98/637/ECSC: Commission Decision of 3 June 1998 on the granting by Spain of aid to the coal industry in 1998 [notified under document number C(1998) 2045] (Only the Spanish text is authentic) (Text with EEA relevance)
Date: 1998-06-03
Institutions: European Commission
Subjects: Spain, cessation of trading, coal industry, control of State aid, industrial restructuring, severance pay

13. 11. 98

EN

Official Journal of the European Communities

L 303/57

COMMISSION DECISION

of 3 June 1998

on the granting by Spain of aid to the coal industry in 1998

(notified under document number C(1998) 2045)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(98/637/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

industry with the general and specific objectives of the
Decision;

Having regard to the Treaty establishing the European
Coal and Steel Community,

Having regard to Commission Decision No 3632/93/
ECSC of 28 December 1993 establishing Community
rules for State aid to the coal industry (1), and in particular
Article 2(1), and Articles 8 and 9 thereof,

Whereas:

I

By Decision 94/1072/ECSC (2) the Commission gave an
opinion as to the conformity of the 1994-1997 phase of
the modernisation,
restructuring and
rationalisation,
activity-reduction plan for the coal industry notified by
Spain with the general and specific objectives of Decision
No 3632/93/ECSC.

By letter of 15 October 1997, Spain notified the Commis-
sion of the second phase (1998-2002) of the modernisa-
tion, rationalisation, restructuring and activity-reduction
plan for the coal industry.

By letters of 17 December 1997, 20 February 1998 and 31
March 1998 Spain provided additional
in
response to the requests contained in the Commission’s
letters of 14 November and 22 December 1997.

information,

By letter of 31 March 1998, pursuant to Article 9(1) of
Decision No 3632/93/ECSC, Spain notified the Commis-
sion of the financial measures it intended to take in
respect of the coal industry in 1998.

Under Decision No 3632/93/ECSC,
must:

the Commission

(a) give an opinion as to the conformity of the 1998-2002
phase of the modernisation, rationalisation, restruc-
turing and activity-reduction plan for the Spanish coal

(1) OJ L 329, 30. 12. 1993, p. 12.
(2) OJ L 385, 31. 12. 1994, p. 31.

(b) rule on the following financial measures relating to

1998:

— aid of ESP 126 855 million to cover operating

losses by coal undertakings,

— aid of ESP 54 967 million to cover exceptional
welfare aid paid to workers who lose their jobs as a
result of the measures to modernise, rationalise,
restructure and reduce the activity of
the coal
industry,

— aid of ESP 11 995 million to cover the technical
costs of closing down mining installations as a
result of the measures to modernise, rationalise,
the coal
restructure and reduce the activity of
industry.

The financial measures proposed by Spain for the coal
industry fall within the provisions of Article 1 of Decision
No 3632/93/ECSC and must be approved by the
Commission, in accordance with Article 9, on the basis,
in particular, of the general criteria and objectives laid
down in Article 2 and the specific criteria established by
Articles 3 and 4 of that Decision. In accordance with
Article 9(6) of the Decision, the Commission must assess
whether the measures are in conformity with the plans
notified.

II

The measures taken to implement the 1994-1997 phase
of Spain’s modernisation,
restructuring
and activity-reduction plan deviated from the plans noti-
fied to and approved by the Commission.

rationalisation,

In its evaluation of this phase of the plan the Commis-
sion found that the undertakings or production units
granted operating aid under Article 3 had made limited
progress towards improving their economic viability, rela-
tive to coal prices on international markets. Broadly
speaking, those undertakings had not made all the efforts

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Official Journal of the European Communities

13. 11. 98

announced on modernisation, rationalisation and restruc-
turing. When approving the aid, the Commission recog-
nised the priority need to attenuate, as far as possible, the
social and regional impact of restructuring and to provide
coal undertakings with a medium-term outlook so that
they could complete their restructuring. Nevertheless,
those undertakings will have to step up their restructuring
efforts in the next phase, from 1998 to 2002.

September 1998 at the latest. If production cost trends
over the period 1994 to 1997 show that certain undertak-
ings or production units fail to meet the conditions laid
down in Article 3(2) of Decision No 3632/93/ECSC,
Spain will submit proposals to the Commission to subject
them to a closure plan before 23 July 2002 or, where
appropriate,
to a progressive and continuous activity-
reduction plan, as provided for by Article 4 of the same
Decision.

