CELEX: 51981PC0424
Language: en
Date: 1981-07-28
Title: DRAFT COMMISSION DECISION (ECSC) amending Decision No 73/287/ECSC concerning coking coal and coke for the iron and steel industry in the Community (presented by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
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DOCUMENTS "COM"
COM (81) 424
Vol. 1981/0133
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                              COM(81)424 final
                                              Brussels . 28th July 1981
                     DRAFT COMMISSION DECISION ( ECSC )
        amending Decision No 73 / 287 / ECSC concerning coking coal and
        coke for the iron and steel industry in the Community
                                   \
                                    \
                                     \
                (presented by the Commission to the Council )
            pf        * -®>.      m
            UA       du r     v   ^
            %                    f
C0M(81 ) 424 final
 ---pagebreak---                                 CONTENTS
                                                                               Page
 A. SUMMARY                                                                     1
      1 . Proposal                                                              1
      2 . Legal objective                               ,                       1
   t 3 . Economic objective                                                     1
 B. EXPLANATORY MEMORANDUM                                                      2
     THE PRESENT SCHEME                     '  ■    -    '             '        2
     4 . Origins and reasons                                       '           -2
     5 . The present machinery ( aid- fund - prices )                           4
     6 - Guide pr i ce              v                                           5
     7 . Contracts                                                              5
 8 . THE FIRMS INVOLVED "ON THE COMMUNITY MARKET                . /   -  ' .    6
     9 . Coal mines                                                             6
    10 . Coking plants    -                                                     7
    11 . Blast furnaces                                                   .8
                                                                     \
12 . THE INTERNATIONAL COKING-COAL MARKET                                       9
                                                      \
     COKING-COAL AID             •                                             11
     1.3 . Production aid                                                      11
     14 . Changes in the alignment margins and . the rate of sales aid         12
     15 . Community financing                                                , 14
     THE NEW PROPOSAL                                                          15
     16 . Durât ion                                                            15
     17 . Rate of aid                                                          16
     18 . Tonnage                                                              16
     19 . Contributions                                                        16
     20 . Draft enacting terms                                                 18
     21 . Future outlook                                                       16
     TABLES ( see next .page )
 ---pagebreak---                           TABLES
In the text
A. Guide price ., proceeds and production costs                        11
B. Alignment mar j "ins                                                13
C. Alignment margins and sales aid                                     13
Separate from the text
   I.  Guide price movements since 1970 in US dollars , EUA / ECU , and the
       currencies of the producing countries per tonne for the
       standard arade                                                  19
  II .  Community coal 1980                                            20
 III . Application of Decision No 73 / 287 - Distribution of
        infra-Community deliveries                                     21
  IV . Community coke 1980                                             22
   V.  Blast-furnace coke - consumption - quantifies . received
        in intra-Community trade                                       23
  VI . The coke rate in blast furnace                                  24
 VII .  Imports of coking coal into the Community                      25
VIII . Aid in respect of intra-Community trade                         26
  IX . Rate of sales aid                                               27
 ---pagebreak---         .            EXPLANATORY MEMORANDUM
 Considerations relating to the extension and amendment of Decision n° 73 / 287 / ECSC
 of 25 July 1973 concerning coking coal and coke for the iron and steel in­
 dustry in the Community ( 1 ).
 A.   SUMMARY
 1.        The above Decision applies until 31 December 1981 . The Commission is
proposing to extend its period of validity until 31 December 1983 while slightly
adjusting certain details in order to bring them into line with the present
situation ( see No . 16 ).
   .       During the two-year extension the Community should establish a general
coal strategy which should cover the new role of coal and metallurgical coke .
           This should be done without perturbing the supply conditions in that
sector ( see No . 21 ).                 >                     v
2.         The legal basis for the coking-coal scheme is the first paragraph of -
Article 95 of the ECSC Treaty , as a result of which it has been possible to
establish machinery comprising :
( a ) a Community scheme covering the Member State 's national aid to coking-coel
       producers ,
( b ) the financing of Community aid for sales in the context of intra-Community
       trade ,
( c ) pricing rules extending the alignment possibilities afforded to. the coaL
       firms pursuant to the last paragraph of Article 60(2)(b ) of the ECSC Treaty .
3.         The Decision 's basic economic objective is still the maintenance within'
the Community of sufficient coking coal production capacity to ensure optimum
colliery activity and guarantee secure coke supplies for the iron . and steel
industry a.t reasonable costs .
           The scheme establishes Community solidarity against the continuing
uncertainties. or> 'the world coking-coal market ; it also lays down conditions
for transparency and non-discrimination .
                                                                            ./ 2
( 1 ) OJ No . L 259 , 15.9.1973 , p. 36
 ---pagebreak--- B.   EXPLANATORY MEMORANDUM
     THE PRESENT   SCHEME
4.         Origins and reasons
           Particularly since the 1960s , coking coal has occupied a leading
place in the Member States' and the Community 's coal policy considerations ,
since it provides , in the form of blast-furnace coke for pig iron production ,
an essential and expensive raw material for the iron and steel industry ,
while            where thermal applications are concerned , in particular electricity
generation , the other types of coal and the other sources of energy ( oil etc .)
are to a great extent interchangeable .
           In the energy Protocol of 21 April 1964 , the Member States took the
view that the Council should pay particular attention to the question of the
Community 's long-term coking-coal supplies ( 1 ), and in the Protocol of 16 Fe­
bruary 1967 , the Member States took into consideration ( 2 ) :
( a ) active competition from non-member country products , and
'b ) the significance of i nt ra - Communi t y trade ,
      and decided to establish for the sector in question :
( a ) a special aid scheme for coal firms , and
( b ) a sctieme for offsetting burdens in respect of intra-Community trade .
           The Council and the Consultative Committee have been consulted , as
required by Article 95 of the Treaty , on the successive decisions taken by the
Commission in this field since 1967 , and the outcome of these consultations
has shown that The Community considers that it is in the common interest
of the Member States and of the coal and steel industries to participate in
a scheme which seeks to attain several objectives set out in Articles 2 and
3 of the ECSC Treaty .
