2000/360/ECSC: Commission Decision of 15 February 2000 on the State aid which Belgium is planning to grant to NV Sidmar (notified under document number C(2000) 517) (Text with EEA relevance) (Only the Dutch and French texts are authentic)
Date: 2000-02-15
Institutions: European Commission
Subjects: Belgium, State aid, application of EU law, control of State aid, environmental policy, iron and steel industry

L 129/26

EN

Official Journal of the European Communities

30.5.2000

COMMISSION DECISION

of 15 February 2000

on the State aid which Belgium is planning to grant to NV Sidmar

(notified under document number C(2000) 517)

(Only the Dutch and French texts are authentic)

(Text with EEA relevance)

(2000/360/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and
Steel Community, and in particular the first subparagraph of
Article 4(c) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof read in conjunc-
tion with Protocol 14,

Having regard to Commission Decision No 2496/96/ECSC of
18 December 1996 establishing Community rules for State aid
to the steel

industry (1),

(6)

Having called on interested parties to submit their comments
pursuant to the provisions cited above (2) and having regard to
those comments,

Whereas:

cold-rolled coils and coated and uncoated sheets.
In
1997 it produced 4 137 000 tonnes of liquid steel and
had a turnover of BEF 55 814 million. As at 31
December 1997 it employed 6 005 people. The compa-
ny's installations date from 1966, 1967 and 1972. The
new investments consist in adaptations to those installa-
tions in order to comply with new environmental stan-
dards or significantly improve on them.

a

of

aid

grant

proposal

The
of
consists
BEF 102 955 200 towards the cost of six investment
projects that the company is to carry out in order to
improve environmental protection. This amount repre-
sents 15 % of the investment costs that the Flemish
authorities consider eligible. The total cost of the invest-
ments is BEF 953 500 000, broken down as follows:

(1)

(2)

(3)

(4)

(5)

I. PROCEDURE

By letter dated 21 October 1998, Belgium notified the
Commission of aid that the Flemish authorities intended
to grant to the steel company NV Sidmar for six invest-
ment projects for environmental protection. By letters
dated 31 May and 23 June 1999,
it provided the
Commission with further information.

the Commission
By letter dated 11 August 1999,
informed Belgium that it had decided to initiate the
procedure laid down in Article 6(5) of Decision No
2496/96/ECSC (hereinafter referred to as ‘the Steel Aid
Code’) in respect of the aid.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Communi-
ties (3). The Commission invited interested parties to
submit their comments on the aid.

The Commission received comments from NV Sidmar. It
forwarded them to Belgium, which was given the oppor-
tunity to react;
its comments were received by letter
dated 10 December 1999.

II. DETAILED DESCRIPTION OF THE AID

NV Sidmar is a steel producer located in Gent, Belgium,
in which Arbed SA, Luxembourg, has a majority
holding. It produces ECSC flat products, such as hot-and

(1) OJ L 338, 28.12.1996, p. 42.
(2) OJ C 280, 2.10.1999, p. 29.
(3) See footnote 2.

(BEF)

Dust collection at unloading crane

10 000 000

Treatment of filtrate from blast furnaces

27 000 000

Adjustments to blast furnaces No 4

59 000 000

Optimisation of industrial sewers

Improved dust collection at blast-furnace
loading sites

78 000 000

27 500 000

Construction of circular cooler for sintering
plant No 2

752 000 000

Total

953 500 000

(7)

(8)

The purpose of the ‘dust collection at unloading crane’
project is to reduce the impact of dust on surrounding
areas when ships are unloaded. This is not a statutory
requirement, but it will significantly improve environ-
mental protection as dust emission will fall from 15 t/
year to 2 t/year. The investment has no effect on
production and all the costs relate solely to the objective
of environmental protection.

The ‘treatment of filtrate from blast furnaces’ project is
aimed at optimising the operation of its existing water-
purification system. Given that
the company already
complies with the requirements governing the discharge
of wastewater into the canal even before carrying out

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Official Journal of the European Communities

L 129/27

(9)

(10)

it constitutes an additional effort to
this investment,
reduce the negative impact on the environment, which is
significant, from 5 t/year to 2 t/year of zinc discharge.
The investment has no effect on production and all the
costs relate solely to objective of environmental protec-
tion.

