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COM ( 83) 174 
 
 
 
Vol. 1983/ 0048 
  
 
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concerning the opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
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file have been declassified in conformity with Article 5 of the aforementioned regulation. 
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
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Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983, 
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COMMISSION OF THE EUROPEAN COMMUNITIES
C 0 M 1 8 3 ) 174 final
Brussels,, 1 5  April 1 9 8 .5
T H E  N E W  S Y S T E M  F O R  C O K I N G  C O A L  A N D  C O K E  
F O R  T H E  IR O N  A N D  S T E E L  IN D U S T R Y  IN  T H E  C O M M U N I T Y
(Communication from the Commission to the Council)
C O M (83) 174 final

C O N T E N T S
1. Introduction
I. The origins of the system for coking coal and coke
2. The iron and steel industry, coking coal and coke
3. Development of C om m unity systems of measures to assist the coal mining 
i ndustry
4. The general system
5. The special system for coking coal
6. Decision 1/67
7. Decision 70/1
II. The current system (Decision 73/287)
8. Duration
9. T he C om m unity financial aid system
10. C om m unity funds
11. Pricing rules
III. H o w  the current system operates
12. Structure of supply in terms of tonnage
13. Price deviations and aids
14. Com m unity financing
15. Situation and outlook of the world market
IV . M ain features of the n e w  system
16. Objective
17. Degressivity
18. The sales aid
19. C om m unity financing
20. Production aid
21. L ong term contracts
22. T he guide price
23. The two legal instruments
Tables :  I to IV  
Annexes :  V  and V I

The n ew  system for coking coal and coke
for the iron and steel industry in the C om m unity
1. Introduction
In its Communication of February 1982 on "The rôle for coal in C om m unity 
energy strategy" (1), the Commission examined the problems of the coal 
industry and the possibilities for C om m unity action to enable solid fuels 
to fulfil the rôle allotted to them  with regard to diversification and 
security of supply.
This Communication served as a basis for the Council's considerations 
and during a meeting of ministers in Copenhagen on 16.12.1982 a political 
initiative w as established am ong the ministers to m ake progress towards 
a balanced, overall C om m unity strategy for solid fuels. The ministers 
declared themselves ready to examine proposals from  the Commission.
In response, the Com mission transmitted to the Council in February 1983 
a "W orking program me on solid fuels" (2) which recalls the specific 
proposals that the Commission has m ade and outlines n e w  ideas and 
proposals.
(1) C 0 M (8 2 ) 3 2
(2) C O M (83) 5 4

-  2 -
A m o n g  these n e w  proposals is one for a  C om m unity action in favour 
of coking coal and coke for the iron and steel industry in the C om m unity.
T he examination of this action should take place in 1983 because 
Decision 73/287, which is currently in force, expires on 31.12.1983.
This Communication recalls the origins and development of the current  
system and analyses the state of the market. It presents Commission  
proposals for a new action with a duration limited to five years and  
involving financial intervention by the Community which will be both  
of significant size and degressive.
I. T he origins of the system for coking coal and coke
2. The origins of the present system go back to the 1960's and its 
development is related to that of the Community's iron and steel industry.
In effect, the latter produces the major proportion of crude steel 
from  blast-furnace pig iron. In the blast furnace, coke plays a  com plex 
rôle and constitutes an important cost element ; it cannot be substituted 
except in so far as a  part of its heating function can be provided b y  
injecting hydrocarbons (fuel oil in particular) or coal.
C o k e manufacture itself requires coals with special characteristics, even 
though progress m ade with regard to blending has enable the range of 
usable coals to be widened.
After vigorous expansion during the fifties and sixties, C om m unity steel 
production reached 156 million tonnes in 1974 and declined thereafter to 
1 1 1  milLion tonnes in 1982. The development of coke production, tied 
mainly to the production of steel, w as different. U p  to the end of the 
fifties it followed approximately that of steel production with a  slightly 
lower growth rate. In 1960 it reached 9 5  million tonnes ; it then 
decreased to 5 9  million tonnes in 1982.
Effectively, consumption in the iron and steel industry fell, first of 
all because of a  continuous reduction in the specific consumption of coke 
per tonne of pig iron (1) (from almost 1  000 kilogrammes in 1953 to about 
530 kilogrammes at present), and secondly because of the reduced production 
of pig iron since 1974 (2) ; j6e of coke in non-steel applications also 
diminished considerably (E U R -9  :  from  29 million tonnes in 1 965 to 1 1  million 
tonnes in 1980). . /3
(1) Also called the coke rate.
(2) The lowest coke rate w as compensated for som e time by an increase in 
steel production (see Table I).

-  3 -
3. Against this technical background are the preoccupations resulting 
from  the coal crisis at the beginning of the sixties. T w o  major ideas 
are quickly developed :  the need to rationalise the mines in order to
adapt to market conditions, and concern about security of supply, particu­
larly of coking coal.
In their protocol on energy problems of 2 1  April 1964, the M em b er States 
of the C om m unity :
"11. Invite the H igh Authority to make, in the context of the Treaty of 
Paris and according to need, procedural proposals for the introduction 
of a C om m unity system of aid by the Commuiity's M em b er States ;
"12. Judge that the problem of long-term coking coal supplies for the 
C om m unity dem ands the Council's special attention" (1).
O n  this basis, decisions will be taken by the H igh Authority/Commission 
with reference to Art. 9 5  of the Treaty :  this will m ake possible the avoi­
dance of diverging initiatives by the M em b er States which, on the basis of 
purely national considerations, would find themselves in contradiction with 
the dispositions of the Treaty, and in particular with Art. 4, which forbids 
all subsidies or aids granted by the M em b er States, and with the dispositions 
of Art. 6 0  concerning the alignment of prices on quotations from  non-m em ber 
countries ; these will introduce a selective approach to coal problems, 
according to whether or not coal could easily be substituted.
In 1976, a converging approach to the objectives could be observed.
Since 1982, the idea of the profitability of coal production has taken 
on a  decisive importance.
The novel character of decisions to be taken in this field and their 
shared character is the setting-up of C om m unity systems for intervention 
by the M e m b er States, by financial or other means, without the funds 
necessarily coming from  a C om m unity source. The C om m unity character 
should result from  :
- criteria assuring observance of the co m m o n  interest ;
- preliminary Commission authorization before any payment of aid ;
- granting by the Commission of the powers of control and intervention  
necessary to guarantee the correct use of aids (2).
. /4
'1 N <  *c  of 30.4.1964, o. 1099/64.
' " 6 5  of 17.2.1965, preamble, 0 J N o. 3 1  of 25.2.65, p. 4 8 0 .