                                                                        ./ 3
( i ) OJ No 69 , 30.4.1964 , p . 1099 , point 12
( 2 ) 0J iVo 36 , 28.2.1 967 , p. 561 .
 ---pagebreak---                           \    .»
     f         '                                                   .                       .
                                  - 3 -                                          -■■  · !■
                                                    \                               -
          The maintenance within Jhe Community of an adequate coking-coal and
coke production capacity in connection with the considerable volume of
intra - Community trade in coal and coke is intended to help ensure good secu­
rity of supply for the iron and steel industry in the Community as a whole .
The Community coal-mining industry 's production costs are covered by selling
prices to the iron and steel industry which are as close as possible tothe
world prices for comparable transactions , plus specific aid calculated in
accordance with Community criteria . This establishes conditions for transpa­
rency and non-discrimination within the Community and a price level comparable
with that observed for competing iron and steel industries'. In this way , it
is possible to avoid transferring part of the Community demand for coking coal
to the world market , since this might trigger a large increase in the level
of world coal prices in general .
5.        The present machinery
          The Decision now in force ( No 73 / 287 / ECSC of 15 July 1973 ( 1 )), was
initially adopted for six years . It was extended for a further three years
as a result of Decision No 1613 / 77 / ECSC of 15 July .1977 ( 2 ) , and certain
procedures were altered by Decision No 3058 / 79 / ECSC of 19 December 1979 ( 3 ).
The text which now applies was published in OJ No C 26 of 13 February 1980 ,
page 2 . It applies until 31 December 1981 .
          The detailed rules for implementing this Decision were set out in
Decision No 3544 / 73 / ECSC of 20 December 1973 ( 4 ), which has remained virtually
unchanged since then . The scheme , which was set up on the basis of the first
paragraph of Irticle 95 of the ECSC Treaty , has three main aspects :
(1)  0J  No L 259 , 15.9.1973 , p. 36
(2)  0J  No L 180,  20.7.1977 , p. 58
(3)  0J  No L 344 , 31.12.1979 , p. 1
( 4) OJ  No L 361 , 31.12.1973 , p. 18
                                                      1
 ---pagebreak---                                  - 4 -
     ( a ) A Community system of financial aid to firms producing coking coal to be
Aids       used in the form of coke in blast furnaces ( 1 )
           If the cost price of Community coal exceeds the price of coal on the
           world market , the Member States may grant production aid , supplemented ,
           where appropriate , by sales aid in respect of deliveries to remote areas
           or other countries ,
     ( b ) In the case of deliveries to other Community countries , sales aid may be
           repaid via a Commun_ity_f und to which special financing rules apply ( 2 ).
           Fund intervention covers no more than 15 million tonnes per annum , subject
Fund       to a ceiling of 47 million ECU . Funding is from three sources : the ECSC
           (6 million ECU ), the iron and steel industry ( 17 million ECU ) and the six
           Member States normally involved in the trade in question ( 24 million ECU
           at most , less if the fund 's requirements are less than 47 mill ion ECUK3 ).
                For 1980 the average rate of Community sales aid ( which varies depending
     on the blast furnace 's location ) was 3.10 ECU , while the average rate of pro­
     duction aid per tonne in the producing countries was as follows :
     Belg ium           42 ECU
     Germany            21 ECU
     France             24 ECU
     United Kinqdom     16 ECU .
     ( c ) PMcincj rules extending the alignment possibilities afforded to coal firms
           by the last paragraph of Article 60 ( 2Kb ) of the ECSC Treaty .
                                                                             ./5
     (1 )  Article 1  and 2 of Decision No 73 / 287
     ( 2 ) Articles 6 , 7 and 8 of Decision i\lo 73 / 287
     ( 3 ) The United Kingdom iron and steel industry 's contribution is paid to
           the United Kingdom provided that the coking coal produced in the United
           Kingdom covers at least 75 % of the requirements of its blast furnaces
           ( Second indent and last paragraph of Article 6 in conjunction with the
           penultimate paragraph of recital IV ).
 ---pagebreak---              Under these rules , selling prices may be aligned on world market prices
             even if there is no actual competition with coking coal 6r coke from             >
             non-rmember countries at the point of consumption ( 1 ).
                ' The Decision also contains the following provisions , which are designed
  to guarantee the Community character4 of the operation of this scheme and com­
  pliance with certain limits , including financial limits :
   6.        periodical publication of a gujde_gr jce by the Commission : calculated
  : <        on the basis of long-term supply * contracts for coking-coal from free-market-
             economy countries , this value is supposed to represent all the . financial
                                   1    . •                  /•   i            •
             burdens arising for the European iron and steel industry in . connection with
         . its coking coal supplies from non-member countries ; it therefore consti-
 •s
         ^ • tutes the basis for. calculating production aid in the four Member States
             concerned and the basis fors alignment where all transactions involving
             Community coal or coke are concerned ( 2 ).                            . »■
                           V </                 :: ;■■■",• ; \                                ; ' ■■
             Table I indicates how the guide cif price ARA has altered since it was
             first published ( 1970-81 ) in US dollars , EIA / ECU and the currencies of
             the producing countries . Table A below ( page 11 ) enables a comparison
                                 »                                       .        V                  !
       '     to be made of recent developments in the guide price , production costs
             and proceeds in the Community .                    ^      .
   7.        Provisions concerning long;term_contracts for supplies to the Community, ( 3 ) :
             the-above aid and alignment arrangements apply only to quantities covered
     1                                                                     v             ■■
             by such contracts ; these contracts , which allow , for reasonable margins ,
             enable the two parties concerned to plan ahead and help reduce the
             problem of stocks ( 4 ). '                                      .              ■
    M               -          ■ '          ' .         '  1
,( 1 ) Article's 3 and 4 of Decision No 73 / 287                                                       *
   ( 2 ) Article 5
   ( 3 ) Article 2(c ) of Decision No 73 / 287 and Article 3 of Decision Np 3544 / 73
   ( 4 ) The implications of provisions relating to long-term contracts were the
             subject of a Communication dated 30 December 1974 ( 0J No C 160 , 30.12.1974 ,
             p. 1).-The conditions relating to the performance of long-term contracts
             were amended for 1977 and 1978 by Decision No 2216 / 77/ ECSC ( 0J No L 256 , '
             7.10.1977 , p. 12 ) and Decision No 2287 / 78 / ECSC ( 0J No L 275 , 30.9.1978 , p. 78 )
             in order to 'take account of the situation in ttie iron and steel industry .
