1999/451/ECSC: Commission Decision of 4 May 1999 on the granting by Spain of aid to the coal industry in 1999 (notified under document number C(1999) 1379) (Only the Spanish text is authentic) (Text with EEA relevance)
Date: 1999-05-04
Institutions: European Commission
Subjects: Spain, State aid, aid to industry, coal industry, control of State aid

13. 7. 1999

EN

Official Journal of the European Communities

L 177/27

COMMISSION DECISION

of 4 May 1999

on the granting by Spain of aid to the coal industry in 1999

(notified under document number C(1999) 1379)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(1999/451/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

(c) aid of ESP 13 079 million (EUR 78 606 373,13) to
cover the technical costs of closing down mining
installations as a result of the measures to modern-
ise, rationalise, restructure and reduce the activity of
the coal

industry.

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 Articles 2(1) and 9
thereof,

(6)

Whereas:

(1)

(2)

(3)

(4)

(5)

I

By letters of 16 October 1998, 6 January 1999, 19
January 1999 and 16 April 1999, Spain notified the
Commission, pursuant to Article 9(1) of Decision No
3632/93/ECSC, of the financial support it intended to
industry in 1999.
grant to the coal

Spain also notified the Commission, by letter of 25
September 1998, of the production costs per under-
taking for 1997.

By letter of 9 March 1999, Spain provided the informa-
tion requested in the Commission’s letter of 15 January
1999 concerning its proposals for the implementation
in 1999 of the 1999-2002 modernisation, rationalisa-
tion, restructuring and activity-reduction plan for the
coal

industry.

By letter of 16 April 1999 Spain notified the Commis-
sion, pursuant to Article 9(2) of Decision No 3632/93/
ECSC, of the amount of aid actually paid to the coal
industry during the coal production year 1998.

Pursuant to Decision No 3632/93/ECSC, the Commis-
sion must rule on the following financial measures
relating to 1999:

(a) aid of ESP 121 030 million (EUR 727 404 949,94)
to cover operating losses by coal undertakings;

(b) aid of ESP 44 141 million (EUR 265 292 753) to
cover exceptional welfare aid paid to workers who
lose their jobs as a result of the measures to modern-
ise, rationalise, restructure and reduce the activity of
the coal

industry;

The financial measures proposed by Spain for the coal
industry fall within the provisions of Article 1 of
Decision No 3632/93/ECSC. The Commission must
therefore take a decision on such measures in accord-
ance with Article 9(4) of the Decision. The Commis-
sion’s assessment will depend on the compliance of the
measures with the general criteria and objectives laid
down in Article 2 and the specific criteria established by
Articles 3 and 4 of the Decision, and on their compati-
bility with the proper
the common
market. Additionally, in accordance with Article 9(6) of
the Decision,
the Commission when conducting its
assessment must check whether the measures conform
with the modernisation,
restructuring
and activity-reduction plan which the Commission
approved in its Decision 98/637/ECSC (2)).

functioning of

rationalisation,

II

(7)

(8)

(9)

By Decision 98/637/ECSC the Commission gave an
opinion as to the conformity of the 1998-2002 phase of
the plan notified by Spain for the modernisation, ratio-
nalisation, restructuring and activity reduction of the
coal industry with the general and specific objectives of
Decision No 3632/93/ECSC.

The Commission has verified that the measures taken to
modernise, rationalise, restructure and reduce activity in
the coal industry during 1998, and those notified for
1999, correspond to the plans which the Commission
had approved.

Spain’s coal production of 1 625 000 tonnes in 1998 is
6,7 % lower than that shown in the plans for 1998 and
6,2 % lower than that which obtained in 1997. The
production figure notified by Spain for 1999 is
16 300 000 tonnes, lower by 6,8 % and 3,3 % than that
shown in the plans for 1998 and 1999 respectively.

(1) OJ L 329, 30.12.1993, p. 12.

(2) OJ L 303, 13.11.1998, p. 57.

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Official Journal of the European Communities

13. 7. 1999

(10)

The number of workers in the undertakings has fallen,
from 22 840 at the end of 1997 to 18 498 at the end of
1998. A further reduction of 1 320 workers is forecast
for 1999.