- 4  -
T he tw o series of decisions in question are as follows :
4. T he C om m unity system of intervention b y  M e m b er States to assist the 
coal mining industry in general w as inaugurated in 1965 (1). This refers 
to "Principles of a  C om m unity energy policy" and is based on conside­
rations of increased profitability, of negative rationalisation, and of 
a  social and regional nature. Taken for a  period of two years, it w as 
first extended to 1970 and further extended in 1 9 7 1  for five years (2), 
emphasis always being placed on the possibility of substituting coal 
b y  other forms of energy and the necessity to concentrate production on 
those installations which were m ost suitable for rationalisation adapted 
to social and regional needs.
In 1976, the revision of the general aid system brought into play, in 
add it * c - n  to the form ai » . » . » . M i e n » . » , ,  l'w » ,  .,»... ».»,.., i.»,'i .uOii. i,wUluing iiOh» 
consultation of the Council in 1974  :  the necessity tc reduce dependence 
o n  oil as far as possible, and the requirement tc maintain the Com munity's 
current p  r eduction c ■  h  a  t  d  » ,  ca l » .  n d  c  i  ,. »  ■. >  .c »e , c c  «  i·,··· ·  ·, ,onci».iO iiS 
This Decision is valid to the end of 1985.
5 . The C om m unity system applicable to coking coal w as initiated in 1967. 
T h e considerations on which it w as based were different from  those 
described for the general financial intervention system described under 4  
above.
,/5
(1) Decision N o  3/65 of 17.02.1965 
0 J N o  3 1  of 25.02.1965, p. 480
(2) Decision N o  3/71/ECSC of 22.12.1970 
0 J N o  L  3  of 05.01 .1971,  p. 7
(3) Decision N o  528/76/ECSC of 25.02.1976 
0 . J  N o  L  63 of 11.03.1976, p. 1

- 5  -
In a  protocol of 1967  relating to coking coal and coke for the iron and 
steel industry in the C om m unity C1), the M em b er States took into conside­
ration :
~  active competition b y  products from  non-m em ber states
- the importance of intra-Community trade.
They decided to establish, for the sector in question
- a  special system of aids for coal undertakings, and
- a  system of compensation of costs relating to intra-Community trade.
F ro m  consultations with the Council and the Consultative Committee that 
have taken place since 1967  on the occasion of prolongation or 
re-establishment of the decisions in force, it has emerged that the 
C om m unity considers it "in the c o m m o n  interest" of the M em b er States and 
their coal, and steel industries to participate in an action aimed at 
realising several objectives defined in Arts. 2  and 3  of the E C S C  Treaty.
These concern the maintenance within the Com m unity, through specific aids, 
of production capacities for coking coal and coke sufficient to assure 
a  satisfactory security of supply for the iron and steel industry, parti­
cularly through the maintenance of the major traditional flow of intra- 
C om m unity trade. Apart from  these aids, the coal industry's production 
costs are to be covered b y  sale prices to the iron and steel industry 
which approximate to world prices for comparable transactions.
Successive decisions have m ade possible adjustments to the corresponding 
arrangements taking account of the development on conditions on the market 
concerned.
6. Decision 1/67 (2) taken originally for a  period of two years, w ill  be 
extended for one year. It covered national aid to a  m ax im u m  of 1.7 units 
of account per tonne of coking coal, a  financing mechanism for the sharing 
of 6 0  % of the corresponding cost am ong the six M em b er States according 
to a  predetermined scale, and a possibility for alignment w hen there is 
no effective competition at the point of utilization.
.  /6
(1) 0 J N o  3 6  of 28.02.1967, p. 5 6 1
(2) Decision N o  1/67 of 21.02.1967, 0 J N o  3 6  of 28.02.1967, p. 562