 ---pagebreak--- 8.      THE FIRMS INVOLVED ON THE COMMUNITY MARKET
        As emerges from the description given above , the scheme relates to
the supply chain constituted by the coal mines , the coking plants and the
blast furnaces , and is intended to help these sectors of ECSC activity to
operate efficiently . The situation in each of these three sectors is examined
below .
9.      Coal mines
        Much of the Community production will still be loss-making     in the
foreseeable future .
        The scheme has so far made it possible to maintain coking-coal pro­
duction capacities at the desired level , as well as the requisite workforce
and the corresponding level of sales .
        In 1980 , the amount of coking coal produced in the Community for
coking plants totalled 62 million tonnes , or 25 % of the coal produced , the
remainder being for thermal applications . The percentage varies from country
to country ( Belgium 62 % , Germany 46 % , France 25 % and United Kingdom 8 % ) .
It was lower than in earlier years , because of the reduction in iron and steel
production and the increase in imports of coking coal and petroleum coke from
non-member countries . After power stations , the iron and steel industry still
represents a considerable outlet for Community coal . Coking coal is a vital
source of activity for many mines and regions .
                                                                      ./7
 ---pagebreak---                                   - 7 -
               It accounts for over half the volume of intra-Commumty trade in coal .
    Moreover , most of the coal traded is hi^h-grade coal which is only available
    in small quantities on the world market and which , 'when     used in a blend ,
    makes it possible to make greater use of the cheaper types of coking coal .
                                       V                           I '
               The amount of coking coal and blast-furnace coke traded within the
    Community fell from 20 million tonnes coal equivalent in 1974 to 14 million
    tonnes in 1980 , the nadir being 12 million tonnes in 1977 ( 1 ).
             , For coking coal and the other types of coal , the coal mines play an
, important stockpiling role which is often of outstanding service .
                          ■          '        •  .        <    ;         v
          ,    Table II providesdata relating to 1980 for the four producing countries
    concerning coal production , deliveries to coking plants and intra-Community
  - trade .                   '                       '
                                                                                    ,           Î
               Table III indicates for the period 1973-77 the annual average for      :
    intra-Community deliveries to countries of destination , and the distribution -
    between inland and coastal areas - of quantities eligible for Community aid .
                                                                       ι
    10 .       Coking plants    •
            y Coking plants represent a vital aspect of the security of supply of
    blast furnaces . The coke production capacity in the Community is at present        1 v
    around 80 million tonnes ; production in 1980 exceeded 66 million tonnes ,
    necessitating a supply of 86 mi 1 1 ion » tonnes of coal .              -
               Of this total , 64% was from indigenous resources , 8 % from elsewhere
    in. the Community and 28 % from outside the Community . The total figurle of 72 %
    for Community coal represents a comparatively high degree of security .
                                          ■        "    /                      ./ 8
•                  :                                                                        ' \
    ( 1 ) One tonne of blast-furnace coke being counted as 1i33 tonnes of co.al .
 ---pagebreak---           The quantities produced in Community coking p lant s cover vi rtua I ly
all the requirements of the iron and steel industry . Without exception , the few
imports from outside the Community concern coke breeze .
          Iron and steel industry coking plants account for a large proportion
( 53 % ) of the total capacity . Mine-owned coking plants play a decisive role
in intra-Community trade in coke ( 7.5 million tonnes in 1980 ), and help offset
fluctuations in coal production and the demand for coke . The existence of
certain mine-owned coking plants is dependent on output from a mine in the
vicinity , and in some cases also on output from blast furnace more or less in
the vicinity . Mine-owned and independent coking plants also cover coke requi­
rements outside the iron and steel industry .
          Under the coking-coal scheme , the rules relating to the price of blast-
furnace coke require coverage of the coking plants' net coking costs , since
the viability of the existing coking plants should be promoted so as not to
      I
increase unduly the investment requirements in this sector , particularly at a
time when the iron and steel industry is undergoing restructuring .
          Table IV contains data relating to 1980 for the coke-producing coun­
tries as regards production , deliveries to blast furnaces and intra-Community
tr ade .
1 1 .     Blast-furnaces
          At least until 1985 , steelmaking in the Community will continue to be
based mainly on blast furnace pig iron and hence the use of coke-oven coke . The
hopes placed in the alternatives have been disappointed . Formed coke is still
at the development stage , the injection of fuel oil in to blast furnaces has
ueclined considerably as a result of the rise in the price of oil , resulting
in a marked increase in the specific consumption of coke per tonne of pig iron .
This increase has to some extent offset the reduction in pig-iron oroauction
observed in recent years . Research is of course continuing with a view to redu­
cing the coke rate .
          Blast-furnace coke consumption fell from 60 million tonnes in 1974 to
46 million tonnes    in 1980 ,
                                                                             ./9
 ---pagebreak---                                  - 9 -
         The growing proportion of pig-iron production accounted for by modern
blast furnaces entails more stringent requirements as regards the quality of
the coke used . These requirements can be satisfied as a result of cooperation
between Community coal mines , coking plants and blast furnaces .           '     '
         Table V indicates for 1975 , 1977 and 1980 the trend in the consumption
of blast-furnace coke country by country , and the proportion accounted for by
supplies of coke from other Community countries ( 5,8 million tonnes in 1980 ).
         Table \if I gives the trend in the coke rate ( speci fi c consumption of coke
per tonne of pig iron ) in the different countries for 1975 , 1977 and 1980 , and
forecasts for 1981 ,
12 .  "  THE INTERNATIONAL COKING-COAL MARKET       '
         Coking coal has a special position in the world coal market . Until 1977 ,
it Was in fact the focal point of this market .
