Commission Decision of 25 July 2001 authorising the United Kingdom to grant aid to four coal production units for 2001 (Text with EEA relevance) (notified under document number C(2001) 2434)
Date: 2001-07-25
Institutions: European Commission
Subjects: State aid, United Kingdom, aid to industry, coal industry

22.11.2001

EN

Official Journal of the European Communities

L 305/27

COMMISSION DECISION

of 25 July 2001

authorising the United Kingdom to grant aid to four coal production units for 2001

(notified under document number C(2001) 2434)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/807/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

II

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

(4)

Having regard to Commission Decision 3632/93/ECSC of 28
December 1993 establishing Community rules for State aid to
the coal

industry (1), and in particular Article 9(4) thereof,

sum of GBP 21 091 500 which the United
The
Kingdom is proposing to grant to the coal
industry
under Article 3 of Decision 3632/93/ECSC is intended
to cover the difference between the production cost and
the selling price of coal
freely agreed between the
contracting parties in the light of the prevailing condi-
tions on the world market for coal of similar quality
from third countries.

Whereas:

(5)

The aid is intended for the following four units:

I

(a) GBP 20 324 500 for Selby Complex production

unit of RJB Mining plc;

(1)

(2)

(3)

By letter of 15 May 2001, the United Kingdom notified
the Commission,
in accordance with Article 9(1) of
Decision 3632/93/ECSC, of the financial aid which it
proposed to grant to the coal

industry for 2001.

In the light of the information submitted by the United
Kingdom, the Commission is required to take a decision
on operating aid amounting to GBP 21 091 500 to
cover operating losses, for the period from 1 January
2001 to 31 December 2001,

in four product units.

The financial measures are covered by Article 1 of
Decision 3632/93/ECSC. The Commission must there-
fore take a decision on these measures pursuant
to
Article 9(4) of that Decision. Accordingly, the Commis-
sion's approval is subject to the general objectives and
criteria laid down in Article 2 and the specific criteria set
out in Article 3 of Decision 3632/93/ECSC and must,
more generally, be compatible with the proper func-
tioning of the common market. In addition, in its assess-
ment the Commission is required to check, in accord-
ance with article 9(6) of that Decision, whether the
measures notified are in conformity with the plan for
the modernisation, rationalisation and restructuring of
the United Kingdom coal
industry approved by the
Commission by Decision 2001/114/ECSC (2), and by
Decision 2001/597/ECSC of 11 April 2001 (3)
(the
restructuring plan).

(1) OJ L 329, 30.12.1993, p. 12.
(2) OJ L 43, 14.2.2001, p. 27.
(3) OJ L 210, 3.8.2001, p. 32.

(b) GBP 217 000 for the Blaentillery No 2 production

unit of Ffynonau Duon Mines Ltd;

(c) GBP 264 000 for the Hay Royds Colliery produc-

tion unit of J. Flack & Sons Ltd;

(d) GBP 286 000 for the Eckington Colliery production

unit of Moorside Mining Company Ltd.

(6)

amounting

to GBP 23 187 000 for

By Decision 2001/340/ECSC (4), the Commission has
already authorised the United Kingdom to grant oper-
ating aid pursuant to Article 3 of Decision No 3632/93/
ECSC for the period for 17 April 2000 to 31 December
2000,
Selby
Complex. Similarly, by Decision 2001/597/ECSC it has
authorised operating aid of GBP 113 000 for Blaentil-
lery No 2, GBP 79 000 for Hay Royds Colliery and
GBP 88 000 for Eckington Colliery. In accordance with
Article 3(2) of Decision 3632/93/ECSC, the Commission
was of
the aid which the United
Kingdom proposed to grant for 2000 was intended to
improve the economic viability of the production units
concerned by reducing their production costs. The aid
should, in accordance with the restructuring plan, help
to make the production units viable, enabling them to
continue their activities beyond 2002 without public
subsidy.

the opinion that

(4) OJ L 122, 3.5.2001, p. 23.

L 305/28

EN

Official Journal of the European Communities

22.11.2001

(7)

(8)

(9)

(10)

(11)

(12)

The information transmitted by the United Kingdom in
its letter of 15 May 2001 notifying the aid for 2001
confirms the analysis and conclusions of the Decision
2001/597/ECSC with regard to aid for 2000. Production
costs at the Selby Complex, Hay Royds Colliery and
Eckington Colliery units must be reduced significantly
and should not exceed the economic viability threshold
of GBP 1,15/GJ set in the restructuring plan, or a very
similar value, at 1999 prices (1).

The level of production costs for the Hay Royds Colliery
and Selby Complex units, which should be more than
GBP […] (*) GJ above the limit defined in recital 7 is in
fact negligible and should not have any real impact in
terms of competitiveness. As from 2003, production
costs for both units are set at a level below the
GBP 1,15/GJ threshold. Owing to temporary operating
problems, the average production costs of Blaentillery
No 2, for the whole of 2002, should reach GBP […]/GJ.
However, these temporary problems should be resolved
in the course of 2002; as a result, the production costs
should progressively decrease, to reach a level below
GPB 1,15/GJ by the end of that year. Consequently, the
level of the production costs of Blaentillery, estimated
for the whole of 2002 at GPB […]/GJ, is not enough to
jeopardise the economic viability of this production unit.
In addition, according to estimates made up to 2004,
the above production units should continue to improve
their economic viability by further reducing production
costs.

