2002/786/ECSC: Commission decision of 5 May 2002 authorising the United Kingdom to grant aid to six coal production units for 2001 and for the period from 1 January 2002 to 23 July 2002 (Text with EEA relevance.) (notified under document number C(2002) 2016)
Date: 2002-06-05
Institutions: European Commission
Subjects: State aid, United Kingdom, coal industry, control of State aid, production aid, support policy

L 282/66

EN

Official Journal of the European Communities

19.10.2002

COMMISSION DECISION

of 5 May 2002

authorising the United Kingdom to grant aid to six coal production units for 2001 and for the
period from 1 January 2002 to 23 July 2002

(notified under document number C(2002) 2016)

(Only the English text is authentic)

(Text with EEA relevance)

(2002/786/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

By letter of 13 March 2002, 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 coal industry for 2001 and for
the period from 1 January 2002 to 23 July 2002.

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 5 516 100 to cover
the operating losses of three production units for the
period from 1 January 2001 to 31 December 2001. It is
also required to take a decision on operating aid
amounting to GBP 2 915 960 to cover the operating
losses of three production units for the period from
1 January 2002 to 23 July 2002. Consequently, the total
operating aid on which the Commission is required to
take a decision amounts to GBP 8 432 060.

(1)

(2)

(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 modernis-
ation, rationalisation and restructuring of the United
Kingdom coal industry approved by the Commission by
Decision 2001/114/ECSC (2), and Decision 2001/597/
ECSC (3)
(hereinafter referred to as the restructuring
plan).

II

(4)

The sum of GBP 8 432 060 which the United 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 conditions prevailing on the
world market for coal of similar quality from third
countries.

(5)

The aid proposed for the period from 1 January 2001 to
31 December 2001 is intended for the following units:

(a) GBP 3 187 100 for the East Pit Extension pro-

duction unit of Celtic Energy Ltd;

(b) GBP 2 285 000 for the North Lanarkshire Coal-
fields production unit of L.A.W. Mining Ltd;

(c) GBP 44 000 for the Nant-Hir No 2 production unit

of M. W.A. (Anthracite) Ltd.

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. 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

(6)

the Commission has
By Decision 2001/597/ECSC,
already authorised the United Kingdom to grant
operating aid pursuant to Article 3 of Decision No 3632/
to
93/ECSC to East

Pit Extension,

amounting

( 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.

19.10.2002

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Official Journal of the European Communities

L 282/67

GBP 2 978 000 for the period from 17 April 2000 to
31 December 2000. The Commission was of the opinion
that the aid which the United Kingdom proposed to
grant was intended to improve the economic viability of
this production unit by reducing its production costs, in
accordance with Article 3(2) of Decision No 3632/93/
ECSC. Under the restructuring plan, the aid should help
to make the mine viable, enabling it to continue its
activities beyond 2002 without the need for public
subsidy.

The information transmitted by the United Kingdom in
its letter of 13 March 2002 confirms the analysis and
conclusions set out in Decision 2001/597/ECSC. The
reduction in the production costs of East Pit Extension
will make it possible to achieve economic viability of
that mine in 2002. Production costs in 2002 should be
GBP [...] (*) per GJ (4).

In the case of North Lanarkshire Coalfields, production
costs for 2002 will probably rise by about GBP [...] per GJ
on the level of GBP 1,15 per GJ considered to be the
economic viability threshold for the United Kingdom
coal
industry. However, this slight overspend is not
enough to jeopardise the viability prospects of this
indeed, the production
production unit. From 2003,
costs of that mine should be GBP [...] per GJ.

As regards Nant-Hir No 2, 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 [...] per GJ in
2002, which is below the level of GBP 1,15 per GJ
considered to be the economic viability threshold for
the United Kingdom coal industry.

(7)

(8)

(9)

(10) Moreover, according to estimates made for the period
up to 2004, the above production units should continue
to improve their economic viability. Consequently,
production costs should remain below the level of
GBP 1,15 per GJ.

(b) GBP 200 960 for the Hay Royds Colliery pro-

duction unit of J. Flack Sons Ltd;

(c) GBP 1 475 000 for the Hatfield Colliery production

unit of Coalpower Ltd.

(12) By Decisions 2001/597/ECSC and 2001/683/ECSC (5),
the Commission has already authorised the United
Kingdom to grant Betws Colliery operating aid pursuant
to Article 3 of Decision No 3632/93/ECSC, amounting
to GBP 870 000 and GBP 1 966 000 for the period
from 17 April 2000 to 31 December 2000 and the
whole of 2001, respectively. By Decisions 2001/597/
ECSC and 2001/807/ECSC (6),
the Commission has
already authorised the United Kingdom to grant Hay
Royds Colliery operating aid pursuant to Article 3
of Decision No 3632/93/ECSC, amounting to GBP
79 000 and GBP 264 000 for the period from 17 April
2000 to 31 December 2000 and the whole of 2001,
respectively.
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 pro-
posed to grant was intended to improve the economic
viability of the production units concerned by reducing
their production costs. In accordance with the restructur-
ing 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.