         Since 1979 , this . role has been played by steam coal , the substitution
of which for oil in thermal applications has boosted the international market
( 198 million tonnes in 1978 , 229 million tonnes in 1979 and 232 million tonnes
in 1980 ), even though few new exporting countries have commenced activities .
         Coking coal accounts for around 130 million tonnes of this total , which
indicates that there has been a slight reduction in recent years . An upturn in
economic activity would reverse this trend . Many consuming countries have
acquired , or are endeavouring to acquire , control over reserves in non-member
countries which would enable them to diversify their supplies , but deliveries
to the Community from these mines are still on the' small side , and significant
results will be achieved only in the medium term .
                                       .!< ···
         Table VII indicates the trend in coking-coal imports into the Community .
         In 1979 , 32 % of world coal exports were from North America and 30 %
from Eastern Europe and the Soviet Union .                  «
                                                                            ./1 0
 ---pagebreak---                                   - 10 -
            Although record tonnages were achieved in 1980 , certain fundamental
difficulties and bottlenecks in the coal supply chain also appeared in tnese
two and other areas . The very significant reduction in deliveries of Polish
and Russian coking coal for an indefinite period is calling into question
much of the process of di ver s i f i cat ion which has been going on for many years .
This is compounded by delays affecting loading in the United States of America
as a result of port congestion since 1980 and the strike by unionized minecs
from March to June 1981 . Deliveries from other major suppliers - Australia and
South Africa - could remain       limited in the near future .
            On a market that is always sensitive , Community purchasers can exDect
to encounter various kinds of difficulties in the next few years , in particular :
 ( a ) an expansion in the coking-coal requirements of other steel - producing
       countries ( e.g. Japan - an increase of 5 million tonnes between 1980 and
       1985 , Brazil , Korea , Canada ),
 ( b ) a switch in the demand for steam coal to certain commercial grades of
       coking coal with properties that are attractive as regards pollution-control
       regulations ( sulphur content etc .),
 ( c ) efforts by those selling coking coal to keep up with the price incerases
       accepted by those buying steam coal ,
 (d)   limited capacity in several ports of loading in the exporting countries .
              These difficulties of adjustment explain the feeling of insecurity
    experienced by European consumers where the short and medium-term supply
    conditions on the world woking-coal market are concerned . They show that the
    transfer to the world market of a significant proportion of Community demand
    could come up against quantitative and qualitative limits and trigger 5 further
    price rise . After a period in which prices rose moderately ( by 10 % early
    1979 and late 1980 ), coking-coal prices have once agavi started to climb
    steeply . It should be recalled that between early 1974 and mid-1975 the guide
    price rose from 32 to 62 dollars per tonne ( 28 to 50 ECU ). In April 1981 it
    was 80 dollars ( 76 ECU ).
                                                                              ./1 1
 ---pagebreak---                                            - 11   -
                                 COKING-COAL AID
13 .       Production aid
           Table A below makes it possible to compare the cost prices of Commu­
nity and imported coking coal . It shows that the competitive situation of
                                                                 >               *
                                            \
                 ■' ·   _* ' ■■■■■
                                                      ' '      /
                                     TABLE A
 »
                                                                 value per     tonne    /
              Guide pri ce (1 )                            Net   proceeds               Production cost
                                                        . for producers
Year      Dollars US            DM     .      EUA
                                                           DM           EUA             DM            EUA
                                              ECU
                                                                        ECU                 ■   ■ '   ECU
1976          63             ; 159             56          153          54          -   155            55
1977          62  „            145             55          138          52              160         ·. 60 .
1978    '   · 62               125             49          123      '   48              168   .        66
1979          65               120       ;     48   ;    . 115          46         /    178            71     "
1980          69           ■   126             50 .        125        > 50 ' ■          200            79
( 1 ) Delivered North Sea port ( ARA : Amsterdam , Rotterdam , Antwerp ).
           The following comments are called for where this table is concerned :
( a ) the guide price expressed in dollars increased by less than 10 % , but only
      as from 1979 ;                                                         /
( b ) the equivalent value expressed in DM fell by over 20 % , despite a 5 % rise
      in 1980, as a result of the fall in value of the dollar . The net proceeds
      for producers followed the same trend ;
( c ) the production c6st expressed in DM rose by nearly 30 % . The difference
      between net proceeds and the production Cost rose from 2 to 75 DM ( or from 1
      to 30 EUA / ECU ) per tonne .
      The difference between production costs and proceeds reflects the alignment
of selling prices on world coking-coal prices , taking into account the " coke and
                                                                      i             - x
coal stockpiling costs borne by Community coal firms .
      Production aid in Germany , which has been nil since 1974 , rose to 13.50
DM / t in 1977 , 41 DM / t in 1978 , 48.50 DM in 1979 and 53 DM / t in 1980 ( 0.5 , 16 ,
19 and 21 EUA / ECU respectively ).
                                                                                                    .   ./ 12
                      I
 ---pagebreak---                                     - Id -
       .    At the beginning of 1981 the trend would seem to be in the opposite
direction . The guide price expressed in dollars rose by over 10 % in six months
compared with the 1980 average , as a result of the increase in the value of the
dollar , and the equivalent value in DM rose by over 20 % ( approx . 25 DM or
10 ECU ). Community coal firms' proceeds in 1981 may be expected to increase
by slightly more than the cost prices . In Germany the difference between the
world market price and the cost of production is currently ( July 1981 ) about
25  DM   ( 10 ECU) / tonne .
            One of the reasons for this change in the trend is the fact that trans­
portation costs for coal from non-member countries have for some time been ri­
sing more steeply than i nt ra - Communi t y transportation costs . For example the
Atlantic freight charge ( USA-ARA ) component of the guide price , which stood
at 16 DM / t (6 ECU ) in 1980 - as it did in 1974 - had reached the figure of'
27 DM / t ( 11 ECU ) in the first quarter of 1981 , and 34 DM ( 13 ECU ) in the second
quarter of 1981 , including demurrage charges . It therefore exceeds the cost of
carriage from the Ruhr to Genoa by sea or to Lorraine by rail ( approx . 31 DM or
12 ECU per tonne ). This freight charge is worked out chiefly on the basis of
long-term contracts . The spot maritime freight charges are higher at present .
