2003/29/ECSC: Commission Decision of 17 July 2002 authorising the United Kingdom to grant aid to eight coal production units for 2001 and for the period from 1 January 2002 to 23 July 2002 (notified under document number C(2002) 2609) (Text with EEA relevance)
Date: 2002-07-17
Institutions: European Commission
Subjects: State aid, United Kingdom, coal industry, control of State aid, support policy

L 17/40

EN

Official Journal of the European Communities

22.1.2003

COMMISSION DECISION

of 17 July 2002

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

(notified under document number C(2002) 2609)

(Only the English text is authentic)

(Text with EEA relevance)

(2003/29/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:

is subject

therefore take a decision on these measures pursuant to
that Decision. The Commission’s
Article 9(4) of
approval
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
in accordance with Article 9(6) of
required to check,
that Decision, whether the measures notified are in
conformity with
for modernisation,
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 (cid:145)the restructuring plan(cid:146)).

plan

the

I

II

(1)

(2)

(3)

By letter of 28 May 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.

(5)

The United Kingdom also notified the Commission by
letter of 5 June 2002, 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 5 588 000 to cover
the operating losses of
five 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 326 500 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 5 914 500 .

The sum of GBP 5 914 500 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
agreed between the
selling price of
freely
contracting parties
the conditions
prevailing on the world market
for coal of similar
quality from third countries.

in the light of

coal

(6)

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

(a) GBP 3 819 000 for the Tower Colliery production

unit of Tower Colliery Ltd;

(b) GBP 387 000 for the Scotland production unit of

Hall Construction Services Ltd;

(c) GBP 521 000 for the New Albion OCCS production

unit of Hall Construction Services Ltd;

(d) GBP 184 000 for the Nantyglo OCCS production

unit of F. Parnell Ltd;

(e) GBP 677 000 for

the Elwyn Mining Complex

production unit of Merthyr Mining Co. Ltd:

(4)

The financial measures are covered by Article 1 of
Decision No 3632/93/ECSC. The Commission must

(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

L 17/41

(7)

(8)

(9)

(12)

By Decision 2001/597/ECSC,
the Commission has
already authorised the United Kingdom to grant
operating aid pursuant
to Article 3 of Decision No
3632/93/ECSC to Tower Colliery, amounting to GBP
3 589 000 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
of Decision No
accordance with Article
the aid
3632/93/ECSC. Under the restructuring plan,
should help to make the mine viable, enabling it to
continue its activities beyond 2002 without the need for
public subsidy.

3(2)

The information transmitted by the United Kingdom in
its letter of 28 May 2002 confirms the analysis and
conclusions set out in Decision 2001/597/ECSC. The
reduction in the production costs of Tower Colliery will
make it possible to achieve economic viability of that
mine in 2002. Production costs in 2002 should be GBP
[(cid:133)] (*) per GJ (4).

(13)

The aid proposed should also enable the Scotland, New
Albion OCCS, Nantyglo OCCS and Elwyn Mining
Complex production units to improve their economic
viability by reducing their production costs. According
to estimates, production costs for these mines should be
GBP [(cid:133)] per GJ, GBP [(cid:133)] per GJ, GBP [(cid:133)] per GJ and
GBP [(cid:133)] per GJ respectively 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.

(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.

(14)

(11)

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

(a) GBP 151 000 for the Blaentillery No 2 production

unit of Blaentillery Mining Ltd;

(b) GBP 131 000 for the Eckington Colliery production

unit of Moorside Mining Co. Ltd;