In accordance with Article 3(2) of Decision 3632/93/
ECSC, the aid which the United Kingdom proposes to
grant for 2001 is therefore intended to improve the
economic viability of the production units concerned by
reducing their production costs.

In accordance with the first indent of Article 3(1) of
Decision 3632/93/ECSC, the aid per tonne as notified
does not exceed, for each production unit, the difference
between production costs and foreseeable revenue for
2001.

The modernisation,
rationalisation and restructuring
measures implemented by each production unit, and in
particular the temporary nature of the financial support
necessary to achieve these measures, will allow the aid to
be degressive,
in accordance with the first indent of
Article 2(1) of Decision 3632/93/ECSC.

In accordance with the restructuring plan approved by
Decision 2001/114/ECSC, the amount of aid must be
limited to the difference between the coal production
costs and sales revenue, and must not exceed GBP 75
million for any one firm for the period 17 April 2000 to

(1) 1 tonne coal equivalent (tce) = 29,302 Gigajoules (GJ).
(*) Confidential

information.

23 July 2002. In this context, the British authorities have
limited the amount which may be granted to the Selby
Complex unit of RJB Mining plc to GBP 20 324 500.
The Commission has already authorised, by Decision
2001/340/ECSC, GBP 54 676 000 in aid to four
production units run by RJB Mining plc.

(13) At the request of the United Kingdom authorities, a
technical report was drawn up by an independent expert
to assess whether the modernisation, rationalisation and
restructuring measures envisaged for the various produc-
tion units would enable them to improve their economic
viability.
took
account of the geological and technical conditions in
which the units operate and the quality of the coal
produced. The report concluded that the various meas-
ures envisaged are consistent and realistic to achieve a
situation of economic viability.

In drawing up the report,

the expert

(14)

The Commission notes that, for each production unit,
an auditor has certified that the financial data notified by
the United Kingdom are an accurate reflection of the
company's accounts. The auditor also stated that the
forecasts had been drawn up using the same accounting
standards as were in use before the period covered by
the restructuring plan.

(15)

In the light of the above and on the basis of the infor-
the aid
mation provided by the United Kingdom,
proposed for 2001 for the production units listed in
recital 5 is compatible with Decision 3632/93/ECSC,
and in particular with Articles 2 and 3 thereof.

III

(16)

(17)

The United Kingdom is required to ensure that the aid
does not cause any distortion of competition and does
not discriminate between coal producers, buyers or
consumers in the Community.

In accordance with the third indent of Article 3(1) of
Decision 3632/93/ECSC and with the provisions of
Decision 2001/114/ECSC relating thereto, the United
Kingdom will take all necessary measures to ensure that
the amount of the aid granted to each production unit
does not cause delivered prices for Community coal to
be lower than those for coal of a similar quality from
third countries.

(18) Moreover, in accordance with Article 2(2) of Decision
3632/93/ECSC, the aid must be entered in the United
Kingdom's national, regional or local public budgets and
must comply with strictly equivalent mechanisms.

22.11.2001

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Official Journal of the European Communities

L 305/29

(19)

(20)

the latest by 30 September 2002,

In accordance with the second indent of Article 3(1) and
with Article 9(2) and (3) of Decision 3632/93/ECSC, the
Commission has to check that the aid authorised is used
only for the purposes stipulated in Article 3 of that
Decision. At
the
United Kingdom shall send notification of the amount of
aid actually paid during the course of 2001 and shall
declare any changes made to the amounts originally
notified. Any information required to ascertain that the
criteria laid down in Article 3 of the Decision have been
complied with shall be provided together with this
annual breakdown.

The United Kingdom is required to justify any departures
from the restructuring plan and from the economic and
financial forecasts notified to the Commission on 15
May 2001. In particular, should it turn out that the
conditions laid down in Article 3(2) of Decision 3632/
93/ECSC cannot be met, the United Kingdom must itself
propose to the Commission the corrective measures
required,

HAS ADOPTED THIS DECISION:

Article 1

The United Kingdom is authorised, subject to the conditions set
out in Article 3 of Decision 3632/93/ECSC, to grant operating
aid of GPB 21 091 500 to the Selby Complex, Blaentillery No

2, Hay Royds Colliery and Eckington Colliery production units
for 2001.

Article 2

The United Kingdom shall ensure that the authorised aid is
used only for the purposes declared in its notification of 15
May 2001 and that any expenditure on items covered by this
Decision which is cancelled, overestimated or misused is reim-
bursed.

Article 3

Without prejudice to the obligations laid down in Article 9(1),
(2) and (3) of Decision 3632/93/ESCS, the United Kingdom
shall, by 30 September 2002 at the latest, communicate the
amounts of aid actually paid during the financial year 2001.

Article 4

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.

Done at Brussels, 25 July 2001.

For the Commission

Loyola DE PALACIO

Vice-President