The undertakings or production units receiving aid for
the reduction of activity under Article 4 adopted a series
of measures over this period, conflicting with the obliga-
tion progressively to reduce their production capacity by
means of total or partial closures. Those measures resulted
in a significant increase in aid. In accordance with Article
9(6) of Decision No 3632/93/ECSC the Commission
requested Spain to explain these deviations and to
propose the necessary corrective measures.

Between 1 January 1994 and 31 December 1997 Spain
the coal
gradually brought
industry, particularly the contracts between coal and elec-
tricity producers, into line with Decision No 3632/93/
ECSC, as provided for by Article 9(7).

the aid arrangements for

to the Commission’s

In response
letter dated 14
November 1997 Spain made amendments to the modern-
isation, rationalisation, restructuring and activity-reduc-
tion plans for 1998 to 2002 originally notified in its letter
of 15 October 1997.

The 1998-2002 phase of the definitive plan, notified by
Spain by letter dated 31 March 1998, aims at stepping up
the modernisation, rationalisation and restructuring meas-
ures which coal undertakings must implement to reduce
their production costs 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, would
still be far from achieving economic viability will have to
step up their activity-reduction plan, as provided for by
Article 4 of Decision No 3632/93/ECSC.

Throughout the period from 1998 to 2002 Spain must
monitor production cost trends at each of the coal under-
takings and, should they prove unable to generate a
downward trend, will propose the necessary corrective
measures to the Commission.

In view of the difficult geological conditions in Spain’s
coalfields, certain undertakings or production units must
be subject to a closure plan before 23 July 2002 or, where
appropriate, a progressive and continuous activity-reduc-
tion plan in order to qualify for the aid for the reduction
of activity (Article 4 of Decision No 3632/93/ECSC).

The company Endesa’s underground production capacity
of 0,315 million tonnes will be subject to a closure plan to
be completed before 23 July 2002.

Given the exceptional social and regional conditions in
the Asturias coalfields, Hunosa, Minas de Figaredo SA and
Mina de la Camocha SA will be subject to a progressive
and continuous activity-reduction plan.

Production by Hunosa and Minas de Figaredo SA fell
from a combined total of 3,12 million tonnes in 1993 to
2,66 million tonnes in 1996 and 2,42 million tonnes in
1997. Further reductions will have to be made to take
production down to a maximum of 1,8 million tonnes in
2001, representing a 42 % reduction since 1993. The
number of mineworkers will have to be reduced from
9 337 on 1 January 1998 to 6 500 by 31 December 2001 -
51 % down on l January 1994.

the undertakings

For
receiving operating aid under
Article 3, Spain has set a target of a minimum net reduc-
tion in production of 1,9 million tonnes between l
January 1998 and 23 July 2002, which by the time that
the plan is completed will take their maximum produc-
tion level down to 12,7 million tonnes, compared with
14,6 million tonnes in 1997.

The mines taken over by Hunosa from Minas de Lieres
SA will have to close down definitively by 31 December
1999. Hunosa has given a commitment
to make no
further investment in preparing new reserves from this
mine, and Spain will undertake to grant no aid to cover
production costs between l January 1998 and the closure
date.

In order to confirm the trend towards a reduction in those
undertakings’ production costs at 1992 prices, Spain must
notify the Commission of 1997 production by 30

Mina de la Camocha reduced production from 0,278
million tonnes in 1993 to 0,248 million tonnes in 1997.
Further reductions will have to be made to take produc-

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Official Journal of the European Communities

L 303/59

tion down to a maximum of 0,183 million tonnes in
2001, down by 34 % since 1993. The number of mine-
workers fell from 1 091 on 1 January 1994 to 754 on 31
December 1997 and should be no more than 400 by 31
December 2001.

restructuring and activity-reduction of

The 1998-2002 plan for the modernisation, rationalisa-
the coal
tion,
industry, notified by Spain, is in line with Article 2(1) of
Decision No 3632/93/ECSC, particularly with the objec-
tive of solving the regional and social problems created by
total or partial reductions in the activity of production
units. In view of its social and regional aspects, the plan
notified to the Commission will be accompanied by
conversion programmes for the mining regions, entailing
aid to restore industrial activity in the region wherever
this is compatible with the Treaties.