(16)

Throughout the period from 1999 to 2002 Spain will
continue to monitor production cost trends at each of
the coal undertakings and, should the undertakings
prove unable to achieve the trend downwards in produc-
tion costs provided for in Article 3(2) of Decision No
3632/93/ECSC, will propose the necessary corrective
measures to the Commission.

(11) During 1998 the definitive closure of mines with a
production capacity of 1 103 000 tonnes was begun,
and other mines with a total capacity of 700 000 tonnes
have already announced their closure in 1999.

(12)

(13)

(14)

These reductions, which are larger than those initially
envisaged, are due to the inclusion in the closure plans,
in conformity with Article 4 of Decision No 3632/93/
ECSC, of undertakings which were unable to meet the
conditions which would entitle them to operating aid
under Article 3 of the Decision.

By letter of 25 September 1998 Spain notified the
Commission, as required by Commission Decision 98/
637/ECSC, of
the undertakings’ production costs in
the production
1997. The Commission’s analysis of
costs of the undertakings or production units in receipt
of operating aid (Article 3 of Decision No 3632/93/
ECSC) revealed a mean reduction in the cost of produc-
tion, at 1992 prices, from 109,2 ECU/tce in 1994 to
81,02 ECU/tce in 1997. This mean reduction of 25,8 %
between 1992 and 1997 breaks down into a reduction
of more than 30 % for 30,3 % of production, between
30 % and 20 % for 42,5 % of production, between 20 %
and 10 % for 16,6 % of production and between 10 %
and 0 % for 8,5 % of production. The remaining 2,1 %
increased their cost of production.

The following undertakings or production units: Antra-
citas de Guill(cid:155)n S.A., Antracitas de Rengos S.A.,
ENCASUR (underground mines component only), Inver-
siones Terrales S.A., Minas de Escucha S.A., Ramiro
Genuario y otras S.A., Antracitas de Rodrigatos, S.A.,
with a total annual production of 675 800 tonnes, have
been included by Spain, according to its notification of
in a closure plan with a deadline
16 October 1998,
occurring before the date of expiry of Decision No
3632/93/ECSC. The Commission has checked that the
conditions laid down in Article 3(2) of Decision No
3632/93/ECSC cannot be achieved by these undertak-
ings, so they do indeed qualify for activity-reduction aid
in accordance with Article 4 of the Decision.

(17) One of the conditions laid down by the Commission in
its Decision 98/637/ECSC on the conformity of
the
Spanish coal
industry’s modernisation, rationalisation,
restructuring and activity-reduction plan with the
general and specific objectives of Decision No 3632/93/
ECSC, is that Spain must ensure that, between 1 January
1998 and the date of closure, no aid is granted to cover
the production costs of the mines formerly belonging to
Minas de Lieres SA, which were put back into produc-
tion by Hunosa. The Commission notes that for 1998
and 1999 the mines in question experienced or are set
to experience production losses valued respectively
at
and
ESP 169 000 000 (EUR 1 015 710,46). On the basis of
the information in the letter of 16 April 1999 from
Spain, the Commission notes that the operating losses of
the old Minas de Lieres mines were not covered by aid
during 1998 and that no aid has been set aside for them
for 1999. These mines must close down definitively by
31 December 1999.

(EUR 1 161 756,40)

ESP 193 300 000

(18)

The aid notified by Spain to cover operating losses in
for a reduction in production aid
1999 provides
compared with 1998, at current currency values, of 4 %
for underground mines and 6 % for open-cast mines.
The total amount of aid, i.e. aid for current production
plus aid to cover exceptional restructuring costs, fell by
8 %. These reductions will help to achieve the objective
of degression of aid. The aid to cover the production
costs of the undertakings or production units, i.e. the aid
under Articles 3 and 4 of the Decision, is intended to
cover all or part of the difference between the produc-
tion costs and the selling price freely agreed between the
contracting parties
the conditions
prevailing on the world market.

in the light of

(15)

If Spain finds that other undertakings are experiencing
difficulties in making further progress towards economic
viability it will
if so,
propose activity-reduction measures as provided for in
Article 4 of Decision No 3632/93/ECSC.

inform the Commission and,

(19)

The reduction in the aid notified for 1999 compared
with 1998 is still more notable when the fall
in the
selling price of coal on the world market is taken into
consideration.