The ‘adjustments to blast furnace No 4’ project consists
in the replacement of the present filter, the building of a
heavier extraction fan, the replacement of the existing
chimney stack and the construction of an emergency
chimney. The current rate of chlorine emissions is about
25 mg/Nm3, whereas since 1 January 1999 the standard
has been 5 mg/Nm3. The company's objective in
carrying out this investment is to purify the flue gases in
order to meet and even improve on the standard that is
required by law as from 1 January 1999, with an emis-
sion rate of 3 mg Cl/Nm3. As
regards hydrogen
chloride,
about
50 mg/Nm3, whereas since 1 January 1999 the standard
has been 30 mg HCl/Nm3. After the investment, the rate
of emission will be only 15 mg/Nm3. The investment
has no effect on production and all the costs relate
solely to the objective of environmental protection.

emission is

rate of

current

the

The ‘optimisation of industrial sewers’ project is aimed
at further optimising reuse of the company's wastewater
and thus reduce its annual water consumption by 9
million m3 (its current annual consumption is 35 million
m3). The investment covers the construction of an addi-
tional network of pipelines and the placing of two addi-
tional pumps. The additional pipelines are needed to
return the purified wastewater to the cold-rolling mill
and to transport wastewater from the coking plant to
the hot-rolling mill's waste pond. Although the level of
pollutants in the water will remain the same after the
investment, the reduction in volume will reduce the total
discharge of pollutants. Gross COD (chemical oxygen
demand) discharge will fall from 1 300 tonnes to 1 000
tonnes per year. PAH discharge will fall from 5 kg per
year to 4 kg per year and the discharge of heavy metals
will also fall in proportion. In addition, the quantity of
sewage sludge, which has to be removed via a recog-
nised sewage processor and eventually dumped, will also
be reduced by 200 tonnes a year. The investment has no
effect on production and all the costs relate solely to the
objective of environmental protection.

(11)

The ‘improved dust collection at
the blast-furnace
loading sites’ project is aimed at reducing dust emissions
when the blast furnaces are loaded. The existing plant
already includes a ventilation system and filter, with a
capacity of 140 000 Nm3 per hour. It will be supple-

another

system with a

capacity of
mented by
100 000 Nm3 per hour. After collection and purifica-
tion, the waste gas is discharged via a stack with an
output
flow of 10 000 Nm3/h. After purification, a
residual dust content of no more than 10 mg/Nm3 will
be left, which is equal to a residual dust emission of less
than 1 tonne a year, as against 30 tonnes a year at
present. The investment has no effect on production and
the costs relate solely to the objective of environmental
protection.

(12)

The ‘construction of circular cooler for sintering plant
No 2’ project is aimed at reducing dust emissions from
the sintering furnace. The current dust emission level is
151 mg/Nm3, whereas
from
January 1999 is only 50 mg/Nm3. After the investment,
dust emissions will be reduced to 20 mg/Nm3 well
below the new standard. According to the notification,
the project comprises two main components.

the new standard as

(a) Electrofilter

The electrofilter is the part of the investment that is
aimed directly at reducing dust emissions in compli-
ance with the new legal standard. This part of the
investment costs BEF 36 million and the Belgian
authorities intend to finance it up to 15 %.

(b) Energy savings

The other part of the investment, a new sintering
furnace, while contributing to environmental protec-
tion, also produces energy savings. The investment
saves energy because residual heat is reused and
because the sinters are cooled in an energy-efficient
way. Since the sinters have already been broken up,
air can reach the sinter bed more easily and the
contact surface between the sinters and the air
coolant is greater, with the result that heat transmis-
sion is more effective. The reduced energy require-
ment for cooling means that the installed power of
the cooling ventilator can be reduced to 2 MW
compared with the current 5,6 MW. This part of the
investment costs BEF 582 million. The Belgian
authorities plan to grant BEF 73,44 million, or 15 %
of the investment costs they consider eligible for aid,
i.e. BEF 486 740 316. This eligible cost is calculated
by deducting savings made over two years in invest-
ment costs.