-  6 -
7. In 1970, the new  system allowed for production aid, financed by 
the producing M em ber State, of 1.50 Units of Account per tonne. T o this 
w as added a  degressive sales aid (from 0.70 Units of Account in the first 
year to 0.40 Units of Account in the third year) (1).
T h e sales aid relating to exchanges formed the subject of Com m unity 
financing, with one contribution from the E C S C  budget, and another from  
any other of the five M em b er States receiving German coking coal.
Alignment was authorized on the prices that could apply for coking coal 
from  non-member states, even of there w as no effective competition at 
the point of use. T o this end, the Commission could set guide prices, 
a  facility of which it m ade immediate use.
II. T he current system for coking coal and coke
8. T he system w as renewed in 1973 for the six years to 1978 (2). It w as 
extended for 3  years (1979-1981) (3) and then for a further two years 
(1982-1983) (4). It thus expires on 3 1  December 1983.
T he Implementing Decision taken in 1973 has remained practically unchanged 
from  the start (5).
T h e mechanism has three essential features :
9. a) A_Community_system_of_financial_aid_to_the_coal_mines producing 
coking coal for use in the form of blast-furnace coke (6).
T o  the extent that the cost price of Com m unity coal exceeds that of coal 
on the world market, the M em ber States m a y  grant :
- production aid for which the governments shall fix each year a rate for 
each coalfield, without any pre-established ceiling ; the rate m a y  vary 
according to the deviation observed between production costs in the 
Community and the cost price of coal from non-member country coal ;
. n
(1) Decision N o  70/1/ECSC of 19.12.1969, 0J N o  L  2  of 06.01.1970, p. 1 0
(2) Decision N o  73/287/ECSC of 15.07.1973, 0J N o  L  259 of 15.09.1973, p. 36
(3) Decision N o  1613/77/ECSC of 15.07.1977, 0 J N o  L  180 of 20.07.1977, p. 8
(4) Decision N o  896/82/ECSC of 20.04.1982, 0 J N o  L  106 of 21.04.1982
(5) Decision N 0 3544/73/ECSC of 20.12.1973, 0 J N o  L  3 6 1  of 29.12.1973, p. 1 8
(6) Decision N o  73/287/ECSC of 15.07.1973, 0J N o  L  259 of 15.09.1973, Arts.
1  and 2

- 7  -
- a  sales aid applicable to deliveries to a zone distant from  the producing 
coal field or m ade in the context of intra-Community trade.
In 1973 it w as decided that this aid should be progressively reduced ; 
the m ax im u m  rate of aid per tonne would fall from 3  Units of Account for 
the first four years to 2.60 and 2  Units of Account respectively for the 
two following years. In fact, this degressivity was suppressed before it 
cam e into play. Moreover, in 1976, 1979 and 1982 an increase in the rate 
was agreed ; for 1982 and 1983 it w as fixed at 4.70 E C U  for deliveries 
to coastal works and 2.80 E C U  (from 1.60 Units of Account in 1973) for 
other works (1).
10. b) In_the_çase_of_deliyeri^s_to_other_Çommunity_çount ries4_the_saj.es_aid 
2s_rega^abj.e_from_Commun 2lt^_funds with their o w n  financing (2)
The increase in the rates of aid in relation to the period 1970-1972 brought 
about an increased requirement for Community funds. T o meet this, 
recourse w as had, in addition to contributions by the E C S C  and the M em b er 
States participating in the trade, to a participation by the iron and 
steel industry based on the consumption of coke in blast furnaces regardless 
of the origin of the coal used to manufacture that coke.
In 1982 the fund intervened to a limit of 1 4  million tonnes per year 
(instead of 1 5  million tonnes from  1973 to 1981) and to a m axim um  of 4 7  
million E C U . The three contributions were 6  million E C U  by the E C S C ,
1 7  million E C U  by the iron and steel industry and a m axim um  of 24 million 
E C U  by the six M em ber States w h o  normally participate in the trade ; 
this last contribution has to be reduced if the requirements do not reach 
47 million E C U  (3).
11. c) While the above arrangements differ substantially from those adopted 
in 1970, the pricing rules have retained the same terms ; alignment 
is authorized on the prices that would obtain for coking coal from 
non-member countries, even if there is no effective competition at 
the point of use. The Commission publishes guide prices for imported 
coals. Since 1980 these prices have also served for the calculation 
of production aids in each coalfield producing coking coal.
. /8
(1) See the development of sales aid rates in Table 2
(2) Decision N o  73/287, Articles 6, 7 and 8
(3) The contribution of the British iron and steel industry is paid to the 
United K ingdom  under the reserve that national coking coal shall cover 
at least 75 %  of blast-furnace requirements (Article 6, 2nd. indent and 
la t paragraph, in conjunction with consideration IV  of the penultimate 
paragraph).

-  8 -
It should be noted that only tonnages taken under long-term contracts (1) 
are eligible for the above aids and alignment; such contracts, provided 
with reasonable margins, allow the two partners sufficient room  for 
manoeuvre and help to reduce the problem of stocks.
III. H o w  the current system operates
12. A s  indicated (2 above and Table I) the period 1967-1982 w as marked 
b y  two main phases of activity in the iron and steel sector as well as 
b y  a clear tendency towards a reduction in coke production in the Community.
Consumption of coal in Com m unity coking plants fell from 107 million tonnes 
in 1973 to 79 million in 1982.
T h e supply structure for this coal has changed progressively :  the propor­
tion purchased from non-member countries has increased to the detriment 
of national supplies and intra-Community trade.
T h e following table shows the breakdown, according to the three sources, 
of tonnages of coal converted into blast-furnace coke during the period 
1979-1982.
Total requirements 
of which
National origin 
Intra-Community Tradem t
(7.)
m t
(X )
m t
(X )
Imports from non-member m t 
countriesM io  tonnes and %
1979 1980
m t ( % >  m t (X )(estimate)
73
38
1 4
21(100)
(54)
(19)
(28)72
36
1 4
22(100)
(50)
(19)
(31)1 9 8 1 1982
m t _ ( J O  m t 
70
3 5
1 3
22(100)
(51)
(18)
(31)6 1
30
22(100 )
(49)
(15)
(36)
National supplies and intra-Community trade show  a tendency to fall off, and 
importation from non-member countries to increase. In 1983, this development 
should be confirmed. It m ay  thus be judged that the current system has not 
prevented Community coking plants from turning increasingly towards non-m em ber 
countries for their supplies. German coking plants form  an exception because 
the importation of coking coal into Germany is quasi-prohibited.
. /9

