HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 271/50
EN
Official Journal of the European Union
18.10.2011
IV
(Acts adopted before 1 December 2009 under the EC Treaty, the EU Treaty and the Euratom Treaty)
COMMISSION DECISION
of 21 December 2005
concerning a restructuring plan for the Spanish coal industry and State aid for the years 2003-2005,
implemented by Spain for 2003 and 2004
(notified under document C(2005) 5410)
(Only the Spanish text is authentic)
(Text with EEA relevance)
(2011/693/EC)
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
(4) By
letter
of
8
August
2003,
Spain
submitted,
under
the
terms of Regulation (EC) No 1407/2002, the amounts of
aid per coal-mining company to be granted for 2003.
Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
(5)
By letters of 18 August 2003 and 18 September 2003
Article 88(2) thereof,
Spain submitted information concerning the production
cost of the production units, under the terms of the
Commission Decision 2002/871/EC of 17 October
2002 establishing a joint framework for the communi
Having called on interested parties to submit their comments
cation of information needed for the application of
pursuant to the aforementioned Article ( 1 ) and having regard to
Council Regulation (EC) No 1407/2002 on State aid to
their comments,
the coal industry ( 3 ).
(6) By
letter
of
10
February
2004
Spain
submitted
the
Minis
Whereas:
terial Order concerning the granting of financial support
to the coal undertakings for the year 2004.
1. PROCEDURE
(7) By
letter
of
30
March
2004
the
Commission
informed
Spain that, having examined the information supplied by
(1) By
letter
of
19
December
2002,
Spain
notified
the
the Spanish authorities, it had decided to initiate the
Commission, in accordance with Article 88(3) of the
procedure laid down in Article 88(2) of the EC Treaty.
Treaty, under the terms of Council Regulation (EC) No
The decision was published in the Official Journal of the
1407/2002 of 23 July 2002 on State aid to the coal
European Union (
industry (

4 ).

2 ), of a restructuring plan concerning the
Spanish coal industry.
(8)
By letters of 30 June 2004 and 16 July 2004 Spain
provided additional information about the restructuring
plan.
(2)
By letters of 19 February 2003, and 31 July 2003, the
Commission requested additional information. Spain
submitted additional information by letters of 18 April
2003 and 3 October 2003.
(9) By
letter
of
19
February
2005
Spain
submitted
the
Minis
terial Order concerning the granting of financial support
to the coal undertakings for the year 2005.
(3)
By letter of 16 June 2003, Spain submitted the Minis
terial Order ECO 768/2003 of 17 March 2003
(10) By letter of 7 September 2005 the Commission
concerning the granting of financial support to the coal
requested additional information. Spain replied by letter
undertakings for 2003.
of 20 October 2005 and provided additional information
about the restructuring plan.
( 1 ) OJ C 182, 15.7.2004, p. 3.
( 2 ) OJ L 205, 2.8.2002, p. 1. Regulation as amended by the 2003 Act
( 3 ) OJ L 300, 5.11.2002, p. 42.
of Accession.
( 4 ) See footnote 1.

