2009/239/EC: Commission Decision of 10 December 2008 on State aid C 60/07 granted by Italy to Fluorite di Silius SpA (notified under document number C(2008) 7805) (Text with EEA relevance)
Date: 2008-12-10
Institutions: European Commission
Subjects: Italy, State aid, control of State aid, exchange of information, invitation to tender, mining extraction, mining industry

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 10 December 2008

on State aid C 60/07 granted by Italy to Fluorite di Silius SpA

(notified under document number C(2008) 7805)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2009/239/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

Having regard to the Treaty
Community,
and in particular
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1), and having regard to
their comments,

(3)

Whereas:

On 17 January 2008 the Commission received obser­
vations from Italy on the opening of the formal investi­
gation. On 20 February 2008 the Commission forwarded
the opening decision to the three companies which had
commented on the initiation of a formal investigation in
the related case C 16/06 Nuova Mineraria Silius (3). The
Commission received comments from three companies,
respectively on 3 March 2008, 4 March 2008 and
5 March 2008. On 28 April 2008 the third parties′
observations were sent to Italy for comment.

On 18 March 2008, a meeting was held between the
Commission and the Italian authorities. On 15 May
2008,
Italy
incoming mail on
replied in a letter
10 June 2008.

Italy was sent a request

for information;

recorded as

I. PROCEDURE

II. DESCRIPTION

(1)

On 11 December 2007 the Commission informed Italy
investigation
that it had decided to initiate the formal
procedure laid down in Article 88(2) of the EC Treaty
in respect of aid granted to Fluorite di Silius SpA. The
Commission’s Decision to initiate the procedure was
published in the Official
European
Union (2). The Commission asked interested parties to
submit their comments.

Journal

the

of

(4)

to issue an invitation to tender

On 8 February 2007 the Commission received a
the Region of Sardinia was
complaint alleging that
planning:
for a
(i)
mining concession in respect of the Genna Tres Montis
mine, which had been given up by Nuova Mineraria
Silius on 25 July 2006; (ii) to set up a new company,
Fluorite di Silius SpA, which would take part in the
tender; and (iii) to transfer all the former employees of
Nuova Mineraria Silius to Fluorite di Silius.

(1) OJ C 30, 2.2.2008, p. 28.
(2) OJ C 30, 2.2.2008, p. 28.

(3) OJ L 185, 17.7.2007, p. 18.

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(5)

(6)

(7)

(8)

(9)

In June 2006 the Region of Sardinia drew up a business
plan (Programma di
intervento e gestione) for the conti­
nuation of mining at Genna Tres Montis. In September
2006 a feasibility study was carried out by Banca CIS,
which concluded that the plan was economically viable.
On the basis of
the Region decided on
4 October 2006 to set up a company which would
tendering
bid for
procedure (1). Fluorite di Silius was set up thereafter;
it
was wholly owned by the Region of Sardinia.

concession in the

the mining

this study,

The core business of the new company,
like the core
business of Nuova Mineraria Silius, was the production
and marketing of fluorite (2) and galena (3). The business
plan for Fluorite di Silius was based on the extraction of
some 2,23 million tonnes of ore, which according to
current estimates would exhaust the existing reserves of
the mine (4). As had been the case with Nuova Mineraria
Silius, most of the output would be sold to Fluorsid SpA,
a supplier of hydrofluoric acid, in which the Region of
Sardinia had a 40 % holding.

The tender for the mining concession was published on
9 March 2007. On 23 May 2007 the awarding
committee awarded the mining concession to the only
bidder, Fluorite di Silius.

The Commission decided to initiate the procedure laid
down in Article 88(2) of the Treaty in respect of the
abovementioned measures on three grounds.

Firstly, the call for tenders made it a condition that all
the workers employed by Nuova Mineraria Silius before
it was put into liquidation, including staff covered by the
laid-off workers′ mobility scheme, were to be hired for at
least five years, and their ranking and wages maintained.
The Commission takes the view that tenders that include
non-market conditions of that kind do not comply with
the market economy investor test.
In particular, such
conditions are likely to confer an advantage at least on
the activity being sold, since that activity is relieved from
competitive pressure, and is financed through revenue
forgone by the State (5).

(10)

Secondly, the Commission doubted that the Region had
acted as a market economy investor when it set up

(1) Resolution (delibera) of the Region of Sardinia, No 42/17. That reso­
lution led to the passing of Regional Act No 16 of 2 November
2008, published in the official gazette Bollettino ufficiale della Regione
Sardegna, No 36, 4 November 2006.

(2) Fluorite (also called fluorspar) is used mainly for the production of
hydrofluoric acid (which in turn is used largely to make aluminium
fluoride, for the production of aluminium by electrolysis).

(3) Lead sulphide.
(4) Reserves calculated on 31 May 2006.
(5) See for example the Commission Decision of 27 February 2008 on
implemented by Romania for
(OJ L 239,

State aid C 46/07 (ex NN 59/07)
Automobile Craiova (formerly Daewoo Romania)
6.9.2008, p. 12).