- 9  -
13. There is no doubt that the existence of the system has slowed dow n this 
development due particularly to the difference in cost between Com m unity 
and non-member country coal. It has thus helped to easethe changes 
necessary to adapt the mining industry to market conditions.
In a  period of strong world demand, the links between operators based on 
the Community system have enabled Community coal to play a beneficial role 
from the point of view of the security and cost of supply. In a general 
way, the absence of a sudden transfer into the world market of a large 
proportion of Community dem and h^s had a stabilizing effect on the 
development of prices in a period w hen the latter were increasing, as 
can be seen in the case of the years 1974 and 1981.
Table III shows deliveries of German coking coal to other Community 
countries between 1973 and 1982. Over ten years, the total exceeds
140 million tonnes (1), but the tonnage for 1982 is 4 5  %  less than that for 
1983.
Table IV  gives information about the development of the costs of 
Community coal and non-member country coal (guide price), the costs of 
Com m unity transport (differential) and of the aids that m ake it possible 
to cover at least a part of the total price difference (alignment margin). 
Taking as an example the Ruhr coalfield (the main supplier for intra- 
Community trade) there is, for the period 1974-1982 an increase of 139 %  
(from 46 to 110 dollars per tonne) in the cost of production, of 5 5  %
(from 4 5  to 70 dollars) in the guide price, and therefore of 9  to 52 dollars 
for the widest alignment margin, and of 2  to 42 dollars for the narrowest.
Production aid varied more as a function of budgetary availability than 
of changes in the alignment margin.
Sales aid, which complements it, increased progressively in nominal value b u t 
covered an increasingly less significant part of the alignment margin (from  
39 %  to 9  %  in one case and from 77 %  to 7  %  in the other).
./10
(1) Intra-Community trade also includes small tonnages sent from France 
to Belgium and from Belgium to Germany, and occasionally from G erm any 
to Britain.
T he tonnages eligible for sales aid, and hence for Community financing 
represent about 95 %  of deliveries.

-  10  -
14. Community financing
A s  intra-Community trade is currently below the ceiling of 14 million 
tonnes per year fixed by the Decision in force, financing requirements 
are less than the m ax im u m  of 47 M ioE C U . Only the M em ber States benefit 
from  the resulting economy in relation to their share of 24 M io E C U  in 
Com m unity financing. In contrast, the E C S C  (6 M ioE C U ) and the iron and 
steel industry (17 M io E C U ) pay the whole of their shares.
15. Situation and outlook of the world market
Over recent years world production and international trade in coking coal 
have evolved as follows :
Million tonnes
1979 1980 1981 1982 (2)
Production (1) 304 306 290 300
W orld trade 105 114 112 120
N B  :  E U R -10 requirements 8 8 ^  88 85 79 (3)
A n  increase in world trade by sea can thus be seen, particularly in the 
directionof South-East Asia, in contrast to the relatively stable production 
and declining requirements of the Community.
S o m e years ago, taking into account the expansion of the world steel industry 
forecast at that time, the potential world production of coking coal w as 
predicted at 335 million tonnes for 1983 and 360 million tonnes for 1985, 
or 70 million tonnes more than the production for 1981.
It n o w  seems that these predictions need to be heavily revised.
For the Community steel industry, whose coal and coke consumption is comparable 
to that of the U S A  and Japan, it is possible, on the basis of the general 
objectives for steel, to estimate the requirements for coal and coke in 1985 
at som e 62 million tonnes. This assumes that the relative prices of coke 
and heavy fuel oil will not permit the latter to recapture part of the market 
for injection into the blast furnace that it has largely lost in recent years.
./II
(1) Total production by the W est +  exports from countries with planned 
economies
(2) Estimate
(3) See 12, para 2  above

-  11 -
The sam e overall development is forecast in Japan, whose coking coal imports 
m oved from 56 to 66 million tonnes between 1979 and 1982, but could decrease 
in the coming years.
Thus the potential world production of coking coal was recently evaluated 
at 335 million tonnes for 1983 and 360 million tonnes for 1985, or 70 
million tonnes more than the production for 1981.
But this development in potential corresponded to an upward development 
in both the iron and steel industry's requirements and the price of 
coking coal. The reversal of these two tendencies should h? - e  a negative 
effect on the world coal potential.
The geographical distribution of the inevitable adjustments in production 
will depend on the nature and solidity of the commercial flows, of the 
costs of production at the mines and the costs of the infrastructure 
(railways, ports, ect.) that will have to be supported by reduced tonnages. 
In 1982, certain mines ceased production because of the insufficient sale 
price. The coming months will m ake possible a sounder judgement of 
the possibilities for a n e w  balance between tonnages and prices on the 
world market.
It is probable that the difference between Community production costs and 
the n ew  prices of imported coal will be even greater for a certain time 
than it w as in 1982.
For the sam e reason, there should not be any major supply difficulties on 
the world coking coal market in the years to come.
IV. M ain fea.'ires of the new  system for coking coal and coke
16. The oujective sought under the n ew  system proposed by the Commission 
is to support both coking coal production capacity in the Community and 
the corresponding coking capacity at a level that will assure the profi­
table or marginally unprofitable operation of mines and a rational 
utilization of the coking plants, while at the same time 
providing the iron and steel industry with a supply under reasonable and 
non-discriminatory conditions.
. /12