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18.10.2011 Official
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the
European
Union L
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(11) In
the
light
of
the
information
submitted
by
Spain,
the
period until 2005 assumes that the effort made by firms
Commission is required to take a decision on the restruc
and workers to restructure the sector during the period
turing plan for the Spanish coal industry and, should the
1998-2002 will continue on the grounds of the 1998-
Commission deliver a favourable opinion on the plan, on
2005 Spanish plan for the restructuring of the coal-
the annual aid concerning the years 2003, 2004 and
mining industry, taking account of the objectives of
2005.
Regulation (EC) No 1407/2002, i.e. a smaller volume
produced with less aid and smaller workforces,
permitting a reduction in production costs.
(12) The
restructuring
plan
and
the
financial
measures
are
covered by Regulation (EC) No 1407/2002. The
Commission must take a decision on the restructuring
(16) The
Spanish
authorities
have
indicated
that
the
social
plan pursuant to Article 10 of the Regulation, to
reality must be one of the criteria to be taken into
determine whether it is in conformity with the
account when deciding which production units will be
conditions and criteria set out in Articles 4-8, and
maintained at a minimum level of activity guaranteeing
whether it complies with the objectives of this Regu
access to coal resources. Other criteria will be the existing
lation. In addition, should the Commission deliver a
coal market and the implementation of environmental
favourable opinion on this plan, it is also required to
legislation. These will determine which power stations
verify, in accordance with Article 10(2) of the Regulation,
will be able to continue in operation.
whether the measures notified for the years 2003-2005
are in conformity with the restructuring plan and, more
generally, on the compatibility of the aid with the proper
functioning of the common market.
(17) In
addition to these criteria,
the Spanish authorities
considered that the overall reduction in aid proposed in
its 2003-2005 plan will lead to firms requesting
voluntary capacity reductions. The possibility of
2. DETAILED DESCRIPTION OF THE MEASURE
granting aid for production unit closures will auto
matically mean a reduction in capacity. Consequently,
(13) On
3
June
1998,
by
Commission
Decision
98/637/ECSC
by the end of 2005 this reduction will be around the
of 3 June 1998 on the granting by Spain of aid to the
12 million tonnes proposed as the target. The Spanish
coal industry in 1998 ( 5 ), the Commission approved a
authorities guaranteed to the Commission that aid for
restructuring plan for the Spanish coal industry for the
capacity closures under the terms of Article 7 of Regu
period 1998-2002. This plan was based on the Plan for
lation (EC) No 1407/2002 will be used solely for
the Restructuring of the Coal-Mining Industry and the
covering the costs of such unit closures.
Alternative Development of Mining Areas 1998-2005
which was signed on 15 July 1997. This Plan was the
result of an agreement between the Spanish authorities
and the interested parties in the coal sector and
(18) The
economy
and
employment
in
the
mining
districts
contained provisions for undertakings that received aid.
are still far below the level that existed before the restruc
The Commission gave a favourable opinion on the 1998-
turing of the industry. For this reason, the Spanish
2002 restructuring plan after analysing its conformity
authorities have indicated that they need more time to
with the general and specific objectives of Commission
apply economic development and alternative
Decision No 3632/93/ECSC of 28 December 1993
employment policies to coal mining. It is not possible
establishing Community rules for State aid to the coal
to speed up the processes for the reconversion of the
industry ( 6 ).
coal industry beyond what is proposed in the plans.
The Spanish authorities argue that the process of restruc
turing has been going on for only 5 years, much less
than in other countries which had a substantial coal
(14) In
view
of
the
Spanish
government’s
intention
to
grant
industry.
aid to the coal industry after the expiry of the ECSC
Treaty on 23 July 2002, and in accordance with Regu
lation (EC) No 1407/2002, in particular Article 9(10)
thereof, on 19 December 2002 the Spanish authorities
(19) The
Spanish
authorities
have
made
use
of
the
right
notified to the Commission a provisional plan for
provided for in Article 9(8) of Regulation (EC) No
accessing coal reserves and for the closure of production
1407/2002, which states that Member States may, on
units for the period 2003-2005.
duly substantiated grounds, notify the Commission of
the identity of each of the production units forming
part of the plans referred to in paragraphs 4 and 6 of
the aforementioned Article by June 2004 at the latest.
(15) This
restructuring
plan
concerns
the
intention
of
the
Spanish authorities to continue supporting the coal
industry for the period 2003-2005 by means of
granting production aid and aid to cover the exceptional
(20) The Spanish authorities have also informed the
costs of the restructuring process. This proposal for the
Commission, on the basis of Decision 2002/871/EC,
of the production costs of the production units with
( 5 ) OJ L 303, 13.11.1998, p. 57.
regard to the reference year 2001/2002 and the period
( 6 ) OJ L 329, 30.12.1993, p. 12.
2003-2005.