14.         Changes in the alignment margins and the rate of sales ai d
            Table B below summarizes the changes between 1972 and 1981    in the align­
ment margins , . i . e . the difference between the price of non-member country coking
coal and that of Community coking coal at the point of consumption . Coal firms
are authorized by the Decision to grant rebates not exceeding this difference .
Taking German coal by way of example , five typical points of delivery are consi­
dered : four remote from coalfields ( two on the coast , two inland ) and one
close to a coalfield . The differences are expressed in dollars and EUA / ECU per
tonne .
                                                                            . /13
 ---pagebreak---                                       - 13 -
                                    TABLE Β
                                                ♦
                             1 . 7.72               1.1.78                .   1.1.81
              t
                        Dollar        EUA / ECU   Dollar      EUA / ECU      Dollar         EUA / ECU
Genoa ( It )           13               12         36          26             45             34
Rotterdam ( NL )       10                 9        31          23             35     ,       27
Liège ( Β )              8                7        26      ,·  19             32             24
Thionville ( F )         7                6        24          17             34             26
Duisburg                 5                4        22          16       '     25 .,          19 · ι
           The following remarks are called for :
( a ) all the alignment margins have increased significantly in recent years ;
( b ) the alignment margin increases the further away the coalfield is ;
Cc ) the margin is greater in the case of coastal steelworks - which is why two
      different rates of production aid have been set ( see Table IX ).
           Table C below indicates the . trend in the difference between the alignment
margins for Duisburg ( D ) and those for the four other points of delivery , on
the assumption that the production aid can attain the level of the Duisburg
alignment margin .
                                    TABLE    C
                             1972                     1978                     1981
                       Dollar       EUA / ECU   Dollar     EUA / ECU        Do l lar     EUA / ECU
Genoa ( It             8                8          14          14             20             15
Rotterdam ( NL )       5                5           9           7         .    10             8
Liège ( B )            3                3           3           3            - 7          ,   5
Thionville ( F )       2                2           2           1                9            7
           It should be noted that in int'ra-Community trade the sales aid covers
a decreasing proportion of the above difference .
                                                                                       -/14
 ---pagebreak---                                   -  "|Λ _
           In 1973 , the rate of aid - set at 2 EUA ( 2.46 dollars ) per tonne on
average - covered roughly 20 % of the highest difference in 1972 and all of
the lowest one . In 1978 , with a rate of 2.10 EUA ( 2.67 dollars ) per tonne the
proportions were still more or less the same . In 1981 , with a rate of 3.10 ECU
( 4.30 dollars ) per tonne the average rate now covers half the lowest difference
and 20 % of the highest one . In fact , as a result of the two different rates
( 2.60 ECU for inland works and 4.40 ECU for coastal works ) 45 % of the diffe­
rence is covered in the case of the former and 30 % in the case of the latter .
15.        Community financing
           The Community financing arrangements for the aid paid in respect of
intra-Community trade are as follows :
(a)   from 1967 to 1969   : contributions from the Member States
(b)   from 1970 to 1972   :  contributions from the Member States and from the ECSC
      Budget
( c ) from 1973 : contributions from six Member States , the ECSC Budget and the
      iron and steel industry .
           The respective amounts have been as follows since 1 January 1980 :
(a)   ECSC  :                       6millionECU
( b ) Iron and steel industry : 17 million ECU
( c)  Six Member States :         no more than 24 million ECU .
           Only the Member States benefit from the saving arising from the fact
chat , at present , as the volume of trade is below the 15 million tonnes per
annum ceiling , the financing requirements are below the 47 million ECU maximum .
           This is a specific financing system reflecting very pragmatically the
interests of the parties concerned and giving expression to the closely -
intertwining nature of the three components of the scheme : aid , commercial rules
and financing .
                                                                             ./15
 ---pagebreak---           The possibility of the coking-coal fund being financed via the General
Budget has been raised several times , and in particular in 1979 - first of all
by Parliament and subsequently by the Council .
          Basically , the Commission would be prepared to propose such a method
of financing once the requisite pre-conditions were fulfilled . However , such
a proposal would have to be part of the ^ framework of a more structured and fi­
nancial ly . better endowed Community energy policy than at present , and one in
which provision was made , therefore , for coal policy as an integral part of
energy policy , and in particular for the coking-coal aid scheme .
          Pending the culmination of such an overall plan , it would seem to be
appropriate to extend the present coking-coal aid scheme temporarily for at
most two years .                            '
          With regard to the extension of the existing system , it should be spe­
cified that the operation of . the Community fund is regularly checked by the
Court of Auditors , and that the Commission departments responsible for managing
it regularly provide the departments in the Member States with background in­
formation on the use made of the funds .
          The Commission 's inspection departments and/ or the Member State 's fi­
nancial control departments check the firms' operations which give rise to
financing at national or Community level .        ■           .   ,
          Table VIII shows the trend in aid in respect of intra-Community trade
from 1975 to 1980 .      •           , -                    ~
                 ν   · '     . Ϊ      ' ' '              " ·'       · ' ·.·     ~
                       '    THE NEW PROPOSAL                    /             '
16 .      In the light of the foreseeable medium-term situation , the Commission
is proposing :                        "
( a ) to extend the period of validity of the present Decision for a further two
      years , i.e. until 31 December 1983 ;     -                           .
( b ) to make a slight improvement in the rates of sales aid ;         -
( c ) to reduce the maximum tonnage involved in intra-Community trade to which
      Community financing applies .
