Report from the Commission - Monitoring of Commission Decision of 29 November 1995 on aid to be granted by Austria to Voest Alpine Erzberg Gesellschaft mbH
Date: 2002-12-18
Institutions: European Commission
Subjects: Austria, State aid, competition law, control of State aid, iron and steel industry, iron ore, mining extraction

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 18.12.2002
COM(2002) 742 final

REPORT FROM THE COMMISSION

Monitoring of Commission decision of 29 November 1995 on aid to be granted by
Austria to Voest Alpine Erzberg Gesellschaft mbH

REPORT FROM THE COMMISSION

Monitoring of Commission decision of 29 November 1995 on aid to be granted by
Austria to Voest Alpine Erzberg Gesellschaft mbH

1. 

INTRODUCTION

The  Commission  presents  its  report  on  the  Monitoring  of  Commission  decision  of
29 November  19951  on  aid  to  be  granted  by  Austria  to  Voest  Alpine  Erzberg  Gesellschaft
mbH pursuant to article 3 of that decision. It covers developments up to 30 June 2002 on the
basis of information provided by the Austrian authorities in their letter of 7 November 2002.

2. 

DESCRIPTION OF THE AID AND OF THE CONDITIONS IMPOSED

Approved  aid  amounts  to  EUR 19.77 million  to  cover  operating  losses  over  the  period
1995-2002 and EUR 9.88 million to cover the costs of closing down mines safely and in an
environmentally  friendly  manner.  This  aid  is  intended  to  enable  it  to  close  down  the
company’s mining operations gradually up to the year 2002.

Authorisation of the aid was subject inter alia to the following conditions:

– 

– 

– 

the  annual  aid  ceilings  and  the  production  ceiling  mentioned  below  were  not  to  be
exceeded (so far observed),

the  amount  of  operating  aid  was  not  to  exceed  the  difference  between  production
costs and revenues (so far observed),

the price charged for iron ore was to be in line with market prices and was not to be
lower than the price of imported iron ore (so far observed).

3. 

PRODUCTION AND SALES

In the first half of 2002 VAEG produced 480 000 tonnes of iron ore with an average content
of 33.6% Fe and 487 000 tonnes of low grade products which its only client, voestalpine AG
(formerly  Voest  Alpine  Stahl  AG),  can  use 
furnace  burden
(Möllerzusatzmaterial). It should be recalled that the authorised ceiling for 2002  amounts to
700 000 tonnes of iron ore.

the  blast 

for 

The standard-grade iron ore was sold at € 10.14 per tonne.

The  low-grade  material  (Möllerzusatzmaterial)  was  sold  at  €  6.03  per  tonne,  fixed  on  the
basis of the market price for lime gravel (Kalkschotter).

1

Decision No 96/269/ECSC (O.J. L 94, 16.4.1996, p. 17)

2

                                                
The  average  price  for  deliveries  of  iron  ore  and  low-grade  material  (Möllerzusatzmaterial)
results  in  €  8.05  per  tonne.  Including  the  costs  of  transport  to  voestalpine/Linz,  the  price
charged was € 53.50 per tonne Fe.

The above price  per  tonne  Fe for  iron  ore  is  higher  than  the  comparable  price  for  imported
iron ore. It may therefore be concluded that the prices charged in the first half of 2002 were
not lower than required under Article 2 of the Commission’s Decision of 29 November 1995.

A detailed overview of production, production costs, sales, prices and losses is  given in the
Annex.

4. 

AID PAYMENTS IN RELATION TO AID AUTHORISED

.

Total aid

Operating aid

Closure aid

(EUR million’)

Authorised

Paid

Authorised

Paid

Authorised

Paid

1995-2001*

26.02

21.86

2002

 Total

3.63

29.65

21.86

18.31

1.45

19.77

17.22

17.22

7.70

2.18

9.88

4.64

4.64

* For details on the period 1995 - 2001 see previous Reports

In the first half of 2002 no aid was paid to the company.

5. 

EVOLUTION OF WORKFORCE

The plan for reducing the workforce is as follows:

Workforce

1995

1996

1997

1998

1999

2000

2001

2002

Production

Closure operations

Total

280

6

286

276

10

286

273

13

286

273

13

286

254

242

210

20

20

31

274

262

241

181

34

215

Departing  from  the  original  plan  the  total  workforce  was  reduced  to  174  by  30  June  2002.
Reduction of workforce is therefore ahead of plan.

3

ANNEX

Comparison of production costs and revenues

Iron ore

Low-grade product

Closure and
securing

Production
(tonnes)

480 000

487 000

Total

967 000

Costs

(EUR 000’)

(EUR/tonne)

(EUR 000’)

(EUR/tonne)

(EUR 000’)

(EUR 000’)

(EUR/tonne)

Production

Extraction

Processing

Quality control

Transport

Overheads

Cost  related  to
exhausted
parts of mine

Closure  (tech-
nical  and  so-
cial measures)

Total  cost  of
sales

Revenues:

Sales (tonnes)

603

1 741

2 270

273

195

500

156

1.26

3.63

4.73

0.57

0.41

1.04

0.33

745

745

531

146

239

531

1.53

1.53

1.09

0.30

0.49

1.09

1 348

2 486

2 801

419

434

1 031

156

1.39

2.57

2.90

0.43

0.45

1.07

0.16

317

317

0.33

5 738

11.97

2 937

6.03

317

8 992

9.30

Iron ore

480 000

Low grade product

487 000

Total

967 000

Sales (value)

4 867

10.14

2 937

6.03

7 804

8.07

Deduction  for
difference 
in
quality

-23

-23

Total

4 844

10.09

2 937

6.03

7 781

8.05

Difference

Operating
result

Aid

-984

-317

-1 211

4