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L 177/29

(20)

(21)

(22)

(23)

(24)

(25)

(26)

(27)

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 the said Decision in 1999 has been
entered in national, regional or local public budgets. Part
of this aid to Hunosa could be channelled via SEPI
(Sociedad Estatal de Participaciones Industriales).

In view of the above, the measures notified by Spain for
1999 are deemed to be in line with the modernisation,
rationalisation, restructuring and activity-reduction plans
approved by the Commission in its Decision 98/637/
ECSC, provided all
the conditions laid down in the
Decision are complied with, particularly those relating to
between
non-discrimination
purchasers or between users of coal in the Community.

producers,

between

III

The aid of ESP 121 030 million (EUR 727 404 949,94)
which Spain plans to grant the coal industry in 1999 is
intended to compensate in full or in part for operating
losses suffered by coal undertakings.

is intended to cover

It
the difference between the
production costs and the selling price freely agreed
between the contracting parties in the light of the condi-
tions prevailing on the world market.

The sum notified subdivides into operating aid of
under
ESP 54 544 million
Article 3 of Decision No 3632/93/ECSC, and activity-
reduction
million
of
(EUR 399 588 907,72) under Article 4 thereof.

(EUR 327 816 042,22)

ESP 66 486

aid

aid

operating

The
ESP 54 544 million
of
(EUR 327 816 042,22) is intended to cover the oper-
ating losses of 57 undertakings with a combined envis-
aged production of 13 335 million tonnes in 1999.

The Commission notes, after verifying the production
costs of these undertakings, at 1992 prices, that the
downward trend of production costs observed in the
period 1994-1997 will continue in 1999. The reduction
envisaged for 1999, compared with 1997, will be 7,2 %.

In 1997 the mean production cost, at 1992 prices, of
the undertakings
receiving aid under Article 3 of
Decision No 3632/93/ECSC is 81,02 ECU/tce, broken
down as follows:

— 10 % of production at costs between 42 and 57

ECU/tce;

— 10 % of production at costs between 59 and 62

ECU/tce;

— 10 % of production at costs between 63 and 71

ECU/tce;

— 10 % of production at costs between 72 and 81

ECU/tce;

— 10 % of production at costs between 82 and 85

ECU/tce;

— 10 % of production at costs between 86 and 87

ECU/tce;

— 10 % of production at costs between 88 and 90

ECU/tce;

— 10 % of production at costs between 91 and 92

ECU/tce;

— 10 % of production at costs between 93 and 95

ECU/tce;

— 10 % of production at costs between 96 and 129

ECU/tce.

(28)

Spain will notify the Commission, by no later than 30
September 1999, of the undertakings’ production costs
for 1998, to enable the Commission to verify the down-
ward trend of these costs over the period 1994 to 1998.

(29)

The mean selling price to the thermal power stations of
the 13 335 000 tonnes (8 476 700 tce) of production
envisaged in 1999 by the undertakings in receipt of
operating aid is ESP 5 955/tonne (EUR 35,79/tonne). In
the light of the envisaged mean cost of this production
in 1999, namely ESP 10 046/tonne (EUR 60,38/tonne),
the Commission notes that the aid notified corresponds
to the difference between the cost of production and the
selling price freely agreed between the contracting
parties in the light of the conditions prevailing on the
world market.

(30) Of

of

aid

the

losses

ESP 66 486

of Hunosa;

million
(EUR 399 588 907,72) to reduce activity, ESP 58 442
million (EUR 351 243 494,04) is intended to cover the
operating
ESP 5 147 million
(EUR 30 934 093,01) the operating losses of Mina la
the
Camocha; ESP 624 million (EUR 3 750 315,53)
operating losses of the underground workings of Endesa;
ESP 533 million (EUR 3 203 394,52)
the operating
losses of the Encasur underground workings; ESP 1 115
million
losses
ESP 271 million
Guill(cid:155)n;
of
(EUR 1 628 742,80) the operating losses of Antracitas
de Rengos; and ESP 354 million (EUR 2 127 582,85)
the operating losses of Minas de Escucha, with the
combined production of these undertakings totalling an
envisaged 3 million tonnes in 1999.