 ---pagebreak---                                                      - I o -
            17 .        In the case of sales aid , it would be a question of slightly raising
Rate of aid the extent to which sales margins are covered ( see point 14 above ) with a view
            to facilitating int ra-Communi ty trade . The maximum rate of sales aid would be
            increased ( 1 )   :
            ( a ) from 4.40 to 4.70 ECU per tonne for works supplied by sea , and
            ( b ) from 2.60 to 2.80 ECU per tonne in the other cases .
                      ( Table IX shows trend in sales aid since the scheme started ).
            18 .        The maximum quantity to which Community financing applies would be
lonnage     reduced from 15 to 14 million tonnes in order to take into account the trend
            in intra-Community trade observed in recent years and the medium-term forecasts .
            19 .        The maximum amount of Community financing would still be 47 million ECU ,
            the three contributions would stay the same ( ECSC 6 million ECU , iron and steel
            industry 17 million ECU , Member States 24 million ECU ), and the same scale of
            payments by the six Member States would apply :
            Gerrnany                      7.75 million ECU
            Belgium                       3.25
            France                        7
            Italy                         3
            Luxembourg                    1.50             '
            Nether lands                  1.50     '         '
            20 .        The text of the draft enacting terms is attached ( p. 18 ).
            21 .        FUTURE OUTLOOK
                        The coking coal scheme was established on the basis of political consi­
            derations in the Community and the Member States in 1967 . It has , with certain
            modifications , been renewed several times and has thus been applicable for 14
            years . Meanwhile , and especially since the last prolongation of the scheme , the
            problems of the Community 's energy supply and the situation on the world cud
            market have undergone profound changes .           In giving itself new energy object „ e .
             for 1990 , the Community has begun to adapt its structure and its conditions ot
             supply and consumption . The Community steel industry , too , is passing throu^'
             a difficult period of structural change .
             ( 1 ) Decision No 77 / 287 / ECSC , Artide 1 ( b ).
 ---pagebreak---                               - 17 -
        It therefore seems Logical to re-examine , in the context of a
coherent energy policy , all the problems related to a common coal strategy
including those of the supply of coking coal and coke for the steel industry .
        The renewal of the current scheme for two years will provide a suitable
period to facilitate the definition of this new approach    in liaison with the
                                                          (
parties concerned while avoiding the introduction into the policy of prejudicial
uncertainties or discontinuities .
1 Annex
9 tables ( numbered I to IX )
                                       \
 ---pagebreak---                                                                   ANNEX
                                   DRAFT
                COMMISSION DECISION             ^ ECSc )
amending Decision No 73 / 287 / ECSC concerning coking coal and coke for the iron
and steel industry in the Community
                                 Article    1
Decision Mo 73 / 287 / ECSC is hereby amended as follows :
1 . Article 1   (b) shall  read as follows    :
    "a sales aid applying to deliveries made to areas remote from the coalfield
    or effected by way of intra-Community trade . The rate of any such aid may
    not exceed 4.70 ECU per tonne of coking coal in the case of deliveries to
    installations which can be supplied direct by sea or where in the case of
    intra-Community trade , carriage by sea is necessary , and 2.80 ECU per tonne
    of coal in all other cases . No scale adopted by a Government shall introduce
    any element of discrimination into the aids relating to the deliveries made
    by the coal undertakings ".
2.  Article 7 ( 1 ) shall  read as follows    :
    " The Community financing arrangements shall cover an annual quantity of coel
    amounting to no more than 14 million tonnes and an amount of no more than 47
    million ECU per year ".
3 . The second and third paragraphs of Article 13 shall read as follows :
    " This decision shall   cease to have effect on 31  December 1983 .
    This Decision shall be binding in its entirety and directly applicable in
    all Member States ".
                                 Art i c le 2
This Decision shall enter into force on the day of its publication in the
Official Journal of the European Communities and shall take effect from 1 Ja­
nuary 1982 .
This Decision shall be binding in its entirety and directly applicable in all
Member   States .
Done at Brussels ,
                                                 For the Commission
 ---pagebreak---                                                                                                             TABLE I
                            GUIDE -PRICE MOVEMENTS SINCE 1970 IN U$ DOLLARS , EUA / ECl) AND THE CURRENCIES
                                    OF THE PRODUCING COUNTRIES PER TONNE FOR THE STANDARD GRADE < 1 ) ( 2 )
                                           EUA / ECU             ... DM             Bf rs           II              POUND
Year                DOLLAR
1970                18.75                    18.35                  68.63            937.50 .     104.15               -
1971                23.75                    22. 67                 86.93 -       1 187.50        131.93 .             -
1972                23.93                    21.33                  77.11         1 072 . 44 -    122 42
                                                                                                     m
                                                                                                                       -
1973                26.43                    21 . 46                79.49         1 116.65        129.77        -   11.19
1974                45.31                    37.99               117.97           1 776. 35       217.99            19.33
1975                61 . 70                  49. 73              151.30           2 262.77     8 264.41             27.75
1976                63.14              \     56b 47            ' 159.49           2 441 . 22      300.04            34 . S9
1977                62.13                    54. 45               144.79          2 231.92      '305.65              35 . 6 S
                    61.93                    48.61    ι           125 .-    : "   1 959. 79 -     279. 90 ,   ,      32.37
1978
                    65-29                    47.64                119.57          1 9ia 39        277. 22            30.82
1979                                                                                                                          0
                                                                                                                              1
                    69. 16                   49.67                125.65        ' 2 021 . 55      292. 08            29.91
1980
                                                                  147.74           2 379. 78      3¿2.24             31.50
1.1.1931            75.70                  . 57.80 ,,
1.^.19 31
 ( 1 ) Annual averages , but quarterly figures .for 1981
 ( 2 ) Properties : ash                           6 % ( dry basis )
                    moisture                      5 %   •
                     sulphur                      1 % ( dry basis )
                     volatile matter            24 % ( dry basis )
            •  -     size range          •   0-30 m / m
 ---pagebreak---                                                       2U -
                                                                                    :   il
                               COMMUNITY COAL            1930
                                                                           6
                                                                      ( 10   tonnes )
     Production   •     Deliveries to coking plants             Int ra-Communi ty trade        C1 )
       (a )             ( b) .                   <%                            (c)
                                                                 total               of which coking
                                    .    • .                                          coa l and blast­
                                .     ■      ...       '      •                       furnace coke ( c )
                    •   '         -       ,    *
         6                 4                        62              1                       0.2
       95                 43            . .         46            20                       14
       18                  5                        25              1
      12 ?                10                         8              4
      247                 62                        25            26                       14
 expressed in tonnes of coal ,
age included in ( b ) .