-  12  -
17. Degressivity
The Protocol of 1964 had already envisaged that in addition to aids for 
rationalization, protective or supportive measures for the mining industry 
should have a "generally degressive" nature. The Decisions of 1970 and 
1973 provided the corresponding dispositions at the time, and each 
prolongation and renewal was for a limited period.
The Commission judges, as is clearly indicated in the opinion presented 
to the Council on 25 M a y  1978 (C0M (78)221 final), that public aids should 
in no case lead to the'postponement of decisions on adaptations that 
are rendered inevitable by economic developments. It is only on this 
condition that a temporary derogation of the prohibition of subsidies 
envisaged by Art. 4 c) of the E C S C  Treaty can be maintained.
Present conditions seem favourable for progressively phasing out a C o m m u ­
nity intervention that is no longer justified by the original motives.
There is no longer a serious risk to the orderly supply to the co m m o n  
market (Art. 3  a) of the E C S C  Treaty) because there is, at one and the 
sam e time, a decrease in requirements, a very marked reduction in intra- 
Com m unity trade, and a general use of blending techniques which m akes 
possible the utilization of an increased range of coking coals offered 
on the world market. This situation gives the operators a chance to 
re-think their long-term relations. The period covered by the C om m unity 
system should thus m ake possible the realisation of the objective set by 
Decision N o  73/287/ECSC, according to which the steel industry should 
support completely the cost of its supply of blast-furnace coke.
T he coal mines - particularly those which are involved in intra-Community 
trade - should find ways and means of adapting to the n ew  market conditions 
within the planned period of five years.
18. The structure of a n e w  system with a limited period of application and 
of degressive intensity can be developed from two types of consideration.
O n  the one hand, the probable development of the quantity that will form
the subject of intra-Community trade :  at present this amounts to 10 million 
tonnes, but everything suggests that it will decline progressively. O n  the 
other hand, the rate of support, which m a y  be called the "alignment margin". 
This rate of support is equal to the ratio between the sales aid - currently 
4.80 and 2.80 ECU/t - and the alignment margin - currently from 52 to 4 2  E C U /t 
(see Table IV). The ratio has diminished sharply and should not be m ore than
. /13

- 13 -
9  to 7  %  in 19^3, Increasing this ratio again to about 1 5  % (the Level 
reached in 198^) (1) but applying the sales aid to smaller and smaller 
tonnages should contribute effectively to the desired objective, that is 
to say a relationship to developments under w ay in the direction of greater 
economic rational.'ty. The aid granted should, in effect, become m ore 
selective and, at the sam e time, achieve a more significant intensity.
The Commission therefore proposes that the average rate of sales aid be 
raised from 3  to 6  ECU/t (2) but for a tonnage decreasing regularly by 2  
million tonnes a year from  an initial level of 10 million tonnes. This 
mechanism appears capable of taking better account of the commercial interests 
of the two groups of operators. In particular, the vendors could take 
account of it in optimising their receipts or their production.
19. Community financing
/\part from a duration reduced to five years and the degressivity, 
other features of the n ew  system show  marked changes in relation to 
the current situation. The Commission proposes to have the financing 
of sales aids relating to intra-Community trade covered by the general 
budget of the European Communities. The present system of financing 
from three sources (cf. 10) would thus be abandoned.
There are several justifications for this proposal.S
Such a modification would answer an old request by the European 
Parliament.
In its opinion of 25 April 1979 (the Ibruegger Report), taken up in
the Rinsche report on coal policy (3) and the Rogalla report on coking
coal (4), the European Parliament demanded that support for coking coal
should be financed from the E E C  budget. Moreover, support for intra-
Community trade should be drastically increased since the current rates
represent only a  small proportion of the alignment rebates granted by
Community producers. Such an increase appears possible because the
intra-Community trade in coking coal which would benefit from it would be
limited to 10 million tonnes instead of the present 14 million tonnes
(see Table IV). ...______  . /1A
(1
) Under the marker conditions of 1983
(2) It will continue to be modulated according to whether or not the coking 
coal deliveries are m ade to coastal works ; for such works it would be
? ·  E '.'U  (instead of the cu, ·  ent 4.70 E C U ; and for others 5  E C U  (instead of
2.80 E C U )
(3) E P  72.283 final
(4) E P  76.392 fi.ial

- K -
Finally, account would be taken of the limited capabilities of the E C S C  
budget and of the steel industry which is engaged in a major phase of 
restructuring.
20. Production aid, financed entirely by the M em ber States, would 
disappear as a specific aid, to be integrated into the system of financial 
interventions introduced by Decision N o  528/76.
Article 1, paragraph 1  of the latter concerns particularly "the maintenance 
of a long-term supply of coking coal for the Community".
During past years, three producing countries have indicated their 
preference for a global aid to the mining industry. Because of the 
interrelationship of activities in the coal and steel areas, a strong 
and rapid reduction in coking coal production would have serious 
consequences for social and economic equilibrium in several regions of 
Europe.
Decision 528/76 ceases to have effect at the end of 1985. This period 
will m ake it possible to review the entive system of aid to the coal 
industry, but does not prevent a longer duration for the coking coal 
system from being envisaged.
21. For deliveries that are not entitled to receive sales aid, i.e ., those 
to iron and steel works situated in the coal field that produces the coking 
coal. Decision N o. 528/76 does not require the conclusion of long-term 
contracts (as does Decision N o. 73/287). The geographical proximity effecti­
vely creates a sufficiently strong link between the two partners. O n  the 
other hand, the existence and execution of long-term contracts (with a m inim um  
duration of three years) must continue to be a condition for the granting of 
sales aid in such a w ay that the coking coal producers can count on guaranteed 
sales outside their coalfield. The sales aid should be reimbursable in the 
event of its final recipient failing to fulfil the relevant contract.
22. For the ensemble of contracts and transactions relating to Com m unity 
coal, the guide price (m ean value of purchases of coking coal in countries 
with free economics) would constitute an alignment floor.
23. In order to put into operation the mechanism that has just been 
described, two legal instruments are necessary :
./15

- 1 5  -
- a draft E C S C  Decision concerning coking coaL and coke for the iron and 
steel inoustry ■ ’n  the Community, based on Art. 95 E C S C  ;
- a proposal for a Council Regulation (E E C ) instituting a Com m unity 
contribution for sales aids in relation to intra-Community trade in 
coking coal and coke for the iron and steel industry in the Community, 
based on Art. 235 E E C .
These texts appear in Annexes V  and VI.

