Commission Decision of 8 May 2001 authorising the United Kingdom to grant aid to the coal industry for 2001 (Text with EEA relevance) (notified under document number C(2001) 1404)
Date: 2001-08-05
Institutions: European Commission
Subjects: State aid, United Kingdom, aid to industry, coal industry, control of State aid, production aid

L 241/10

EN

Official Journal of the European Communities

11.9.2001

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 8 May 2001

authorising the United Kingdom to grant aid to the coal industry for 2001

(notified under document number C(2001) 1404)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/683/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 9(4) thereof,

the Commission is required to check,

assessment
in
accordance 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 (3)
(‘the restructuring plan’).

Whereas:

II

I

(1)

(2)

(3)

By letter of 16 March 2001, the United Kingdom noti-
fied the Commission, in accordance with Article 9(1) of
Decision No 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 25 259 000 to
cover operating losses, for the period from 1 January
2001 to 31 December 2001, in four production units.

The financial measures are covered by Article 1 of
Decision No 3632/93/ECSC. The Commission must
therefore 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 No 3632/93/ECSC and
must, more generally, be compatible with the proper
functioning of the common market. In addition, in its

(4)

sum of GBP 25 259 000 which the United
The
Kingdom is proposing to grant to the coal
industry
under Article 3 of Decision No 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
conditions on the world market
for coal of similar
quality from third countries.

(5)

The aid is intended for the following units:

(a) GBP 18 318 000 for the Longannet Mine produc-

tion unit of Mining (Scotland) Ltd;

(b) GBP 3 807 000 for the Hatfield Colliery production

unit of Hatfield Coal Company Ltd;

(c) GBP 1 168 000

for

the Blenkinsopp Colliery

production unit of Blenkinsopp Collieries Ltd;

(d) GBP 1 966 000 for the Betws Colliery production

unit of Betws Anthracite Ltd.

(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.

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Official Journal of the European Communities

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(6)

(7)

(8)

(9)

The Commission has already authorised the United
Kingdom to grant operating aid pursuant to Article 3 of
Decision No 3632/93/ECSC to the production units for
the period from 17 April 2000 to 31 December 2000
amounting to GBP 17 462 000 for Longannet Mine (1),
GBP 3 932 000 and GBP 470 000 respectively for
Hatfield Colliery and Blenkinsopp Colliery (2),
and
GBP 870 000 for Betws Colliery (3). In accordance with
Article 3(2) of Decision No 3632/93/ECSC, the Commis-
sion considered that the aid which the United Kingdom
proposed to grant for 2000 was intended to improve
the
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.

viability of

economic

The information transmitted by the United Kingdom in
its letter of 16 March 2001 notifying the aid for 2001
confirms the conclusions reached by the Commission in
the context of Decision No 3632/93/ECSC, with regard
to aid for 2000. Production costs at
the Hatfield
Colliery, Blenkinsopp Colliery and Betws Colliery units
must be reduced significantly and, in 2002, should not
exceed the economic viability threshold of GBP 1,15/GJ
set in the restructuring plan (4) at 1999 prices. In the
case of Longannet Mine, the estimated production costs
for 2002 are expected to be GBP […] (*)/GJ. The higher
quality of the coal produced by Longannet Mine, which
in particular has a very low sulphur content, neverthe-
less enables this production unit to obtain a higher price
for it
than that generally charged by other United
Kingdom producers. The prospects for reducing produc-
tion costs and the level of debt should therefore enable
Longannet Mine to continue its activities beyond 2002
without public subsidy. In addition, according to esti-
mates 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 No 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.

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,
Article 2(1) of Decision No 3632/93/ECSC.

in accordance with the first indent of

(10) 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 after the expiry of the ECSC Treaty on 23 July
2002. In drawing up the report, the expert 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 measures envisaged
are consistent and realistic to achieve a situation of
economic viability.

(11)

(12)

(13)

(14)

(15)

In accordance with the first indent of Article 3(1) of
Decision No 3632/93/ECSC, the aid per tonne as noti-
fied does not exceed,
the
difference between production costs and foreseeable
revenue for 2001.

for each production unit,

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.

In the light of the above and on the basis of the infor-
mation provided by the United Kingdom,
the aid
proposed for 2001 for the production units listed in
recital 5 is compatible with Decision No 3632/93/ECSC,
and in particular with Articles 2 and 3 thereof.

III

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 No 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.

(1) Commission Decision 2001/217/ECSC of 13 December 2000 (OJ L

81, 21.3.2001, p. 31).

(2) Commission Decision 2001/340/ECSC of 13 February 2001 (OJ L

122, 3.5.2001, p. 23).

(3) Commission Decision 2001/597/ECSC of 11 April 2001 (OJ L 210,

3.8.2001, p. 32).

(4) 1 tonne coal equivalent (tec) = 29,302 Gigajoules (GJ).
(*) Confidential

information.

(16) Moreover, in accordance with Article 2(2) of Decision
No 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 mech-
anisms.

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11.9.2001

(17)

(18)

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 No 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 16
March 2001. In particular, should it turn out that the
conditions laid down in Article 3(2) of Decision No
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 No 3632/93/ECSC, to grant oper-
ating aid of GBP 25 259 000 to the Longannet Mine, Hatfield

Colliery, Blenkinsopp Colliery and Betws Colliery production
units for 2001.

Article 2

The United Kingdom shall ensure that the authorised aid is
used only for the purposes which it has declared in its noti-
fication of 16 March 2001, and that any expenditure on items
covered by this Decision which is cancelled, overestimated or
misused is reimbursed.

Article 3

Without prejudice to its obligations under Article 9(1), (2) and
(3) of Decision 3632/93/ECSC, the United Kingdom shall, at
the latest by 30 September 2002, 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, 8 May 2001.

For the Commission

Loyola DE PALACIO

Vice-President