 ---pagebreak---                                                                                                             TACLE III
                                        ' <AmL1' r -' tion of Dec i sion No 73 / 287
                              Distribution of intra-Community deliveries
                                                                                              • Annual average 1975-1977
                                                                                                  ( 10^ tonnes )
               '
                        Tonmqos delivered                                  Tonno η s    eligible for aid ( 1 )               '   ;
                              I               of
                                                                                   , of which for inland        for coasta I
                   Total    C1 )     which coke ( 2 )             Tota I base
Supplies to                                                                                 works                  works
                       (a )
                            l·
                            I
                                                (b)              (c a d + e )
                                                                              %
                                                                                             (d)
                                                                                                         X
                                                                                                                    (e)
                                                                                                                            y.
Lie U, i que           2.2         J
                                      -     1
                                               '0.2    . ■ ·
                                                              2.0          ( 100 ) 1.7                C 84 )   0-3      ( 16 )
frcr.ce                6.7                      2.2           6.3          ( 100 ) 5.4                ( 85 )   0.9      ( 1·ν.
                                 I
                                /
Itdli '-J              2.6                      0             2-0          ( 100 )   M»
                                                                                                      C    0)  2-0      ( 100 )
l.uxcrr.kourg          2.7                      2.2           2.7          ( 100 ) 2.7                ( 100 )   -
                                                                                                                        (      co
 .'L'ccr Ijnd          1.0                      0.2           0.9          ( 100 )                    (    0)  0.9    / ( 1CIC )
                      15.2                      4.8          14.0          ( 100 ) 9.3                ( 70 )   4.2      ( 3 ->
                                                    •
C1 )    Including coke expressed in terms of coal .
(2) t = t .
 ---pagebreak---                                                       - tl
                                                                           TAlil I  IV
                             COMMUNITY    COKE   19S0
                                                            ( 10    tonnes )
                 Production      Quantities    received    Int ra - Commum ty trade
OU . it ry                       by blast furnaces •
                     (a)              ( b)  (V             Total           of   win ch b.~f. coKe
                                                                           of which
                                                                              ( deliveries )
                    6.                5                     0.3
                   29                17                     6.0                          t>.4
  r                11                10                     0.4
  !                 8                 6
  L                                   2
                    2                 2                     0.5                          0 .4
  L' K             10                 4  (2 )               0-3
  FMP              66                46                     7 .S                          5 .8 (?)
       Including int ra-Commum ty trade ,
            -e  reduced due to strike .
 > "or.nugr.'S included in ( c2 ) of Table II .
 ---pagebreak---                                                                                         TAP ! 1 V
                                           BLAST-FURNACE COKE
                                              Consumption ( a )
                                " Quantities received in intra-Community trade ( b )
                                               Percentage  (b : a )
                                                                          ( 10   tonnes )
                            I                                                              /
                                                                    -
Country           1975                            1
                                                    1977                         1980
                                                  !
  - '
            a      b                    '    a . ;   b                  a         b
                              a                                 a                            a
9          5.0    0.3        6             4.6      0.1         2      5.3     - 1.0        19
 D        15 .0    -
                             0            14         -
                                                                0     17-4        -
                                                                                             0
 F         9.5    2.2     23               9-1      2-7       30      10.0       2 .4       24
 IT        5 -4              0             5-4       -
                                                                0      5.5        -
                                                                                             0
L          2.0    2.1    105               1.8      1.6       89 ,     1.9       1 .9     1C0
NL      v  1 .9   0.2     11               1.8                  0      1.9       0.4       21
SB         7A               0              7-3       -
                                                                0      3.7(1 )    -
                                                                                             0
      \
EUR       46 .2   4.8     10            44          4.4       io      45.7       5.8       13
(1 )    Reduction due to strike .
 ---pagebreak---                                    - 24 -
                                                                  TAUl.f. VI
              THE COKE RATE IN BLAST  FURNACES
                                                ( kg per tonne of pig iron )
ount ry W4                   1977              1930                1961
                                                               ( estimate )
 Β       563                  526              545                  545
         517               . 477               515                  520
         552                  504              520                  530
         499                  477              455                  460
        |538               : 497               545                  550
 fX      4 70               ! 450              430                  430
 UK'     596                ' 603              580                  575
         537                  505              514                  518
 ---pagebreak---                                                         -     -
                                                                                         TAQLC VII
                                         IMPORTS OF COKING COAL INTO
                                                THE COMMUNITY
                                                                                   ( 10" tonnes )
 orm;rrj
                                  Tonna ge :» receiv ed               Tonn.'igps contr.i c t •*_
                      1974              1977               1980       1980              1981     (1)
U.S. A.                8.5        .      8-2             • 13 ■       15-7       . '    10-4
/. jc ; ralia          2.3    ;          3 Jb               3.1        5.2               4.8         ,
 PoLand                5.2               U        ».
                                                            2.7        5-3               5.1
 USSR                  1.4               1.1                0.7        0.9               0-9
 Other                   -  •          10.3                 0-5
Ϊ0Τ /!.              17.4              17.4                20         27.1              21 -2
( 1 ) Provisional .,
                                DELIVERIES FROM EASTERN BLOC COUNTRIES
                                    in the first quarters of 1980 and 1981
                     1 / 80            1 / 81
 PoLand                1.1             0,5
 USSR                  0.2             0,06
                                                                    >      •
                                                                  /
 ---pagebreak---                      *
                                 '•ID I •'J . RESPECT OF _ INTRA­- C0W.UNIÎY TRADE ™ COKING Ç0-AL                        WAND COKE
    Y SrâF-                   IM 5                           mt'                            W7 .                            1978                                1979                          19 SO      '
Tc^-3~es     eligible for aid < mt )                                                                               '  -
D                             14.7                           12.9                           10.6           1                11 ,3                               13 , Ζ
                                                  -
                                                                                                                                                                                              1-.V.        ,
Β                                -                                -
                                                                                                                            . ,  -          "
                                                                                                                                                                   -
                                                                                                                                                                                                0 . 1.