The plan notified by Spain for 1998 to 2002 provides for
an annual reduction in aid to current production of 4 %
for underground mines and 6 % for open-cast mines.
This will help to achieve the objective of degression of
aid. The aid to cover the production costs of the under-
takings or production units, i.e. the aid under Article 3
and/or Article 4, is intended to cover all or part of the
difference between production costs and the selling price
freely agreed between the contracting parties in the light
of the conditions prevailing on the world market.

In accordance with Article 2(2) of Decision No 3632/93/
ECSC, all the aid which Spain plans to grant to the coal
industry under that Decision for the period 1998 to 2002
will be entered in national, regional or local public
budgets. Part of the aid to Hunosa and Minas de Figaredo
SA could be channelled via SEPI (Sociedad Estatal de
Participaciones Industriales), a public undertaking for
which the expenditure and revenue estimates are entered
in the general State budgets.

In view of the above, the plan submitted by Spain is in
line with the general objectives laid down in Article 2 and
with the specific objectives established in Articles 3 and 4
of Decision No 3632/93/ECSC, provided that all
the
conditions laid down in that Decision are complied with,
and particularly the condition relating to non-discrim-
ination between producers, purchasers and users of coal in
the Community.

III

The aid of ESP 126 855 million which Spain plans to
grant the coal industry in 1998 is intended to compensate

in full or in part for operating losses suffered by coal
undertakings.

It is intended to cover the difference between production
costs and the selling price freely agreed between the
contracting parties
the conditions
prevailing on the world market.

in the light of

The sum notified subdivides into operating aid of ESP
59 443 million under Article 3 of Decision No 3632/93/
ECSC and aid of ESP 67 412 million to reduce activity
under Article 4 of that Decision.

The operating aid of ESP 59 443 million is intended to
cover the operating losses suffered by 73 undertakings
producing a total of 14,5 million tonnes in 1998. Spain
will send notification of those undertakings’ 1997 produc-
tion costs by 30 September 1998 at the latest, to show
trends between 1994 and 1997.

Of the aid of ESP 67 412 million to reduce activity, ESP
61 054 million is intended to cover the operating losses of
Hunosa and Minas de Figaredo SA, ESP 5 361 million the
operating losses of Mina de la Camocha SA and ESP 997
million the operating losses of the underground workings
of Endesa on production totalling 3 million tonnes.

Of the aid of ESP 61 054 million to Hunosa and Minas de
Figaredo SA, ESP 44 429 million will be granted via SEPI.

The amount of aid notified by Spain for 1998 is 3 %
lower than the aid authorised by the Commission for
1997, after comparison with the selling prices in the light
of the conditions prevailing on the world market. Spain
sent notification of the Council of Ministers’ decision on
the company-by-company allocation of this aid.

The aid to cover the operating losses suffered by coal
undertakings is entered in the general State budgets for
1998.

The inclusion of those measures in the modernisation,
rationalisation, restructuring and activity-reduction plan
notified by Spain and the degression of the aid and quant-
ities planned for 1998 are in line with the objectives of
the first and second indents of Article 2(1) of
the
Decision, particularly the objective of solving the social
and regional problems created by developments in the
coal industry.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

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Official Journal of the European Communities

13. 11. 98

IV

the other undertakings restructuring or reducing their
activity.

The aid of ESP 54 967 million which Spain is proposing
to grant will cover compensation for workers who will
lose their jobs or have to take early retirement under the
modernisation, rationalisation, restructuring and activity-
reduction plan for the Spanish coal industry.

Part of this aid, amounting to ESP 44 872 million, will be
granted to Hunosa and Minas de Figaredo SA to cover the
costs for the workers who took early retirement before 1
January 1998 or will take early retirement in 1998. This
part of the aid will be granted to Hunosa and Minas de
Figaredo via SEPI.

The remaining ESP 10 095 million of aid is intended to
cover compensation for workers from the other undertak-
ings
rationalisation and
restructuring measures who will lose their jobs in 1998.

affected by modernisation,

The aid to cover exceptional costs arising from restruc-
turing is entered in the general State budgets for 1998.

