Commission Decision of 17 October 2001 authorising the United Kingdom to grant aid to two coal production units for 2000 and 2001 (Text with EEA relevance) (notified under document number C(2001) 3081)
Date: 2001-10-17
Institutions: European Commission
Subjects: State aid, United Kingdom, coal, control of State aid, mining operation

6.2.2002

EN

Official Journal of the European Communities

L 35/19

authorising the United Kingdom to grant aid to two coal production units for 2000 and 2001

COMMISSION DECISION

of 17 October 2001

(notified under document number C(2001) 3081)

(Only the English text is authentic)

(Text with EEA relevance)

(2002/82/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,

Whereas:

I

(1)

(2)

(3)

By letter of 8 August 2001, the United Kingdom notified
the Commission,
in accordance with Article 9(1) of
Decision No 3632/93/ECSC, of financial aid which it
intends to grant to the ‘Longannet Mine’ production unit
of Mining (Scotland) Ltd for the period from 17 April
2000 to 31 December 2000 and for 2001.

Moreover, by letter of 3 September 2001, the United
Kingdom notified the Commission, in accordance with
Article 9(1) of Decision No 3632/93/ECSC, of the finan-
cial aid which it intends to grant to the ‘Aberpergwm
Colliery’ production unit of Anthracite Mining Ltd for
the year 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 5 397 000 to cover
special operating losses of Longannet Mine, namely
GBP 2 190 000 for the period from 17 April 2000 to
31 December 2000 and GBP 3 207 000 for 2001. The
Commission is also required to take a decision on oper-
ating aid amounting to GBP 1 031 066 to cover oper-
ating losses of the Aberpergwm Colliery for 2001.

(5)

(6)

(7)

Article 9(4) of
that Decision. The Commission'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, more
generally, to the aid being compatible with the proper
functioning of the common market. In addition, in its
assessment
in
accordance with Article 9(6) of that Decision, whether
the measures notified are in conformity with the plan
for modernisation, rationalisation and restructuring of
industry approved by the
the United Kingdom coal
Commission by Decision 2001/114/ECSC (2),
and
Decision 2001/597/ECSC (3) (hereinafter referred to as
‘the restructuring plan’).

the Commission is required to check,

II

The sum of GBP 5 397 000 which the United Kingdom
is proposing to grant to the Longannet Mine under
Article 3 of Decision No 3632/93/ECSC is intended to
cover part of the difference between the production cost
and the selling price of coal freely agreed between the
the conditions
contracting parties
for coal of similar
prevailing on the world market
quality from third countries.

in the light of

and

2001/217/ECSC (4)

By Decisions
2001/683/
ECSC (5), the Commission has already authorised the
United Kingdom to grant operating aid to the Longannet
Mine pursuant to Article 3 of Decision No 3632/93/
ECSC amounting to GBP 17 462 000 for the period
from 17 April 2000 to 31 December 2000 and
GBP 18 318 000 for 2001. In accordance with Article
3(2) of Decision No 3632/93/ECSC, the Commission
was of
the aid which the United
Kingdom proposed to grant was intended to improve
the economic viability of the production unit concerned
by reducing its production costs. In accordance with the
restructuring plan, the aid should help to make Long-
annet Mine viable, enabling it to continue its activities
beyond 2002 without the need for public subsidy.

the opinion that

However, the aid which the Commission authorised for
Longannet Mine covered only a part of the operating
losses relating to the abovementioned periods. Direct
depreciation as provided for in point 2(c) of Form A in
Annex I to Decision No 341/94/ECSC (6) is not covered
by State aid. By excluding this eligible expenditure, the

(4)

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

(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.
(4) OJ L 81, 21.3.2001, p. 31.
(5) OJ L 241, 11.9.2001, p. 10.
(6) OJ L 49, 19.2.1994, p. 1.

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Official Journal of the European Communities

6.2.2002

aim of the United Kingdom was to minimise the level of
aid provided to the Longannet Mine. Appropriate finan-
cial support by the shareholders should make it possible
to attain a balance commensurate with the Longannet
Mine's operating results.

Unforeseeable geological problems, together with major
flooding, have recently caused significant production
losses. These temporary losses due to exceptional
circumstances have led to serious financial difficulties. In
order to ensure Longannet Mine's survival, it is therefore
a matter of urgency to inject additional resources to
prevent it from having to close down because of insol-
vency.

they do not

jeopardise prospects

According to the notification of 8 August 2001, Long-
annet Mine's financial difficulties are due to exceptional
circumstances and should therefore remain temporary.
Accordingly,
for
economic viability by reducing the mine's production
costs. In accordance with Decisions 2001/217/ECSC and
2001/683/ECSC, Longannet Mine therefore remains able
to continue its activities beyond 2002 without any
public subsidy. An independent expert has examined the
underground seismic studies and an audit carried out at
the production site, and has confirmed that Longannet
Mine has sufficient mineral reserves to enable it
to
continue operating until the end of 2002 under favour-
able economic conditions.

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 the period from 17
April 2000 to 31 December 2000, or for 2001.