Table I
Steel industry :  steel, pig iron a n d  coke  
E O T  6 :  1 9 5 9  - 1 9 7 3  - E O T  9 :  1 9 7 3  - 1 9 8 3 (in m io  t)
Y ea rC ru d e steel  
p rod u c ti o nPig iron  
prod u c ti o nC o k e  rate  
k g  /tC o k e  consum ption b y  sector fop steel m a k in g  1
Blast
furnacesSintering O th er T ota l
1 9 5 3
1 9 5 4
.1 9 5 5
1 9 5 6
1 9 5 7
1 9 5 8
1 9 5 9
1960
1961  
1962
1 9 6 3
1 9 6 4
1 9 6 5
1966
1 9 6 7
1 9 6 8
1 9 6 9
1 9 7 0
1 9 7 1
1 9 7 2
1 9 7 3  E O T
1 9 7 3  E O T
1 9 7 4
1 9 7 5
1 9 7 6
1 9 7 7
1 9 7 8
1 9 7 9
1980  
1981  
1982  
1983 Eetia39.7
44.0
52.8
57.0
60.0
58,2
63.4
73.1
73.5
73.0
73.2
82.9 .
86.0
85.1
89.9
98.6
107.9
109.2  
103,4
113.1
122.9
150.1
155.6
125.2
134.1
126.1
132.6  
140,2
127,7126,1
111,3
105,231.5 
33,1
41.0
43.6
45.1
43.5
46.7
54.0
54.6
5 3 .7
53.2
60.8
63.2
6 1 .7
65.9
72.1
79.3
80.5
75.7
81.3
89.8
106.9
112,1
88.6
94.6
87.6
90.5
98.5
89.5
88.6
76.8
72,6960
9 7 0
9 6 9
9 7 2
9 4 9
9 1 1
883:
8 5 7
814
7 6 9
7 3 3
7 0 2
6 6 0
628
611
5 9 4
582
5 5 4
526
526
5 3 4
5 3 6
5 2 2
5 2 0
5 0 5
5 0 0
5 0 9 .
5 1 3
5 3 3
5 3 0
5 3 031,8
39.8 
42,2
43.8
41.3
42.5
47.7
46.8
43.7
40.9
44.6
44.3
40.8
41.4
44.1
47.1
46.9
41.9
4 2 .7
47.2
56.96 0 .2  
46,3
48.2
44.3
45.0
5 0 .1
45.947.0
41.1 
38,51.0
0,9
0,9
1.1
1.4
1.7
2.2
2.5 
2,9 
3,4
4.1
4.34.2
4.3
4.4
4.5
4.7
4.6
4.8
5.3
6.9
7.5
6.9
7.0
6.3
6.5
7.2
6.4
6 .1
4.2
4.41,0
1.1
1.2 
1,1
1.0
1.0
1,1
1,0
0,9
1,0
0,8
0,7
0,7
0,5
0,5
0,5
0,4
0,4
0,9
0,3
0,5
0,3
0,4
0,5
0,4
0,3
0,3
0,1
0,1
0,2
0,23 3 .8
41.8 
44,3 
46,0
43.7
45.2
51.0
5 0 .3
47.5
45.3
49.5
49.3
45.7 
46,2
49.0
5 2 .1
52,0
4 6 ,9
47.8
52.8
6 4 .3
68,0
53.6
5 5 .7
51.0
51.8 
57,6
52.4
5 3 .2
45.5
43.1

COKING COAL - EVOLUTION OF RATES OF SALES AID (per tonne)
rear n° (1) (2) (3) (4) (5) (6) (7) (8) (9)
Calendar year 
(Decision n°)1973 1974 1975 1976 1977 1978 1979 1980 1981
1973
(73/287)UC 3
1,603
1,603
1,603 * 
1,60*2,60 * 
1,40 *2 * 
1 *
1976
(2963/76)UCE 3,165
1,6882,743*
1,477*2,110*
1,055*
1977
(751/77)UCE 3,165
1,6882,110*
1,055*
1977
(1613/77)UCE 3,165
1,6883,165
1,6883,165*
1,688*3,165*
1,688*3,165*
1,688*
1979
(3058/79)UCE 4,40
2,604,40
2,60( 10)
1982
1983
1982-1983 ECU 4,70
(896/82) 2,80
* Rates cancelled and replaced by the following decision.

Deliveries of coking coal by Germ an mines for the steel industry in other countriesTable III
(10 tonnes)
Year Belgi u r n F rance Ita ly L u x e m b o u r g Netherlands T O T A L
1973 2,4 8,0 2,7 3,6 1,3 18,0
1974 3,0 8,9 3,2 3,5 1,3 19,9
•  1975 2,7 7,1 2 ,9 2,7 1,0 16,4
1976 2,1 6,9 2,4 2,2 . 0,7 14,3
1977 1 ,3 5,4 2,0 2,0 0,5 11,2
1978 1,6 4,2 2,5 2,3 1,0 11,6
1979 2,6 6,2 1,9 2,5 1,2 14,4
1980 1,8 4,1 2,4 2,5 . 1,2' 12,0
1981 2,0 5,1 2,6 2,0 1 ,3 !3,o
1982 1,0 4,2 2,0 1,9 0,9 10,0
Total 10 years20,5 [ 60,1 24,6 25,2 10,4 140,8

