Commission Decision of 24 April 2002 authorising the United Kingdom to grant aid to four coal production units for 2001 (Text with EEA relevance) (notified under document number C(2002) 1447)
Date: 2002-04-24
Institutions: European Commission
Subjects: Northern Ireland, State aid, United Kingdom, coal, coal industry, control of State aid, exchange of information, production aid

13.7.2002

EN

Official Journal of the European Communities

L 184/37

COMMISSION DECISION

of 24 April 2002

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

(notified under document number C(2002) 1447)

(only the English text is authentic)

(Text with EEA relevance)

(2002/582/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:

(1)

(2)

(3)

I

By letter of 13 February 2002, the United Kingdom noti-
fied the Commission, in accordance with Article 9(1) of
Decision No 3632/93/ECSC, of financial aid which it
intends 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 4 055 520 to cover
the operating losses of four production units for the
period from 1 January 2001 to 31 December 2001.

that Decision. The Commission’s approval

The financial measures are covered by Article 1 of Deci-
sion No 3632/93/ECSC. The Commission must therefore
take a decision on these measures pursuant to Article
9(4) of
is
subject to compliance with 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’s being compatible with the
proper functioning of the common market. In addition,
in its assessment, the Commission is required to check,
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 the
United Kingdom coal industry approved by the Commis-
sion by Decision 2001/114/ECSC (2), and Decision
2001/597/ECSC (3) (hereinafter ‘the restructuring plan’).

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 conditions prevailing on the
world market for coal of similar quality from third coun-
tries.

(5)

The aid is intended for the following units:

(a) GBP 739 000 for the North East Surface Mines

production unit of H.J. Banks and Co., Ltd;

(b) GBP 832 000 for the Central Surface Mines produc-

tion unit of H.J. Banks and Co. Ltd;

(c) GBP 1 157 520 for the Hatfield Colliery production

unit of Coalpower Ltd;

(d) GBP 1 327 000 for the Ayrshire Coalfields produc-

tion unit of LAW Mining Ltd.

(6)

The Commission has already authorised the United
Kingdom to grant operating aid to North East Surface
Mines and Central Surface Mines pursuant to Article 3 of
Decision No 3632/93/ECSC amounting to GBP 703 000
and GBP 661 000 respectively for the period from 17
April 2000 to 31 December 2000 by Decision 2001/
597/ECSC. In accordance with Article 2 of Decision No
3632/93/ECSC, the Commission was of the opinion that
the aid which the United Kingdom proposed to grant
was intended to improve the economic viability of the
production units concerned by reducing their production
costs. In accordance with the restructuring plan, the aid
should help to make those production units viable
enabling them to continue their activities beyond 2002
without the need for public subsidy.

II

(7)

(4)

The sum of GBP 4 055 520 which the United Kingdom
is proposing to grant to the coal industry under Article 3

(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.

The information transmitted by the United Kingdom in
its letter of 13 February 2002 confirms the analysis and
conclusions in Decision 2001/597/ECSC. The reduction
in the production costs of North East Surface Mines and
Central Surface Mines will make it possible to achieve
economic viability of those mines in 2002. Production
and
should
costs
GBP 1,02/GJ in 2002.

respectively GBP 0.89/GJ

be

L 184/38

EN

Official Journal of the European Communities

13.7.2002

(8)

(9)

The Commission has already authorised the United
Kingdom to grant operating aid to Hatfield Colliery
pursuant to Article 3 of Decision No 3632/93/ECSC
amounting to GBP 3 932 000 for the period from 17
April 2000 to 31 December 2000 by Decision 2001/
340/ECSC (1) and GBP 3 807 000 for 2001 by Decision
No 2001/683/ECSC (2). In accordance with Article 3(2)
of Decision No 3632/93/ECSC, the Commission was of
the opinion that the aid which the United Kingdom
the
proposed to grant was
economic viability of the production unit concerned by
reducing its production costs.

intended to improve

In August 2001, Hatfield Coal Company announced that
it had put its Hatfield Colliery into liquidation. In spite of
good prospects of a long-term reduction in production
costs which had been considered realistic by an indepen-
dent technical expert and could have guaranteed the
future of the production unit, the company was forced
to cease its activities following a breaking-off of negotia-
tions with the financial institution which was to provide
investment cover. In accordance with the conditions for
granting aid set out in the restructuring plan, the United
Kingdom authorities therefore requested reimbursement
of the aid which had been granted to Hatfield Colliery.