(EUR 6 701 284,96)
de

Antracitas

operating

the

(32)

(33)

(34)

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Official Journal of the European Communities

13. 7. 1999

(31) Of

aid

the

million
(EUR 351 243 494,04) to Hunosa, ESP 39 555 million
(EUR 237 730 337,89) will be granted via SEPI.

ESP 58 442

of

The mean selling price to the thermal power stations of
the 3 000 million tonnes (2 350 000 tce) of production
envisaged in 1999 by the undertakings in receipt of aid
to reduce activity is ESP 5 350/tonne (EUR 3 215/
tonne). In the light of the envisaged mean cost of this
production
ESP 27 550/tonne
(EUR 165,58/tonne), the Commission notes that that
the aid notified corresponds to the difference between
the cost of production and the selling price freely agreed
between the contracting parties in the light of the condi-
tions prevailing on the world market.

namely

1999,

in

(37)

(38)

nalisation, restructuring and activity-reduction plan for
the Spanish coal

industry.

of

aid,

this

ESP 34 046 million
totalling
Part
(EUR 204 620 581,06), is to be granted to Hunosa to
cover the costs for the workers who took early retire-
ment before 1 January 1999 and the 536 workers who
will retire in 1999. This part of the aid will be granted to
Hunosa via SEPI.

remaining

ESP 10 095

The
million
(EUR 60 672 171,94) is intended to cover compensa-
tion for the approximately 1 000 workers who will lose
their jobs in 1999 in the other undertakings affected by
modernisation, rationalisation, restructuring and activity-
reduction measures.

The aid to cover the operating losses suffered by coal
undertakings has been entered in the general State
budgets for 1999. It is 5 % lower than the aid authorised
by the Commission for 1998. Spain sent notification of
the Spanish Council of Ministers’ decision on the
company-by-company allocation of
aid. This
decision has been published in Spain’s Boletin Official
del Estado (1)).

this

The inclusion of this measure in the modernisation,
rationalisation, restructuring and activity-reduction plan
notified by Spain, and the reduction in the aid and
quantities envisaged for 1999, are in line with the objec-
tives of the first and second indents of Article 2(1) of
Decision No 3632/93/ECSC, and in particular the objec-
tive to solve the social and regional problems created by
developments in the coal

industry.

(35)

In view of the above, and on the basis of the informa-
tion provided by Spain,
this aid is compatible with
Articles 3 and 4 of Decision No 3632/93/ECSC and with
the proper functioning of the common market.

(39)

This aid, designed to cover exceptional costs that have
arisen or are due to arise from restructuring, has been
entered in the general State budgets for 1999.

(40)

(41)

These financial measures relate to action made necessary
by the modernisation, rationalisation and restructuring
of the 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
expenditure on workers who lose their jobs as a result of
restructuring and rationalisation, may be considered
compatible with the common market provided that the
amount paid does not exceed such costs.

(42)

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with Article 5
of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

IV

(36)

The aid of ESP 44 141 million (EUR 265 292 753)
which Spain is proposing to grant is intended to cover,
with the exception of the costs for the payment of
social-welfare benefits borne by the State as a special
the Treaty,
contribution pursuant
compensation paid to workers in Spanish coal undertak-
ings who have lost their jobs or have had to or will have
to take early retirement under the modernisation, ratio-

to Article 56 of

(1) BOE No 46, 23.2.1999, p. 7570.

(43)

The aid of ESP 13 079 million (EUR 78 606 373,13)
which Spain proposes to grant is intended to cover part
of the loss of value of the fixed assets of coal undertak-
ings which have to close down totally or partially, and
other exceptional costs to enable undertakings to cover
the costs that have arisen or are due to arise from the
progressive closures connected with the restructuring of
the coal

industry.