(13)

The Commission considered that the six projects satis-
fied the criterion of environmental protection. With the
exception of the aid for the ‘construction of circular
cooler for sintering plant No 2’, all the conditions set
out in the Community guidelines on State aid for envir-
onmental protection (1) and the Steel Aid Code are met.
In particular, regarding the first five projects, the aid
intensity remains below the admissible ceilings, all the
costs relate to environmental protection and the pollu-
tion levels are considerably reduced.

(1) OJ C 72, 10.3.1994, p. 3.

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(14) However, as regards the abovementioned project, the
Commission considers that the notified aid exceeds the
limits admissible, the Belgian authorities having defined
eligible costs more broadly than allowed by the
Community rules, which require that any cost produc-
tion advantage derived by the company from the invest-
ment must be deducted from the costs of the project.
Belgium intends to deduct only the savings made over
two years instead of the 10 years corresponding to the
depreciation period for this investment. To determine all
the cost advantages obtained from an investment, the
lifetime of the investment should be taken into
full
account.
the Belgian authorities
stated that the depreciation period/lifetime of the invest-
ment was 10 years. If the savings to be made were to be
deducted only for two years, the aided investment would
give the firm a cost advantage in the remaining eight
years which would
the
Community rules.

In the present case,

incompatible with

be

(15)

The Belgian authorities further stated that, over the 10-
year period in question,
the firm expected to make
energy cost savings of BEF 510 075 887 but that over
the same period it would spend an extra amount of
BEF 485 533 829 in connection with the investment,
broken down as follows:

Interest

Financial charges

Operating costs

(BEF)

71 494 734

173 399 095

188 000 000

environmental protection, when a company carries out a
project to comply with new environmental standards,
no cost savings are to be deducted from the cost of the
investment. Sidmar
the
Commission were to continue to regard the project as
in energy saving and to deduct such
an investment
savings, then all the costs related to the project, as
described above, should be deducted from the savings.

further points out

that,

if

IV. COMMENTS FROM BELGIUM

(18) As part of

the procedure,

the Belgian authorities
confirmed the position given in the notification, namely,
that only two years' savings should be deducted from
investment costs relating to ‘construction of circular
cooler for sintering plant No 2’. In support of Sidmar's
position, they nevertheless consider that,
if a 10-year
period were to be undertaken, it would also be necessary
to take account of all the costs relating to the invest-
ment. They also confirmed the comments made by
Sidmar under the procedure, stating that
the firm's
intention in implementing the project is to reduce dust
emissions from the sintering plant in order to comply
with the new VLAREM II standards and that the invest-
ment project constitutes a whole. The energy-saving
effect had never constituted the main reason for under-
taking the project. Accordingly, the Belgian authorities
considered that the Commission should examine the
admissible aid under the rules in its guidelines on State
aid for environmental protection concerning investment
aid to help firms comply with new standards.

Over a 10-year period, the additional costs should be
offset against the cost savings brought about by the new
investment, so that the firm would make a net saving of
only BEF 24 542 000, i.e. the amount to be deducted if
the life of the investment were to be taken into account.

(16)

The Commission could not agree with this approach
and had serious doubts as to the compatibility of the aid
to be granted to the project.
It therefore decided to
initiate the procedure under Article 6(5) of the Steel Aid
Code.

III. COMMENTS FROM INTERESTED PARTIES

V. ASSESSMENT OF THE AID

(19) Article 3 of the Steel Aid Code allows steel companies to
benefit from aid for carrying out investments which help
to improve environmental protection. The rules and
conditions applicable to environmental aid are set out in
the Annex to the Steel Aid Code and the guidelines on
environmental aid. Under those rules, aid for investment
to help firms comply with new mandatory standards can
be authorised up to 15 % gross of the eligible costs
(point 3.2(A) of the guidelines on environmental aid).
Aid for investments that allow significantly higher levels
of environmental protection than those required by law
may be authorised up to 30 % of the eligible costs (point
3.2(B) of the guidelines). The eligible costs, in any case,
must relate solely to environmental protection.