Table IV
Coking coal :  costs, prices, aids
(1) (2) (3) (4) (5)(in Dollars per tonne)
(6)
YearCoalfield :  Ruhr 
Nominal production costs 
+  adjustment for quality 
to characteristies of 
(2)Guide
price
cif A R A  (*)Production 
aidTransport cost 
differential
(a) 00Sales aid 
(a) (b)Total alignment 
margin
- (1) -  (2)+(4)Sales aid as % 
of total alignment 
margin
(a)(b) (a) (b)
1974
1978
1981
1982
( provisional)
1983 I
( hypothesi s)46
82
100
105
11045
62
82
81
7020,70
7,70
11,20
non-fixée8,20
10,00
12,40
11,60
12,001,60
1.70
1,80
1.70
1,803,70
4 ,0 0
4,90
4,80
4,802 ,0 0
2,10
2,90
2 ,8 0
2,809,20
30,—
3O.4O
35,60
52, —2,60
21.70
19,80
25.70
4 1 ,8 03 9
13
16
13
97 7
10
15
11
(*) Antwerp, Rotterdam, Amsterdam(a) at the point where the alignment is greatest ) outside
(b) at the point where the alignment is smallest )  the producing coalfield
(a) =  coastal works
(b) =  other works

ANNEXE V
Decision concerning coking coal and coke for  
the iron and steel industry in the Community
Section I
Measures by Member States  
Article 1
Measures taken by a Member State to assist the coal-mining industry under  
its jurisdiction according to Article 1  of Decision No. 528/76/ECSC of 
25 February 1976 regarding the Com m unity system of measures taken by the M em b er 
States to assist the coal mining industry (1), m ay  be intended, in particular, 
to facilitate the production and sale of coking coal and coke for the iron and 
steel industry in the Community.
Article 2
1. In this connection, a Member State may provide for a special aid,  
entitled "sales aid", with a view to facilitating deliveries to areas remote  
from the coalfield or effected by way of intra-Community trade
2. Sales aids m ay be granted for deliveries of coking coal or coke, made  
on the basis of a long-term contract, intended to supply the blast furnaces  
of the Community iron and steel industry and conforming to the provisions of  
Decision No. 3544/73/ECSC of 20 December 1973 pursuant to Decision No 73/287/ECSC  
regarding coking coal and coke (2) conditional upon regular execution of the said 
contract and application of prices conforming to the provisions of Section II of 
the present Decision.
3. The rate of sales aid per tonne of coking coal m a y  be up to 8  E C U  
in the case of delivery to a  works having the possibility of direct 
supply by sea or whose supply by intra-Community trade requires 
maritime transport. The aid m a y  be up to 5  E C U  in other cases.
T he modulation adopted by a  government must not introduce 
discrimination into the aids relating to deliveries by the coal 
undertakings.
(1) O.J. N o. L  63 of 11.3.1976, p. 1.
(2) O.N. N o. L  361 of 29.12.1973, p. 18.

-  2 -  
Article 3
1. Notification of intended aid by a M em ber State, addressed to the 
Commission as required by the provisions of Article 2  of Decision 
N o. 528/76/ECSC, must give the details of the coking coal and coke 
for each coalfield or coal undertaking concerned.
2. The Commission shall carry out, after each budgetary year, the 
verifications needed to fix the definitive amount of sales aid 
authorized for each coalfield or undertaking.
Section II 
Pricing rules 
Article 4
1. The Commission shal l fix guide cif prices at regular intervals for coking coal  
for the Community. These prices shall form a com m o n  base for the determination of the 
minimum price to be respected for all delivery points for the sale of coking  
coal or coke supplied to the iron and steel industry of the Community by coal  
undertakings in receipt of the aids described in Article 1 above.
2.  T h e guide price shall represent the average cost to coking plants and iron  
and steel plants of their supplies under regular contract of coking coal and  
coke from non—member countries, to the exclusion of isolated and exceptional  
purchases.
3· The Commission shal l ensure that the guide price has the necessary trans­
parency.
Article 5
1. Coal undertakings shal l  be authorized to grant rebates on their list prices
for deliver: :  covered by Article 4»1 whether or not there is actual competition
from coking coal or coke from non-member countries at the point of consumption.
2. In the case of coking coal deliveries, the rebates allowed under para. 1  
above shall not cause the delivered price to work out below that calculated from  
the cif guide price of the first paragraph of Article 4·
3. In the case of coke deliveries, the delivered price shall at least cover  
the sum of the price of the Community coal used to produce the coke, calculated  
as indicated in para. 2 above, and the net cost of coking of the supplying  
coking plant.
. ·/· ·

-  3  -
4. Sales aid shall be granted to a coal undertaking if, and in so far as such
aid constitutes an element of the rebate granted for a delivery carried out under  
the terms of a long-term contract.
5.  All long-term contracts shall stipulate that in the event of non-execution  
imputable to the purchaser, the latter must repay to the seller a proportion of  
the rebate obtained equal to the sales aid relating to the tonnages during the  
course of the annual period in question.
Article 6
1. The provisions of Article 60, paragraph 2 b), last indent of the Treaty  
allowing the Commission, in the event of abuse, to restrict or abrogate the  
right of the undertakings concerned to take advantage of this exception on the  
one hand, and the provisions of the Decisions taken for the application of the  
said indent on the other hand shall apply to the rebates covered by Article 5 »  
above.
2. In the case of infraction by a coal undertaking of the rules derived from  
Article 5»  the provisions of Article 64 of the Treaty shall be applicable.
Section III
Community contribution  
Article 7
The Community shall contribute towards the financing of the sales aids relating to 
intra-Community trade conditional upon the provisions of Sections I and
II above being respected The contribution is governed by the provisions of  
Regulation ........