(13) The information transmitted by the United Kingdom in
its letter of 13 March 2002 confirms the analysis and
conclusions set out in Decisions 2001/597/ECSC, 2001/
683/ECSC and 2001/807/ECSC. Production costs for
the Betws Colliery and Hay Royds Colliery production
units in 2002 should come to GBP [...] per GJ and
GBP [...] per GJ, respectively, which represents a level
close
of
GBP 1,15 per GJ for the United Kingdom coal industry.
According to estimates, production costs should be
GBP [...] per GJ and GBP [...] per GJ in 2003.

economic

threshold

viability

the

to

(11) The aid proposed for the period from 1 January 2002 to
23 July 2002 is intended for the following units:

(a) GBP 1 240 000 for the Betws Colliery production

unit of Betws Anthracite Ltd;

(14) Moreover, according to estimates made for the period
up to 2004, the above production units should continue
to improve their economic viability. Consequently,
production costs should remain below the level of
GBP 1,15 per GJ.

(*) Confidential information.
( 4) 1 tonne coal equivalent (tce) = 29,302 gigajoules (GJ).

(5) OJ L 241, 11.9.2001, p. 10.
(6) OJ L 305, 22.11.2001, p. 27.

L 282/68

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Official Journal of the European Communities

19.10.2002

(15)

the

Kingdom,

In the case of Hatfield Colliery, the Commission has
United
already
by
authorised
Decision 2002/582/ECSC (7),
to grant operating aid
pursuant to Article 3 of Decision No 3632/93/ECSC,
amounting to GBP 1 157 520 for 2001.The Com-
mission had been of the opinion that the putting of
Hatfield Colliery into liquidation in August 2001 as a
result of financial difficulties did not call into question
the economic viability of the coalfields. The company
taking over the mine, Coalpower Ltd, had drawn up a
new investment plan for the mine with a view to
optimising production, so that once production has
been restored to its optimum level, it should be possible
to ensure the economic viability of Hatfield Colliery
from 2003.

(16) The information transmitted by the United Kingdom in
its letter of 13 March 2002 confirms the analysis
and conclusions set out in Decision 2002/582/ECSC.
to
Production costs
GBP [...] per GJ. Production costs should continue to fall
to an estimated level of GBP [...] per GJ in 2004.

in 2003 should

amount

III

(17)

(18)

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 and the period from 1 January 2002 to 23 July
2002, respectively.

(19) 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.

(20) At

the request of the United Kingdom authorities,
an independent expert has compiled technical reports
examining the potential of the modernisation, rationalis-
ation and restructuring measures planned for the various
production units to achieve the objective of economic

( 7) OJ L 184, 13.7.2002, p. 37.

viability. In drawing up his report,
the expert took
account of the geological and technical operating con-
ditions and the quality of the coal produced by the
production units. The reports conclude that the various
measures envisaged were consistent and realistic in
terms of attaining economic viability.

(21) 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.

(22) The Commission notes that the aid notified on 13 March
2002, when added to the amounts of aid already
authorised by the Commission under the restructuring
plan for the United Kingdom coal
industry, remains
below the ceiling of GBP 170 000 000 laid down by
that restructuring plan.

(23)

In view of the above and on the basis of the information
provided by the United Kingdom, the aid proposed for
2001 and the aid proposed for the period from 1 January
2002 to 23 July 2002 for the six production units
referred to in recitals 5 and 11 are compatible with
Decision No 3632/93/ECSC, and in particular with
Articles 2 and 3 thereof.

IV

(24) 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.

(25)

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.

(26) 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 or comply with strictly equivalent mechanisms.

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Official Journal of the European Communities

L 282/69

(27)

In the context of Member States’ obligations under
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 state-
ment.

(28) 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 March 2002. 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
will be responsible for proposing to the Commission
which corrective measures ought to be taken,

HAS ADOPTED THIS DECISION:

Article 2

The United Kingdom shall ensure that the authorised aid is
used only for the purposes declared in its notification of
13 March 2002 and that any expenditure on items covered by
this Decision which is cancelled, overestimated or misused is
reimbursed.

Article 3

In addition to the obligations laid down in Article 9(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.

In addition to the obligations laid down in Article 9(2) and (3)
of Decision No 3632/93/ECSC, the United Kingdom shall, by
30 September 2003 at the latest, communicate the amount of
aid actually paid for the period from 1 January 2002 to 23 July
2002.

Article 1

Article 4

The United Kingdom is authorised, subject to the conditions
set out in Article 3 of Decision No 3632/93/ECSC, to grant
operating aid of GBP 5 516 100 to the East Pit Extension, to
North Lanarkshire Coalfields and to Nant-Hir No 2 production
units for 2001.

The United Kingdom is also authorised, subject to the con-
ditions set out in Article 3 of Decision No 3632/93/ECSC, to
grant operating aid of GBP 2 915 960 to the Betws Colliery,
Hay Royds Colliery and Hatfield Colliery production units for
the period from 1 January 2002 to 23 July 2002.

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

Done at Brussels, 5 June 2002.

For the Commission

Loyola de PALACIO

Vice-President