(17)

The recipient, Sidmar, was the only interested party to
send comments. In a letter dated 29 October 1999, it
takes the view that the investment is not an investment
in energy saving, as notified by the Belgian authorities,
but an investment in compliance with new environ-
mental standards as it cannot be dissociated from the
first part of the project, described under ‘electrofilter’. It
then states that, under the guidelines on State aid for

(20) As stated in the Annex to the Steel Aid Code,

in
assessing aid for environmental protection, the Commis-
sion endeavours to prevent general investment aid for
new equipment being granted under cover of environ-
mental protection. The Commission therefore rigorously
checks that only investment costs that are related to
environmental protection are considered eligible for aid.

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regardless of

Contrary to the position taken by Sidmar, the guidelines
state clearly that
‘the eligible costs must be strictly
confined to the extra investment costs necessary to meet
environmental objectives’. This applies to any invest-
ment
led the
the initial
to
company to carry out
comply with new rules, to improve on standards or to
reduce energy consumption. As stated in point 2.3 of
the guidelines,
‘aid for energy conservation will be
treated like aid for environmental purposes’.

reason that
the investment, whether

(21) As it stated when opening the procedure, the Commis-
sion believes that the ‘construction of circular cooler for
sintering plant No 2’ project achieves significant benefits
for the environment and that it thus qualifies for aid
under the guidelines on environmental aid. While the
Commission therefore acknowledges that
the project
was aimed at such environmental objectives, it would
not alter its approach to the case if the savings had not
been made in energy costs but in another type of cost.
To ensure that the eligible costs are strictly confined to
the extra investment costs necessary to meet environ-
mental objectives, the Commission deducts from the
investment costs all production cost advantages that the
company derives from the investment. This can be done
only by taking into consideration the savings made
during the lifetime of the equipment or, as an acceptable
equivalent, the depreciation period of the equipment. In
the present case, therefore, Belgium must deduct from
the investment cost the savings made over 10 years as a
direct result of the investment.

(22) Operating costs related to the project cannot be consid-
ered eligible for aid either. Costs such as financing costs,
maintenance costs and normal running costs for any
given equipment are part of the normal running costs of
any company. They cannot be regarded as part of the
extra investment costs necessary to meet environmental
objectives. Thus, the costs incurred by Sidmar during the
10-year depreciation period of the equipment in ques-
tion do not qualify for aid to protect the environment.

VI. CONCLUSION

(23)

The aid notified by Belgium for the ‘construction of
circular cooler for sintering plant No 2’ project does not
comply with the conditions set out in the guidelines on
environmental aid and the Steel Aid Code. The aid to the
other projects, however, complies with all the condi-
tions, as the Commission already stated when it initiated
the procedure. The Commission accordingly considers

that the aid to the projects relating to ‘dust collection at
unloading crane’, ‘treatment of filtrate from blast furna-
ces’, ‘adjustments to blast furnace No 4’, ‘optimisation of
industrial sewers’,
‘improved dust collection at blast-
furnaces loading sites’, amounting to BEF 24 516 600,
is compatible with the common market. However, the
aid to the ‘construction of circular cooler for sintering
plant No 2’ project amounting to BEF 78 438 600 is
considered incompatible,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Belgium plans to grant to NV Sidmar for
the financing of the environmental projects relating to ‘dust
collection at unloading crane’, ‘treatment of filtrate from blast
furnaces’, ‘adjustments to blast furnace No 4’, ‘optimisation of
‘improved dust collection at blast-furnaces
industrial sewers’,
loading sites’ amounting to BEF 24 516 600 is compatible
with the common market.

Article 2

The State aid which Belgium plans to grant to NV Sidmar for
the environmental project relating to the ‘construction of
circular cooler
sintering plant No 2’ amounting to
BEF 78 438 600 is incompatible with the common market.

for

Accordingly, the aid for this investment project may not be
implemented.

Article 3

Belgium shall inform the Commission, within two months of
notification of this Decision, of the measures taken to comply
with it.

This Decision is addressed to the Kingdom of Belgium.

Article 4

Done at Brussels, 15 February 2000.

For the Commission

Mario MONTI

Member of the Commission