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L 271/52
EN
Official Journal of the European Union
18.10.2011
(21) Under the terms of the definition of ‘production unit’ in Article 2 of Decision 2002/871/EC, all the
coal-mining companies, except Hunosa, have defined their underground workings and related infra
structure as a single ‘underground production unit’, and all their opencast workings and related
infrastructure on a single ‘opencast production unit’.
The notified production units and the production of the reference year (2001/2002) are the
following:
Production Unit
U: Underground
Production capacity of the reference year
O: Opencast
(tce: ton coal equivalent)
Alto Bierzo, S.A.
U 104
405
Antracitasde Arlanza, S.L.
U 10
360
Antracitas de Gillon, S.A.
U 57
100
Antracitas la Granja, S.A.
U 51
550
O 8
930
Antracitas de Tineo, S.A.
S 50
100
Campomanes Hermanos, S.A.
S 43
320
CARBONAR, S.A.
U 320
000
Carbones de Arlanza, S.A.
U 25
332
Carbones de Linares, S.L.
U 12
817
Carbones del Puerto. S.A.
U 3
400
Carbones el Tunel, S.L.
U 17
420
Carbones de Pedraforca, S.A.
U 75
110
Carbones San Isidro y María, S.L.
U 31
920
Compaía General Minera de Teruel,
U 21
000
S.A.
O 71
000
Coto Minero del Narcea, S.A.
— Monasterio
U 9
000
— Braas
U 69
000
Coto Minero Jove, S.A.
U 82
334
E.N. Carbonifera del Sur, S.A.
— Pozo María
U 18
210
— Pearroya
O 381
240
— Emma, Puerto llano
O 464
040
ENDESA, S.A. (TERUEL)
— Andorra
U 55
070
— Andorra
O 354
310
Gonzalez y Diez, S.A.
— Tineo
U 113
098
— Buseiro
O 16
605

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18.10.2011 Official
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Union L
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Production Unit
U: Underground
Production capacity of the reference year
O: Opencast
(tce: ton coal equivalent)
Hijos de Baldomero Garcia, S.A.
U 60
340
Hullas de Coto Cortes, S.A.
U 282
120
O 48
340
Huellera Vasco-Leonesa, S.A.
U 713
533
O 320
882
INCOMISA, S.A.
U 9
370
La Carbonifera del Ebro, S.A.
U 38
426
MALABA, S.A.
U 26
310
Mina Adelina, S.A.
U 8
200
Mina Escobal, S.L.
U 3
079
Mina la Sierra, S.A.
U 5
560
Mina los Compadres, S.L.
U 5
610
Minas de Navaleo, S.L.
U 19
636
Minas de Valdeloso, S.L.
U 9
870
Minas del Principado, S.A.
U 16
903
MINEX, S.A.
U 59
520
Minera del Bajo Segre, S.A.
U 25
164
Minero Siderurgia de. Ponferrrada S.A.
U 643
000
O 154
000
Munoz Solé Hermanos, S.A.
U 23
141
Promotora de Minas del Carbon
O 50
580
S.A. Catalano-Aragonesa
U 324
550
O 504
800
Union Minera del Norte, S.A.
U 736
430
(UMINSA)
O 86
850
Union Minera Ebro-Segre, S.A.
U 14
090
(UMESA)
Viloria Hermanos, SA.
U 73
964
O 29
844
Virgilio Riesco S.A.
U 24
680
Mina La Camocha
U
HUNOSA — Aller
U 314
000
HUNOSA — Figaredo
U 89
000