In view of the above and on the basis of the information
provided by the United Kingdom, the additional aid of
GBP 5 397 000 which the United Kingdom intends to
grant to the Longannet Mine for the period from 17
April 2000 to 31 December 2000 and for 2001 is
compatible with Decision No 3632/93/ECSC, and in
particular with Articles 2 and 3 thereof.

(8)

(9)

(10)

(11)

III

(12)

The sum of GBP 1 031 066 which the United Kingdom
is proposing to grant to the Aberpergwm Colliery under
Article 3 of Decision No 3632/93/ECSC is intended to
cover the difference between the production cost and
freely agreed between the
the selling price of coal
the conditions
contracting parties

in the light of

prevailing on the world market
quality from third countries.

for coal of similar

(13) After a complete closure in 1986, substantial investment
was made in order to foster new activities for this mine.
Following preparatory work in 1996, it resumed opera-
tion in July 2000. However, Aberpergwm Colliery's
mining activities will become more substantial only
from 2001, with
of
66 800 tce (1).

production

estimated

an

(14)

The measures to modernise the coalmining conditions
that still have to be taken will steadily optimise the
economic operating conditions. As a result, the produc-
tion costs, which in 2000 amounted to […] (*) GBP/
GJ (2), should diminish significantly and should in 2002
— at 1999 prices — not exceed the economic viability
threshold of 1,15 GBP/GJ
laid down in the United
Kingdom coal industry restructuring plan. In addition,
according to forecasts up to 2004, continuous produc-
tion cost reduction should be conducive to steadily
improving the mine's economic viability beyond 2002.

(15) At the request of the United Kingdom authorities, an
independent expert has compiled a technical report
examining the potential of modernisation, rationalisa-
tion and restructuring measures implemented by Aber-
pergwm Colliery to improve its economic viability. In
drawing up his report, the expert took account of the
geological and technical operating conditions and the
quality of the coal produced by this production unit. The
report concludes that the various measures envisaged
were consistent and realistic in terms of attaining the
estimated costs calculated by the production unit.

(16)

(17)

(18)

(19)

In accordance with Article 3(2) of Decision No 3632/
93/ECSC, the aid which the United Kingdom proposes
to grant is therefore intended to improve the economic
significantly
viability of Aberpergwm Colliery by
reducing its production costs. In view of the prospects
for reducing production costs and increasing revenue,
this aid will help to make the production unit competi-
tive in order to ensure that it will be able to continue its
activities beyond 2002 without public subsidy.

The plan proposed by the company, and more specifi-
cally the temporary nature of the financial aid necessary
for restructuring, will allow the aid to be degressive, in
accordance with the first
indent of Article 2(1) of
Decision No 3632/93/ECSC.

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 calculated on the basis of
the financial data relating to the period covered by this
aid.

The Commission notes that an auditor has certified that
the financial data notified by the United Kingdom are an
accurate reflection of the accounts of Anthracite Mining
Ltd. The auditor has also stated that the forecasts were
drawn up using the same accounting standards as were
in use before the period covered by the aid.

(1) tce = tonnes coal equivalent.
(*) Confidential
(2) 1 tonne coal equivalent (tce) = 29 302 Gigajoules (GJ).

information.

6.2.2002

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Official Journal of the European Communities

L 35/21

(20)

(21)

(22)

In the light of the above and on the basis of the infor-
mation provided by the United Kingdom,
the aid
proposed for 2001 to be granted to the Aberpergwm
Colliery production unit is compatible with Decision No
3632/93/ECSC, and in particular with Articles 2 and 3
thereof.

IV

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, the United Kingdom will take
all measures necessary 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.

(23) Moreover, in accordance with Article 2(2) of Decision
No 3632/93/ECSC, the aid must be entered in United
Kingdom's national, regional and local public budgets or
comply with strictly equivalent mechanisms.

(24)

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 latest by 30 September of each year, the
United Kingdom shall notify the amount of aid actually
paid for the previous year and 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 statement.

(25)

The United Kingdom is required to justify any departures
from the restructuring plan and from the economic and
forecasts notified to the Commission on 8
financial
In particular,
August 2001 and 3 September 2001.
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 will propose to the Commis-
sion which corrective measures ought to be taken,

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 5 397 000 to the Longannet Mine production
unit for the period from 17 April 2000 to 31 December 2000
and for 2001.

The United Kingdom is further authorised, subject to the condi-
tions set out in Article 3 of Decision No 3632/93/ECSC, to
grant operating aid of GBP 1 031 066 to the Aberpergwm
Colliery production unit for 2001.

Article 2

The United Kingdom shall ensure that the authorised aid is
used only for the purposes declared in its notifications of 8
August 2001 and 3 September 2001, and that any expenditure
on items covered by this Decision which is cancelled, overesti-
mated or misused is reimbursed.

Article 3

Without prejudice to the obligations laid down in Article 9(1),
(2) and (3) of Decision No 3632/93/ECSC, the United Kingdom
shall, by 30 September 2002 at the latest, communicate the
amount of aid actually paid for the period from 17 April 2000
to 31 December 2000 and for 2001.

Article 4

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

Done at Brussels, 17 October 2001.

For the Commission

Loyola DE PALACIO

Vice-President