- 4 -
Section IV
General and final provisions  
Article 8
1. The Commission shall ensure that the provisions of the present Decision  
do not have the effect of altering the conditions of competition among the  
coking coal or coke producing undertakings or among the steel undertakings.
2. If at the request of a Member State or on its own initiative the  
Commission finds that:
(a) the implementation of this Decision is liable to give rise to serious
disturbances in the common market for coal and steel, ori'to difficulties which  
may result in a deterioration in the regional economy, or that
0 0 appreciable changes are taking place in the conditions, volume or pattern
of intrar-Community trade, thus altering the economic conditions prompting the  
adoption of this Decision, it may suspend application of this Decision. It  
shall refer the matter to the Council aid the European Parliament forthwith.
Article 9
The Commission shall periodically report to the Council and the European  
Parliament on the application of this Decision and on developments in the  
supply situation, in particular in connection with intrar-Community trade.
Article 10
After consulting the Council and the Consultative Committee, the Commission shall  
take all measures necessary for the application of this Decision.
Article 11
This Decision shall enter into force on the day of its publication in the  
Official Journal of the European Communities and shall take effect from
1 January 19^4 and shall be applicable until 3 1  December 1988.

- 5 -
Its provisions shall apply also to contracts concluded before 1 January 1984  
under the provisions of Article 3 of Decision No. 3544/73/ECSC of 20 Decem ber 
1973 pursuant to Decision No. 73/287/ECSC regarding coking coal and coke (1) 
a n d  whose period of validity has not expired.
This Decision shall be binding in its entirety and directly applicable in  
all Member States.
Done a t  B r u s s e l s
For the Commission
(1) O.J. No. L361 of 29.12.1973, P. 18

-  6 -  
A N N E X  V I
Draft
Ç Q U N Ç IL _ regulation _(eeç) .
establishing a  Community contribution for sales aids relating to 
intra-Community trade in coking coal and coke for the 
iron and steel industry in the Com m unity
T H E  C O U N C IL  O F  T H E  E U R O P E A N  C O M M U N IT IE S ,
Having regard to the Treaty establishing the European Economic C o m m u ­
nity, and in particular Article 235 thereof;
Having regard to the proposal from the Commission;
Having regard to the opinion of the European Parliament;
Having regard to the opinion of the Economic and Social Committee;
Whereas under the terms of Article 2  of the Treaty, the Community has 
as its task the promotion throughout the Community of a harmonious 
development of economic activ ities, a continuous and balanced expansion 
and an increase in stability;
Whereas in the present economic context, the Community is confronted 
by the imperative need to diversify its sources of energy supply and 
to replace oil by alternative sources of energy;
Whereas there is a need to strengthen the role of coal in covering 
energy requirements and for that purpose to improve the possibilities 
for economic, or currently marginally uneconomic, production capacity 
in the Community's coal industry, particularly with regard to coking 
coal and coke;
Whereas such a strengthening implies, over and above national aids
1under the terms of Commission Decision N o  /E C S C  , the granting 
of a financial contribution to support intra-Community trade in coking 
coal and coke;
O J

- 7  -
W hereas such measures are Likely to improve the general employment 
situation in the Community and favour the harmonious development of 
econom ic activity, thus contributing to the achievement of one of the 
Community's basic objectives;
W hereas the contribution towards the financing of sales aids relating 
to intra-Community trade should be degressive in character, so that 
at the end of the period covered by this Regulation the iron and steel 
industry will take over the cost of its supplies of coking coal and 
coke;
W hereas for the management of the contribution the Commission must 
h a v e  the necessary powers of verification in relation to the M em ber 
States and undertakings concerned;
W hereas the Treaty does not provide the specific powers of action 
required for this purpose;
H A S  A D O P T E D  T H IS R E G U L A T IO N :
Article_1
A  Com m unity contribution shall be granted to M em ber States which pay sales 
aids relating to intra-Community trade in coking coal and coke for 
the iron and steel industry in the Community in accordance with Article 
l of Decision N o  /ECSC.
Article_2
1 . The Community contribution shall be related to a tonnage of coal 
w h o se upper limit is indicated below for each year in which this Regu­
lation applies.

-  8 -
Year M ax im u m  tonnage
(million tonnes)
1984 10
1985 8
1986 6
1987 4
1988 2
2. T he Community contribution shall be granted subject to the 
limits of the appropriations written into the general budget of the 
European Communities for that purpose.
Article 3
1. A n y  M em ber State which has financed in advance the sales aid relating to 
intra-Community trade m ay request repayment of the corresponding
amounts by the Commission.
2. The Commission shall verify the requests and decide the amounts 
to be reimbursed to the M em ber States concerned. If the annual total 
of tonnages exceeds the limit set in Article 2(1), the reimbursement 
shall be reduced to the appropriate amount, an identical percentage 
being applied for each M em ber State.
3. T he M em ber States m ay  request payment quarterly or half-yearly 
on the basis of provisional statements of intra-Community deliveries.
4. Following each financial year the Commission. shall carry out with 
the undertakings or national administrations the verifications 
necessary to decide definitively the amounts to be reimbursed.

- 9 -
Article 4
T he Commission shall report periodically on the application of this Regulation 
to the Council and to the European Parliament.
Article 5
This Regulation shall enter into force on the day of its publication in the 
Official Journal of the European Communities
It shall apply from 1  January 1984 until 3 1  December 1988.
This Regulation shall be binding in its entirety and directly applicable 
in all M em ber States.
D one at Brussels, For the Council
President

F IN A N C IA L  S T A T E M E N T
T. Budget line
Chapter :  70 Article . . r . . . .  Part ..............
N e w  system for coking coal and coke for the iron and steel industry in 
the Community.
5. Financial effect of th? action on the intervention credits
5.1. Total cost for the entire planned duration (1.1.1984 - 31.12.1988) :  
180 M io E C U
5.2. Share of the Community budget in the financing :  100 %
5.3. Five-year schedule of credits necessary :
M io E C U
1984 60
1985 4 8
1986 36
1987 24
1988 1 2