Portugal 
In 1993 the Commission authorized aid linked to current production (direct support) 
totalling ESC 1 202.8 million (ECU 6.4 million), i.e. ESC 6 106 (ECU 32.49) per tonne. 
For 1994, aid to cover operating losses fell to ESC 358.7 million (ECU 1.8 million), 
taking the form of aid for the reduction of activity under Article 4 of Decision 
No 3632/93/ECSC. 
By letter of 5 August 1994, in accordance with Article 8 of the Decision, Portugal 
submitted to the Commission a plan to reduce the activity of its coal industry. By 
Decision 94/994/ECSC of 3 November 1994 authorizing the granting of aid by Portugal 
to the coal industry in 199424 the Commission delivered a favourable opinion on the plan 
and authorized the financial measures notified by the Portuguese authorities. The 
Commission noted that, according to the information forwarded by those authorities, coal 
extraction would cease definitively by the beginning of 1995. The Portuguese authorities 
have since confirmed that the last mine did indeed close on 31 December 1994. By 
enabling the closure process to be staggered, the aid to cover operating losses for 1994 
helped resolve the social and regional problems linked to the reduction of the production 
units' activity, in accordance with Article 2 of Decision No 3632/93/ECSC. 
The second financial measure notified by the Portuguese authorities in respect of 1994 
was aid to cover exceptional social costs, totalling ESC 700 million (ECU 3.6 million), 
intended to provide partial cover for the compensation to be paid to some 450 employees 
of the Carbonifera do Douro company who were to lose their jobs by 31 December 1994 
as a result of the closure plan. In its authorizing decision, the Commission underlined 
that this aid was not connected to current production and must be regarded as covering 
inherited liabilities. As from 1995, Portugal must no longer grant aid connected to 
production and must confine its support to covering exceptional costs resulting from the 
cessation of coal mining. 
24 OJL 379, 31.12.1994, p. 3. 
16 
3.5 United Kingdom 
During 1994, the amount of aid linked to current production and actually paid was very 
small, totalling £15.6 million compared with the £118.8 million initially authorized by the 
Commission in Decisions 94/574/ECSC25 and 94/999/ECSC.26 
The outstanding feature of 1994 was the volume of aid authorized under Article 5 of 
Decision No 3632/93/ECSC to cover exceptional costs, viz. the costs resulting from the 
modernization, rationalization and restructuring of the United Kingdom's coal industry, 
a process which accelerated considerably in 1994 in the context of privatization. This aid 
totalled £675 million (ECU 870 million), compared with the £9.6 million (ECU 12.4 
million) authorized under the heading of inherited liabilities in 1993. 
By letter of 30 March 1994, in accordance with Article 8 of Decision No 3632/93/ECSC, 
the United Kingdom Government submitted to the Commission a plan to modernize, 
rationalize and restructure its coal industry. In Decision 94/574/ECSC of 1 June 199427 
the Commission examined the contents of the plan and re-authorized the operating aids 
referred to above. The Commission noted that the aim of the United Kingdom plan was 
to make coal produced in the United Kingdom fully competitive with imported coal and 
to abolish all aid. This meets the objective of the first indent of Article 2(1) of Decision 
No 3632/93/ECSC, namely, in the light of coal prices on international markets, to make 
further progress towards economic viability with the aim of achieving degression of aids. 
This degression is genuine, since, as the Commission underlines, the operating aid 
provided under the plan is of a temporary nature and is limited to the period leading up 
to the privatization of the British Coal Corporation, its aim being to render the production 
units competitive with imported coal. 
The aid of £675 million to cover exceptional costs, authorized by the Commission in 
Decision 94/995/ECSC of 3 November 1994,28 was granted because the United Kingdom 
Government has been forced, prior to the privatization of the British Coal Corporation, 
to assume responsibility for the obligations resulting from the process of modernization, 
rationalization and restructuring of the coal industry which cannot be considered to be 
related to current production, the aim being to prevent operations with a prospect of 
economic viability being burdened with inherited liabilities, especially those resulting 
from the sheer size of the British Coal Corporation. It must also be emphasized that the 
process of restructuring was unavoidable and that even without privatization, measures 
such as those covered by this aid authorization would have been indispensable; 
furthermore, these financial measures involve no direct or indirect aid to the new 
undertakings emerging from privatization. For the most part (£635 million) they cover 
exceptional social welfare payments to compensate workers who have lost their jobs or 
been transferred following restructuring measures and, to a lesser extent (£40 million) 
liabilities for environmental damage (subsidence, etc.) caused by underground production 
activities before privatization of the British Coal Corporation. 
25 
26 
27 
28 OJL 220, 25.8.1994, p. 12. 
OJL 382, 31.12.1994, p. 1. 
OJL 220, 25.8.1994, p. 12. 
OJL 379, 31.12.1994, p. 6. 
17 
4. Conclusions 
Despite considerable efforts to rationalize and restructure the coal industry, the average 
cost of production in the Community in 1994 was ECU 119/tce, while the price of 
imported coal scarcely exceeded ECU 43/tce. What is particularly worrying is that not 
only have costs resumed an upward trend since the beginning of the 1990s, but that aid 
per tonne has risen from ECU 32/t in 1993 to ECU 45/t in 1994, even though Germany's 
activation of a credit line has been left out of the calculation. 
Regarding exogenous factors, it must be stressed that in 1994 the price of imported coal 
reached its lowest level in real terms since the end of the 1970s, due partly to surpluses 
on the international markets and the arrival on the market of new exporters and partly to 
the almost constant appreciation of the ECU against the US dollar during that period. 
Even if prices have recovered somewhat since then, there are very few options for coal 
policy in the Member States. Choices are ultimately guided by geological conditions and 
by social and regional considerations. 
Firstly there are States where, for various reasons, "national" coal plays only a minor part 
in the energy balance and where geological conditions - generally in small coalfields -
rule out any chance of improving productivity. These States opt for closure. This was 
the course taken by France and Portugal; the latter country has already completed its 
closure plan, while the French plan is staggered up to the beginning of the next century. 
This is a repeat of the way coal production ceased in the Netherlands and Belgium. 
Then there are the States with sizeable coal reserves, though often in difficult geological 
conditions, where "national" coal has traditionally occupied an important place and where 
employment in coalmining has remained relatively high so as to ensure a smooth 
reconversion for the industrial areas concerned. These States, such as Germany and 
Spain, while encouraging their coal industries to cut costs further, have to take account 
of social and regional problems and set a realistic timetable for reducing aid and 
production capacity. 
Lastly, there is the case of the United Kingdom, where a draconian restructuring 
programme and concentration exclusively on profitable deposits have resulted in 
production costs almost as low as those charged on the world market. It is somewhat 
paradoxical, though, to note that British mines whose production costs were lower than 
those in other Member States and which were only slightly subsidized have had to be 
closed for lack of a market while high-cost mines are still being worked elsewhere in 
Europe - a situation which has helped push up the amount of aid per tonne in the 
Community very considerably. 
To sum up, while Decision No 2064/86/ECSC has indisputably given rise to far-reaching 
restructuring in the coal sector, there is no denying that the survival of a large part of the 
European coal industry will remain dependent on the granting of large amounts of aid. 
It is too soon to tell whether the tighter framework of the new Decision 
No 3632/93/ECSC will actually set the least loss-making part of the EU coal industry on 
the road to economic viability or merely assist the further decline of a large part of that 
industry. 
18 

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