(c) GBP 44 500 for the Nant-hir No 2 production unit

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

of 2001,

By Decisions 2001/597/ECSC and 2001/807/ECSC (5),
the Commission has already authorised the United
Kingdom to grant Blaentillery No 2 operating aid
pursuant to Article 3 of Decision No 3632/93/ECSC,
amounting to GBP 113 000 and GBP 217 000 for the
period from 17 April 2000 to 31 December 2000 and
the whole
respectively. By Decisions
2001/597/ECSC and 2001/807/ECSC, the Commission
has already authorised the United Kingdom to grant
Eckington Colliery operating aid pursuant to Article 3
of Decision No 3632/93/ECSC, amounting to GBP
88 000 and GBP 286 000 for the period from 17 April
2000 to 31 December 2000 and the whole of 2001,
respectively. Finally, by Decision 2002/786/ECSC (6),
the Commission has already authorised the United
Kingdom to grant Nant-hir No 2 operating aid pursuant
to Article 3 of Decision No 3632/93/ECSC amounting
to GBP 44 000 for 2001.

by

units

reducing

concerned

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 proposed to grant
was intended to improve the economic viability of the
production
their
production costs. Under the restructuring plan, the aid
should help to make the three production units viable,
enabling them to continue their activities without the
need for public subsidy. In view of certain temporary
operating problems,
it was expected that the average
production cost of Blaentillery No 2 in 2002 would be
above the GBP 1,15 per GJ viability threshold. However,
these temporary problems should be solved in the
course of 2002, gradually bringing production costs
down to GBP 1,15 per GJ by the end of 2002. The
Commission therefore considered that the average level
of production costs at Blaentillery No 2 for the whole of
2002 would not be such as to undermine the economic
viability of this production unit.

and

set out

The information transmitted by the United Kingdom in
its letter of 28 May 2002 confirms the analysis and
conclusions
in Decisions 2001/597/ECSC,
The
2001/807/ECSC
development of production costs at Eckington Colliery
and Nant-hir No 2 will enable these mines to achieve
economic viability in 2002. The United Kingdom has
also confirmed that the production costs of Blaentillery
No 2 should gradually fall to GBP [(cid:133)] per GJ at the end
of 2002.

2002/2016/ECSC.

(15) 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 305, 22.11.2001, p. 27.
(6) OJ L 282, 19.10.2002, p. 66.

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Official Journal of the European Communities

22.1.2003

III

IV

(16)

(17)

(18)

In accordance with Article 3(2) of Decision No
3632/93/ECSC,
the aid which the United Kingdom
proposes to grant 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,
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.

the aid per

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.

potential

expert has compiled technical
of
the

(19) At the request of the United Kingdom authorities, an
reports
independent
examining
the modernisation,
rationalisation and restructuring measures planned for
the various production 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 envisaged were consistent and realistic in
terms of attaining economic viability.

(20) 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.

(21)

(22)

The Commission notes that the aid notified on 28 May
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.

the above and on the basis of

In view 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 eight
production units referred to in recitals 6 and 11 are
compatible with Decision No 3632/93/ECSC, and in
particular with Articles 2 and 3 thereof.

(23)

(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.

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.

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

regional or

(26)

(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
statement.

and financial

required to justify

The United Kingdom is
any
departures from the restructuring plan and from the
forecasts notified to the
economic
Commission on 28 May 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
to be
Commission which corrective measures ought
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
operating aid of GBP
5 588 000 to the Tower Colliery,
Scotland, New Albion OCCS, Nantyglo OCCS and Elwyn
Mining Complex production units for 2001.

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Official Journal of the European Communities

L 17/43

The United Kingdom is also authorised,
to the
conditions set out in Article 3 of Decision No 3632/93/ECSC,
to grant operating aid of GBP 326 500 to the Blaentillery No
2, Eckington Colliery and Nant-hir No 2 production units for
the period from 1 January 2002 to 23 July 2002.

subject

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 2

Article 4

The United Kingdom shall ensure that the authorised aid is
used only for the purposes declared in its notification of 28
May 2002 and that any expenditure on items covered by this
Decision which is cancelled, overestimated or misused is
reimbursed.

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

Article 3

Done at Brussels, 17 July 2002.

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.

For the Commission

Loyola DE PALACIO

Vice President