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L 271/54
EN
Official Journal of the European Union
18.10.2011
Production Unit
U: Underground
Production capacity of the reference year
O: Opencast
(tce: ton coal equivalent)
HUNOSA — San Nicolas
U 110
000
HUNOSA — Montsacro
U 107
000
HUNOSA — Carrio
U 105
000
HUNOSA — Sotón
U 86
000
HUNOSA — Maria Luisa
U 172
000
HUNOSA — Candil
U 94
000
HUNOSA — Pumarabule
U 73
000
Total (Tec) 8
023
203
(22) By
letter
of
3
October
2003
the
Spanish
authorities
(26) With regard to the years 2006-2007, the Spanish
notified the Commission that the underground
authorities have notified that it is not possible at
production units of Endesa, Encasur and Antracitas de
present to set specific objectives for this period. The
Gillon S.A. would close in 2005 and that the company
Spanish authorities are proposing to continue to reduce
Promotora de Minas de Carbon S.A. (PMC) would close
the aid by 4 % annually. Once the Plan for accessing coal
its opencast unit.
reserves has been agreed, the details of the allocation of
the aid and of the distribution of production (in tonnes)
will be communicated to the Commission.
2.1. Reduction in operating aid
(23) For the coal-mining companies, the proposed reduction
in aid to cover operating deficits is 4 % annually for the
2.4. Plan concerning the coal-mining company
years 2003, 2004 and 2005, except for HUNOSA, for
Hunosa
which the reduction will be 5,75 % annually on average.
(27) The
Spanish
authorities
have
notified
in
greater
detail
the
plan for the publicly-owned coal-mining company
2.2. Production capacity
Hunosa. Over the 2002-2005 period the capacity is
forecast to fall from 1 800 000 tonnes in 2001 to
(24) With regard to the production capacity, the Spanish
1 340 000 tonnes in 2005. Aid to cover operating
government proposed granting aid to a production
deficits is being cut from EUR 321 091 000 in 2001
capacity of approximately 12 million tonnes in 2005.
to EUR 239 281 000 in 2005.
In 2002 production was approximately 13 400 000
tonnes.
(28) The
basic
aims
of
the
2002-2005
Hunosa
Plan
were,
2.3. Budget
firstly, to restructure the undertaking and to reduce
losses in such a way that the activity-reduction
(25) The
total
amounts
of
operating
aid,
technical
and
social
measures required under the national mining plan and
costs that are notified are the following:
Community legislation took due account of Hunosa’s
social and economic importance in the central Asturian
coalfield. Furthermore, the aim was to lay the foun
(in EUR)
dations for the future development of the area in
which the central Asturian coalfield is located by
Year Operating
aid
( 1 ) Technical
costs
( 2 ) Social
costs
( 3 )
creating the conditions needed to create alternative
employment to coal mining. Lastly, the plan entails
2003
568 647 000 81
299
000 469
072
000
cutting Hunosa’s operating losses by over 30 % and a
33,6 % reduction in its workforce, thus increasing its
2004
539 854 000 82
987
000 490
112
000
productivity by 21,4 %.
2005
513 046 000 96
739
000 484
866
000
( 1 ) Articles 4 and 5(3) of Regulation (EC) No 1407/2002.
(29) The
Hunosa
Plan
envisaged
the
implementation
of
a
set
( 2 ) Article 7 of Regulation (EC) No 1407/2002.
of measures designed to ensure that production levels
( 3 ) Article 7 of Regulation (EC) No 1407/2002.
were scaled down. First, two of the existing nine