The financial measures relate to action necessitated by the
the
modernisation, rationalisation and restructuring of
Spanish coal industry and cannot therefore be considered
to be related to current production (inherited liabilities).

Pursuant to Article 5 of Decision No 3632/93/ECSC, the
aid mentioned explicitly in the Annex to the Decision,
namely the cost of paying social-welfare benefits resulting
from the pensioning-off of workers before they reach
statutory retirement age and other exceptional expendi-
ture on workers who lose their jobs as a result of restruc-
turing and rationalisation, may be considered compatible
with the common market, provided that the amount paid
does not exceed such costs.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

V

The aid of ESP 11 995 million which Spain proposes to
grant is intended to cover part of the loss of value of the
fixed assets of coal undertakings which have to close
down totally or partially and other exceptional costs
resulting from the progressive closures connected with
the restructuring of the coal industry.

Part of this aid, totalling ESP 1 670 million, is to be
granted to Hunosa and Minas de Figaredo SA via SEPI.
The remaining ESP 10 325 million of aid is intended for

The aid to cover exceptional costs arising from restruc-
turing is entered in the general State budgets for 1998.

These financial measures relate to action made necessary
by the modernisation, rationalisation and restructuring of
the Spanish coal industry and cannot therefore be con-
sidered to be related to current production (inherited
liabilities).

it results from the restructuring of

Pursuant to Article 5 of Decision No 3632/93/ECSC, the
aid mentioned explicitly in the Annex to the Decision,
namely exceptional intrinsic depreciation, may, provided
that
the industry
(without taking account of any revaluation which has
occurred since l January 1986 and which exceeds the rate
of inflation) and other additional work and residual costs
arising from closures of
installations, be considered
compatible with the common market on condition that
the amount paid does not exceed such costs.

Spain must ensure that the aid granted to undertaking to
cover exceptional costs is in line with the categories of
costs defined in the Annex to Decision No 3632/93/
ECSC.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

VI

Spain must ensure that the aid to current production
granted under this Decision gives rise to no discrim-
ination between producers, purchasers and users on the
Community coal market.

In view of the above and on the basis of the information
provided by Spain, the aid and measures planned for the
coal
industry are compatible with the objectives of
Decision No 3632/93/ECSC and with the proper func-
tioning of the common market.

This Decision applies without prejudice to the compati-
bility with the Treaties of any contracts concluded
between Spanish coal and electricity producers.

In accordance with the second indent of Article 3(1) and
with Article 9(2) and (3) of Decision No 3632/93/ECSC,
the Commission must verify that the aid relates solely to
the purposes set out in Articles 3, 4 and 5 of the Decision.
To this end, it must be informed of the amounts involved
and the distribution of payments,

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HAS ADOPTED THIS DECISION:

Article 2

Article 1

Spain is hereby authorised to pay the following aid in
respect of 1998:

(a) operating aid of ESP 59 443 million under Article 3 of

Decision No 3632/93/ECSC;

(b) aid for the reduction of activity of ESP 67 412 million
under Article 4 of Decision No 3632/93/ECSC;

(c) aid of ESP 54 967 million to cover exceptional welfare
aid paid to workers who lose their jobs as a result of
the measures to modernise, rationalise, restructure and
reduce the activity of the Spanish coal industry under
Article 5 of Decision No 3632/93/ECSC;

(d) aid of ESP 11 995 million to cover the exceptional
technical costs of closing down mining installations as
a result of the measures to modernise, rationalise,
restructure and reduce the activity of the Spanish coal
industry under Article 5 of Decision No 3632/93/
ECSC.

In accordance with Article 86 of the ECSC Treaty, Spain
shall adopt all appropriate measures, whether general or
particular, to ensure fulfilment of the obligations arising
under this Decision. It shall ensure that the aid authorised
is used for the purposes intended and that any unspent,
overestimated or incorrectly used aid for any item covered
by this Decision is repaid to it.

Article 3

Spain shall notify the Commission, by 30 June 1999 at
the latest, of the amount of aid actually paid in respect of
1998.

Article 4

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 3 June 1998.

For the Commission

Christos PAPOUTSIS

Member of the Commission