Fluorite di Silius, in order to have it bid for the mining
concession, on the basis of a business plan with an
internal rate of return of 3,5 % (6), which was clearly
below the average for the industry (7), and below the
opportunity cost to the investor measured by reference
to State bonds (8).

(11)

the Mines Department

submitted a report
Thirdly,
(istruttoria) on the case to the Region on 6 June 2007
in which it stressed that the time span of the project, at
nine years, would not allow full depreciation and
recovery of the investment projected in the Fluorite di
Silius business plan (about EUR 36,76 million). The
investment not recovered would be substantial, at some
EUR 13,5 million, or 36 % of the total (9). More rapid
depreciation of
the assets would be contrary to the
Italian accounting rules, and would in any event be an
company’s profits. The
additional burden on the
Commission therefore doubted whether
the main
points in the business plan would be acceptable to a
market economy investor.

(12) On 18 March 2008, a meeting took place between the
Italian authorities and the Commission, at which the
Commission further explained the concerns
it had
stated in the decision to initiate the formal investigation
procedure. By letter received on 16 April 2008, recorded
as incoming mail on 17 April 2008, the Italian auth­
orities informed the Commission that the tender for the
mining concession had been cancelled. By letter dated
the same
10 June 2008, recorded as incoming mail
day,
the
the Italian authorities provided a copy of
formal step cancelling the tender, which was dated
8 April 2008 (10). In the same letter the Italian authorities
stated that the Fluorite di Silius business plan, whose
feasibility had been questioned in the opening decision,
had now been abandoned.

(13)

By letter dated 16 April 2008, recorded as incoming mail
on 17 April 2008, the Italian authorities informed the
Commission that they intended to make a fresh call for
tenders, without the condition that all former employees
of Nuova Mineraria Silius should be taken on (see recital
also submitted to the
9). The

Italian authorities

(6) The awarding committee referred to an internal rate of return of
9,4 %. But the Region’s Mines Department (Servizio Attività Estrattive)
has stated that that figure does not take account of the initial
capital provided by the Region (EUR 2 million),
the
negative cash flow at the end of the project arising out of the
closure of the mine (safety and environmental restoration), and a
few other additional payments. The internal rate of return calculated
by the Mines Department is 4,16 %.

taxes,

(7) Which was 8 %, according to the September 2006 version of the

Banca CIS report.

(8) Which was 5-6 %, according to the awarding committee (minutes

of 21 May 2007).

(9) The same report found that the activity would have to be extended
by a further 3,2 years in order to amortise those assets. But it could
not be ascertained whether the mine contained the 800 000 ad­
ditional tonnes that would permit this extension of activity (and, in
any event, the duration of the concession was limited to 10 years).
(10) A decision of the Mines Department, No 4336/146 of 8 April

2008.

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(17)

(18)

III. CONCLUSION

the award of

The formal
initiated in
investigation procedure was
respect of the invitation to tender, subject to conditions,
for
the Genna Tres Montis mining
the invitation to tender has now been
concession;
cancelled, and the investigation no longer serves any
purpose.

the

formal

procedure
Consequently,
initiated under Article 88(2) of the EC Treaty initiated
on 11 December 2007 in respect of aid granted to
Fluorite di Silius should be closed,

investigation

HAS ADOPTED THIS DECISION:

Article 1

The formal investigation procedure concerning Fluorite di Silius
SpA which was initiated under Article 88(2) of the EC Treaty
on 11 December 2007 is hereby closed.

Article 2

This Decision is addressed to the Italian Republic.

Done at Brussels, 10 December 2008.

For the Commission

Neelie KROES
Member of the Commission

Commission a copy of the call for tenders, which did not
contain any condition regarding the employment of
former staff.

(14)

(15)

(16)

By letter dated 10 June 2008, recorded as incoming mail
the same day, the Italian authorities stated that if the
company were to decide to take part
in the tender
recently announced a new business plan would be
presented. The Italian authorities undertook to inform
the Commission of the outcome of the new tender and
of the award,
if any, of the concession that had been
given up by Nuova Mineraria Silius. The Italian auth­
orities also undertook to provide the Commission, at
the winning
its
bidder (1).

request, with the business plan of

if Fluorite di
The Commission would point out
Silius, which is wholly owned by the Region of
Sardinia, were to decide to take part in the new tender,
its business plan would have to be in line with the
market economy investor principles.

that

The tender that
included the condition regarding the
employment of former staff has been cancelled, so that
the State aid element it might have comprised is no
longer a possibility, and Fluorite di Silius can no longer
be considered a potential aid recipient. The business plan
presented in connection with the tender has now been
abandoned. It may be concluded that the formal investi­
gation procedure no longer serves any purpose and
should be closed.

(1) Subject to the parties' rights of confidentiality.