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EN
18.10.2011 Official
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European
Union L
271/55
production units were closed. Added to this was the
trend could be reinforced in the future. According to
closure of the washery. The closure of these three sites
the Spanish authorities, this reduction of production
represents a 25 % reduction in productive capacity.
costs means a 25 % reduction of aid to the company
Secondly, action was taken to optimise productivity,
and that this trend could be reinforced in the future.
the focus being on measures concerning the selection
of deposits, the degree of modernisation and washing
processes. Efforts were concentrated on those pits
(33) In
accordance
with
the
objectives
set
out
in
the
plan,
it
is
which offered the highest productivity, the lowest
proposed to launch a set of measures to encourage the
overall costs and the best quality. In principle, part of
creation of an economic structure providing an alter
the production was to be reserved for the nearby power
native to coal mining in the geographical area in which
plant and Hunosa had to deliver annually coal for 100
Hunosa operates. A commitment has therefore been
days’ consumption. Thirdly, the planned reduction in
made, by the Spanish authorities and the trade unions,
activity makes it necessary to reduce the undertaking’s
to encourage the creation of 650 jobs during the 2002-
workforce. Lastly, as a result of the measures taken,
2005 period in the central Asturian coalfield with the aid
production during the lifetime of the plan will fall by
of the various measures under this Plan.
26,1 % overall from 1 800 000 tonnes in 2001 to
1 340 000 tonnes in 2005.
(34) Concerning
the
aid
to
cover
the
exceptional
costs
of
the
restructuring process and inherited liabilities, which
accompany the application of the technical measures
(30) The
Hunosa Plan envisaged the hiring of 550 new
regarding concentration and selection of deposits and
workers during the period 2002-2005. The Spanish
the corresponding capacity adjustments, the Spanish
authorities guaranteed that these new workers should
authorities explained that social measures are needed, in
they have to be hired, would be selected from among
particular to finance the early-retirement scheme. The aid
workers from other mining undertakings who had lost
that will cover these measures and other proposed
their jobs following mine closures, with two very specific
measures will decrease gradually.
exceptions, the hiring of specialised technicians and of
lineal descendants of workers who had died in accidents
at work.
(35) The following table shows the reduction in workforce
and the total amounts of aid to be granted according
to the Hunosa Plan, as proposed in the restructuring
plan.
(31) The
Spanish
authorities
have
communicated
that
the
costs per tec of the production units of HUNOSA that
they propose to keep open during the restructuring
period are the following:
Aid reduction
Aid for exceptional
Year
Workforce at year
end
activity ( 1 )
costs ( 2 )
(in EUR)
(in EUR)
2003 4
902 271
593
000 302
557
000
Average cost (EUR/tce)
Production
2004 4
437 254
682
000 298
983
000
Unit
Reduction (%)
2001 2005
2005 4
079 239
281
000 286
203
000
Aller 271 237 12,5
( 1 ) Article 4 of Regulation (EC) No 1407/2002.
San Nicolás 429 317 26,1
( 2 ) Article 7 of Regulation (EC) No 1407/2002.
Montsacro 342 251 26,6
(36) By
letter
of
22 April
2003, the
Spanish
authorities
Carrio 261 223 14,5
notified the Commission that the aim of the Hunosa
Plan, among other objectives, as a precautionary
Sotón 376 304 19,1
measure, was the maintenance of a minimum quantity
of coal production in order to guarantee access to
M
reserves.

o Luisa 371 331 10,8
Candil 411 340 17,3
(37) In the same letter the Spanish authorities explained that
Average 344 278 19,2
the minimum production of Hunosa for 2005 would be
1 340 000 tonnes, in order to guarantee that 30 % of the
needs (100 days) of the power plants near Hunosa’s
mines could be met by this company. The Spanish
(32) The
Spanish
authorities
considered
that
this
reduction
in
authorities proposed applying the same criterion after
production costs of approximately 20 % in the period
2005. The Spanish authorities considered that the main
2002-2005 demonstrates the possibilities of a
tenance of strategic production close to the power plants
reduction in Hunosa’s production costs and that this
was a priority objective of the plan for accessing reserves.

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L 271/56
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Official Journal of the European Union
18.10.2011
2.5. Duration of the scheme
plan for accessing coal reserves and to submit the
total amounts of the estimated coal production per
(38) The
aid
will
be
available
in
the
period
2003-2005.
coal year and the estimated amount of aid for
accessing coal reserves as required by Article 9(6)
of Regulation (EC) No 1407/2002.
2.6. Form of the aid
(39) The
aid
will
take
the
form
of
grants.
(c) To clarify whether the aid for the reduction of
activity per coal year as required by Article 9(4) of
Regulation (EC) No 1407/2002 should be as a
2.7. Beneficiaries
minimum the aid that Spain intended to grant
to the companies/production units referred to
(40) Production units of Spanish coal-mining companies
in paragraph 18 of Commission Decision
referred to in paragraph 21.
2002/826/ECSC of 2 July 2002 on financial
measures by Spain in respect of the coal industry
in 2001 and in the period 1 January 2002 to
23 July 2002 (
2.8. Legal basis

7 ).