F                                -                           -    -
                                                                                               «
                                                                                                           !                    0, 2'                             Cr 2                           0.0 ?
Total                         14.7                           12 . 9 -                       10.6
                                                                                                           j                11,5
                                                                                                                                                             '
                                                                                                                                                                13,4                          13.-1
                                                                         .
                                                                                                                                                .
                                                                                       '
                                                                                                                                              ,
Contributions to the Community fund ( MEUA )                                                                                                                                                ■  »
                    State     Steel Total j state           Steel       Total     State Steel        Total ]   State        Steel       Toia I j State         Steel Total       State      Steel Total
D                      2. 3     6.2    3.5            2,0 ,     5.7 . '7.7        1.7        5,1 .    6.3            1.9        5.5       7.4            2,2 , 6.4       5.6         5.6         7, C 12,6
θ                      0.9             3.0            0.8       2.0      2.8      0.7      v 1.6 -    2.3            0.8   . 1 .9         2.7            0.9      2.1    3.0         2,3         2,2 ", 5
F                      2.0      4.0    6.0            1.8       3.7      5.5      1 .c ·     3,0      4.5            1.7        2.8       4.5            2.0      3*6    5.6         5.0 .      ¿..o '9.3
It                     0.9      2.3    3.2            0.9       2.0      2.9      0.7        1.4      2.1           0,7         1.9       2.6     '      0.8      2*0    2,8         2.2         2,2 - 4.4   -
L .                    0,7   . 0.8     1.5          • 0.7       0.7      1.4      C.6        0.6      1.2           0.6         0.6       1.2        ' 0,7        0.8    1,5         1.1         0,8    1·9
NL                     0.4      0.8    1.2            0.4       0.7      1.1      0.3        0*6      0.9           0,4         0.7       1 /1           0.4    - 0.8    1 «2        1·1         3,S    r.9
                                                                                                                                                                                  (
EUR-6                  7.2    16.2    23.4            6*-6   14.8       21,4      5,5 .     12«t3    17.8           6.1     13.4        19.5             7,0    15.7 22.7           17.3      17.0 34,3
ECSC                    -
                                       5.9             -          -
                                                                         5.4        -         -
                                                                                                      4. 4            -          -
                                                                                                                                          5.0              '
                                                                                                                                                                         5,7            -
                                                                                                                                                                                                   -    6,0
                                                                                                                                                       '
Total                                 29.3                              26*8                         22.2                               24.5                            28*4                           40.3
UK                              3.0 "                           3.2                      .
                                                                                             2 p4               •
                                                                                                                          . 2 3
                                                                                                                                        .
                                                                                                                                                                  2.8            •    '          1' Ό
Amounts     repaid via the Community funs ( MEUA )
                                                                                                                                                                                                               o
r-
c                           - 29 3                           26 8                           22 2                            24 2                                28.1                          39,8
Β
                                                                                                                                                                                                 ϋ· h
F                             '  -                                -                           -
                                                                                                                                0 3                               0»3                            0.'
Total             /
                              29 3                           26 8                           22 2                            24 5                                28.4        *
                                                                                                                                                                               •
                                                                                                                                                                                              ¿ C.3
National production aid in respect of ( Ä )                 tonnages
                                                                               ( EUA / t )          MEUA       (EUA / t )             MEUA          ( EUA / t )       MEUA     (EUA -¡χ')            MEUA
D                                                                                 5.1                54.1         16.1                 182.1          19.3             255 , C      29.2              376,3
                                 -                                -
Β
                                                                                                                                                                                   45,5                 6,1
                1                -                                -                           -                                  -                                 -
F                                                                                                                33.3                     6.7
                                 –
                                                                                                                                                      43.6               8.7                            C>4
                                                 ■                -
                                                                                              -                                  -
Total                            -
                                                                                                     54 1                              188 8                           263 7                          382 8
 Repayment ( c ) in relation to total aid ( C ) + ( D ) ( % )
D                               100                            . 100   1 . : '       -
                                                                                              29                                 12                               9,9        '
                                                                                                                                                                                     9.6
Β                                                                                                            ;                                                                       ^    L
 F                               -
                                                                                                 6.0                               4, 8                           3.7                7    c
                                                                                                                                                                                        «
          ι
 ---pagebreak---                                    RATE OF SALES AID PER TONNE   ( COKING COAL )
 Year No               (1 )         (2)           (3)        (4)             (5)     (6)              C7 ) (8)  (9)    ( 10 )
 Calendar year        1973        1974           1975      1976           1977      1978            1979   1980 1981   19S2
( Décision No)
1973          UA       5            3             3         3       *     2.60 *     2        *
( 73 / 287 )           1.60         1.60          1.60      1-60 *        1-^0 *  *
                                                                                     1        *
1976          EUA                                           3.165         2.743 *    2. 110 *
(2963 / 76)                                                 1 .683        1.477 *    1 . 055 *
1977          EUA                                                         3-165      2-110 *
( 751 /77)                                                                1 . 688    1.055 *
1977          EUA                              '                          3 165      3.165          3.165
( 1613 / 77 )                                                             U6SS       1.688          1.688
                                                                                            J
1979          EUA
                                                                                                           4.40 4.40
( 3058 / 79 )
                                                                                                           2.60 2.60 ,             '
                                                                                                                                  N>
                                                                                                                                  X
1981          EUA
                                                                                                                       4.70        ,
 ( draft )
                                                                                                                       2-50
 * Rates cancelled and replaced as a result of next decision .
                                                                                                ' ■                          I 5*
                                                                                                                             P
                                                                                                                             irn