V

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L 177/31

(44)

(45)

(46)

(47)

(48)

(49)

(50)

(51)

of

aid,

this

ESP 2 754 million
totalling
Part
(EUR 16 551 873,35), will be granted to Hunosa via
SEPI. Since Minas de Lieres S.A. received closure aid in
Spain’s 1991 to 1993 restructuring plan it is not there-
fore entitled to receive any other aid to cover the costs
of closure, which must be completed by no later than
31 December 1999. The remaining sum,
totalling
ESP 10 325 million (EUR 62 054 499,78), will be
granted to the other undertakings that are restructuring
or reducing their activity.

The aid to cover exceptional costs arising or due to arise
from restructuring has been entered in the general State
budgets for 1999.

These financial measures relate to action made necessary
by the modernisation, rationalisation and restructuring
industry and cannot therefore be
of the Spanish coal
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 exceptional intrinsic depreciation provided that
it results from the restructuring of the industry (without
taking account of any revaluation which has occurred-
since 1 January 1986 and which exceeds the rate of
inflation) and other additional work and residual costs
arising from closures of installations, can be considered
compatible with the common market provided that the
amount paid does not exceed such costs.

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

In view of the above, and on the basis of the informa-
tion provided by Spain,
this aid is compatible with
Article 5 of Decision No 3632/93/ECSC and with the
proper functioning of the common market.

(52)

(53)

(54)

(55)

Spain undertakes to ensure that, within the framework
of the provisions of Article 86 of the Treaty, the aid is
limited to that which is strictly necessary in the light of
the social and regional considerations which characterise
the decline of the Community’s coal industry. The aid
may not give any economic advantage, whether directly
or indirectly, to productions for which no aid is author-
ised or to other activities distinct from coal production.

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 authorised for
current production responds exclusively to the objectives
stated in Articles 3 and 4 of the Decision. Spain must
notify the Commission, by no later than 30 June 2000,
of the amount of aid actually paid during 1999, and
declare any corrections made to the amounts originally
notified. When submitting this annual statement of aid
paid, Spain must also supply the Commission with all
the information necessary for verification of the criteria
set out in the Articles in question.

In approving the aid, the Commission has recognised
the need to soften, as far as possible, the social and
regional impact of the restructuring of the coal industry,
given the economic and social situation surrounding the
mines affected.

In view of the above, and on the basis of the informa-
the measures and the aid
tion provided by Spain,
industry are deemed to be
proposed for
compatible with the objectives of Decision No 3632/93/
ECSC and with the proper functioning of the common
market.

the coal

HAS ADOPTED THIS DECISION:

Article 1

VI

Spain is hereby authorised to pay the following aid in respect
of 1999:

The aid granted by Spain to the coal
industry is
restricted to coal production destined to be used for
electricity production. Spain undertakes to ensure that
the coal sold to the industrial and domestic sectors is
sold at prices (exempt from compensation) that cover
the costs of production.

Spain must ensure that
the aid granted to current
production under this Decision does not give rise to any
discrimination
between
purchasers or between users on the Community coal
market.

producers,

between

coal

(a) operating

aid

million
(EUR 327 816 042,22) under Article 3 of Decision No
3632/93/ECSC;

ESP 54 544

of

(b) aid for the reduction of activity of ESP 66 486 million
(EUR 399 588 971,72) under Article 4 of Decision No
3632/93/ECSC;

(c) aid of ESP 44 141 million (EUR 265 292 753), under
Article 5 of Decision No 3632/93/ECSC, to cover excep-
tional welfare aid for workers who lose their jobs as a
result of the measures to modernise, rationalise, restructure
and reduce the activity of the Spanish coal

industry;

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13. 7. 1999

(d) aid of ESP 13 079 million (EUR 78 606 373,13), under
Article 5 of Decision No 3632/93/ECSC,
to cover the
exceptional technical costs of closing down mining installa-
tions as a result of the measures to modernise, rationalise,
restructure and reduce the activity of the Spanish coal
industry.

Article 2

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 resulting from 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 2000 at the
latest, of the amount of aid actually paid in respect of 1999.

Article 4

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 4 May 1999.

For the Commission

Christos PAPOUTSIS

Member of the Commission