(41) Orden ministerial ECO/2731/2003, Orden ministerial
ECO/768/2003, Orden ministerial ECO/180/2004 and
(d) To submit all the available information on the appli
Orden ministerial ITC/626/2005.
cation of the principle of degressivity of aid and to
answer the questions of whether competitiveness
factors such as the evolution of the production
costs would be taken into account and whether the
2.9. Energy and environmental situation in Spain
inclusion of the production unit in a closure plan
would be considered a factor for higher reduction
(42) According
to
electricity
production
forecasts
prepared
by
Spain for the period 2000-2011, the share of coal in
of aid.
electricity production will be reduced from 35,9 % in
2000 to 15 % in 2011. Electricity produced from
natural gas will increase from 9,7 % to 33,1 % over the
(e) To clarify whether production units amounting to a
same period. Renewable energies will increase from
capacity of 1 660 000 tonnes will be closed before
16,9 % of electricity production in 2000 to 28,4 % in
31 December 2005.
2011. Electricity generation is responsible for only 28 %
of total CO 2 emissions. Spain does not consider it logical
to make the link between aid given to national coal
(f) To clarify whether the production units Antracitas de
production and CO 2 emissions. The correlation should
Gillon, ENDESA (underground) and ENCASUR
instead be between power generation and emissions.
(underground) received operating aid in 2003; to
Power stations will operate as long as technically and
report whether the aid received by these production
economically viable irrespective of the fact whether the
units from 1998 to 2002 to cover exceptional costs
coal consumed is nationally produced or imported.
under Article 5 of Decision No 3632/93/ECSC did
not exceed such costs; to clarify whether, in the event
the aid exceeded the costs, Spain would recover the
2.10. Grounds for initiating the procedure
difference.
(43) On 30 March 2004, the Commission initiated the formal
investigation procedure. The Commission expressed
(g) To submit the total amount of the aid to Hunosa on
doubts whether the notified plan is in conformity with
2003, 2004 and 2005, taking into account the
the conditions and criteria set out in Regulation (EC) No
reductions of production costs notified by the
1407/2002 and whether it complies with the objectives
company.
of this Regulation. The Commission considered that the
plan had not been explained in sufficient detail.
Therefore, in a letter of 30 March 2004 the Commission
asked the Spanish authorities:
(h) To clarify the maximum number of jobs at Hunosa
that are necessary for workers with a specific
technical background.
(a) To submit the total amount of the estimated coal
production per coal year and the estimated amount
(i) To explain in detail the amendments to the Minis
of aid for the reduction of activity per coal year as
terial Order ECO/2771/2003 to guarantee the correct
required by Article 9(4) of Regulation (EC) No
application of Article 7 of Regulation (EC) No
1407/2002.
1407/2002, and to confirm that only production
units notified under the terms of Decision
2002/871/EC will be eligible for aid.
(b) To clarify the selection criteria to be met by the
production units in order to be included in the
( 7 ) OJ L 296, 30.10.2002, p. 73.