(10) On 5 October 2001,

the Hatfield Colliery unit was
bought out by Coalpower Ltd. The putting of Hatfield
Colliery into liquidation as a result of financial difficulties
did not call into question the economic viability of the
coalfields. Coalpower Ltd therefore drew up a new
investment plan for the mine to optimise production.
This investment plan and the production plans were
evaluated by an independent expert at the request of the
United Kingdom authorities. This expert expressed the
opinion that once production had been restored to its
the strategy presented by Coalpower
optimum level,
should ensure the economic viability of Hatfield Colliery
from 2003. Production costs should be reduced signifi-
cantly. At 1999 prices, they should fall to GBP […] (*) in
2003, below the level of GBP 1,15/GJ considered to be
the economic viability threshold for the coal industry in
the United Kingdom.

(11) Hatfield Colliery resumed its activities in November
2001. 208 workers were taken on again. 58 000 tonnes
of coal were extracted in November and December
2001.

(12)

In October 2001, the United Kingdom authorities paid
Coalpower Ltd aid amounting to GBP 951 750. This
constituted the balance of the aid of GBP 3 807 000
that the Commission had authorised for Hatfield Colliery
for 2001 by Decision 2001/683/ECSC and which had
not been paid to Hatfield Coal Company when it went
into liquidation.

ating losses for 2001. This sum is necessary given on the
one hand the low revenue in 2001 due to the fact that
production did not resume until November and on the
other
involved in restarting
production.

the considerable costs

(14) As regards Ayrshire Coalfields, the aid proposed should
also enable that production unit to improve its economic
viability by reducing its production costs. According to
estimates, production costs should be GBP […] in 2003,
well below the level of GBP 1,15/GJ considered to be
the economic viability threshold for the United Kingdom
coal industry.

III

(15)

(16)

(17)

In accordance with Article 3(2) of Decision No 3632/93/
ECSC, the aid which the United Kingdom proposes to
grant for 2001 is 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 No 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 carried out at each production unit, and more
specifically the temporary nature of the financial aid
necessary for such measures, will moreover allow the aid
to be degressive, in accordance with the first indent of
Article 2(1) of Decision No 3632/93/ECSC.

(18) At the request of the United Kingdom authorities, an
independent expert has compiled technical reports exam-
ining the potential of modernisation, rationalisation and
restructuring measures planned for the various produc-
tion units to achieve the objective of 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 the production units.
The reports conclude that the various measures envi-
saged were consistent and realistic in terms of attaining
economic viability.

(19) An auditor has certified, for each production unit, that
the financial data notified by the United Kingdom are an
accurate reflection of the accounts of the company. 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.

(13)

The additional aid of GBP 1 157 520 that the United
Kingdom authorities are asking the Commission to
authorise will enable Hatfield Colliery to cover all oper-

(20)

(1) OJ L 122, 3.5.2001, p. 23.
(2) OJ L 241, 11.9.2001, p. 10.
(*) Confidential information.

the aid notified on 13
The Commission notes that
February 2002, when added to the amounts of aid
already authorised by the Commission under the restruc-
turing plan for
industry,
remains below the ceiling of GBP 170 000 000 laid
down by that restructuring plan.

the United Kingdom coal

13.7.2002

EN

Official Journal of the European Communities

L 184/39

(21)

(22)

(23)

In view of the above and on the basis of the information
provided by the United Kingdom, the aid proposed for
2001 for the North East Surface Mines, Central Surface
Mines, Hatfield Colliery and Ayrshire Coalfields produc-
tion units is compatible with Decision No 3632/93/
ECSC, and in particular with Articles 2 and 3 thereof.

3632/93/ECSC cannot be met, the United Kingdom is to
propose to the Commission the requisite corrective
measures,

HAS ADOPTED THIS DECISION:

IV

Article 1

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 deliv-
ered prices for Community coal to be lower than those
for coal of a similar quality from third countries.

(24) 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 and local public budgets or
comply with strictly equivalent mechanisms.

(25)

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 should notify the amount of aid actu-
ally paid for 2001 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 should be provided
together with this annual statement.

(26)

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 13
February 2002. In particular, should it turn out that the
conditions laid down in Article 3(2) of Decision No

The United Kingdom is authorised, in the framework of Article
3 of Decision No 3632/93/ECSC, to grant operating aid of
GBP 4 055 520 to the North East Surface Mines, Central
Surface Mines, Hatfield Colliery and Ayrshire Coalfields produc-
tion 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 13 February
2002 and that any expenditure on an item 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 No 3632/93/ECSC, the United Kingdom
shall, by 30 September 2002 at the latest, communicate the
amount of aid actually paid for 2001.

Article 4

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

Done at Brussels, 24 April 2002.

For the Commission

Loyola DE PALACIO

Vice-President