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Union L
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3. COMMENTS FROM SPAIN
(49) The
definition
of
‘production
unit’
has
been
checked
with
those undertakings which have the largest production
(44) The
comments
sent
by
the
Spanish
authorities
after
the
capacity and which might therefore have more than
Commission opened the procedure are the following.
one production unit. Up until now, except in respect
Third parties did not submit comments of Regulation
of Hunosa, analysis of the aid was carried out at under
(EC) No 1407/2002.
taking level and underground coal workings were
calculated together with opencast workings.
3.1. Aid for the reduction of activity (Article 4 of
Regulation (EC) No 1407/2002) and aid for accessing
coal reserves (Article 5(3) of the aforementioned
3.1.3. Aid for the reduction of activity
Regulation)
(50) The
Spanish
authorities
explained
that,
as
may
be
seen
(45) The
Spanish
authorities
submitted
reports
of
the
aid
paid
from the report, all the undertakings which in 2002 were
in 2003 and 2004 and the payment forecast for 2005,
classified as being in receipt of aid under Article 4 of
which classify the aid according to whether it was
Decision No 3632/93/ECSC are currently classified as
granted under Articles 4 and 5 of Regulation (EC) No
undertakings receiving aid under Article 4 of Regulation
1407/2002. The aid granted and to be granted to
(EC) No 1407/2002.
Hunosa is classified according to whether it is financed
out of the State general budgets or SEPI ( 8 ).
3.1.4. Degression of aid
3.1.1. Production in the period 2003-2005
(51) The
Spanish
authorities
have
explained
that,
until
the
end
of 2005, aid reduction should be global and at a rate of
(46) The
production trend resulting from the production
4 % per year.
capacity closures which the industry undertook to carry
out is as follows:
3.2. Aid to cover exceptional costs
(Kilotonnes)
(52) The
Spanish
authorities
have
informed
the
Commission
2001 2002 2003 2004 2005
that Order ECO/2731/2003 has been amended in order
to bring it into line with the requirements of Article 7 of
Production 13
993 13
372 12
576 12
400 12
000
Regulation (EC) No 1407/2002. The order will only
apply to production units which actually close before
31 December 2005 and it will not be applied to
3.1.2. Criteria
closure programmes which expire after that date.
Furthermore, the compensation of EUR 13 per 1 000
(47) The
Spanish
authorities
submitted
the
criteria
which
have
therms for coal contracts cancelled as a result of
been used when categorising production units as aid
closure of the production unit which supplied the fuel
beneficiaries under Article 4 or Article 5(3) of Regulation
has been fixed as the maximum aid to provide financial
(EC) No 1407/2002. As the main criterion, the cost of
support for the types of cost contained in Annex to
production per ton coal equivalent (tce) was fixed, and
Regulation (EC) No 1407/2002. Only duly substantiated
the following were established as secondary criteria:
actual costs of closure will be paid for.
(a) existence of a market, i.e. there should be an
3.3. Previous Commission decisions
operating power station within a 100 kilometre
radius;
3.3.1. Closures until 31 December 2005
(53) The
Spanish
Government
will
comply
with
paragraph
18
(b) solvency of the undertaking which owns the
of Decision 2002/826/ECSC by definitively closing
production unit; in this regard, there should be a
production capacity of 1 660 000 tonnes at the under
minimum proportion between the undertaking’s
takings mentioned in the aforementioned paragraph by
capital and liabilities.
31 December 2005. Some of those undertakings already
began to reduce production capacities in 2002.
(48) Finally,
the
social
and
regional
conditions
in
the
area
where the production unit is located must be taken
3.3.2. Production units which received aid to cover exceptional
into consideration. The Spanish government feels that
costs of closure
these social and regional criteria cannot be ignored.
However, it is willing to consider any terms which the
(54) As
stated
in
the
2003,
2004
and
2005
aid
reports,
the
Commission might suggest.
aid granted in 2003 to Antracitas de Gillón, ENCASUR,
ENDESA and PMC (before closure in 2004) and that
( 8 ) Sociedad Estatal de Ecónomia y Hacienda, created in 1996 under the
planned for 2004 and 2005 is aid for reduction of
responsibility of the Ministry for Economic Affairs and Finance.
activity. The aid granted to provide financial support

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for exceptional closure costs between 1998 and 2002 to
must be determined whether the measures are granted by
ENDESA and ENCASUR was justified at the time as aid
Member States or through state resources, whether they
to cover differences between general early retirement
favour certain undertakings, whether they distort or
payments and the 100 % paid by those undertakings.
threaten to distort competition and whether they are
The Spanish authorities provided letters of commitment
liable to affect trade between Member States.
to confirm the closure of the production units
committed for closure by the undertakings at the end
of 2005.
(61) The
first
condition
of
Article
87
refers
to
aid
granted
by
States or through state resources. In this particular case,
3.4. The Hunosa plan
the existence of state resources is demonstrated by the
fact that the measure is effectively financed by the public
3.4.1. Observations on the HUNOSA restructuring effort
budget of the State and to a lesser extent, by SEPI, a
publicly owned company fully controlled by the State.
(55) The
Spanish
authorities
provided
details
of
the
significant
level of restructuring undertaken in recent years and the
degree of compliance with the 2002-2005 plan. The plan
involves the closure of two production units, which
(62) The
second
condition
of
Article
87(1)
relates
to
the
entails a reduction of 700 000 tonnes in terms of
possibility of the measures favouring specific bene
extraction capacity.
ficiaries. It needs to be determined, firstly, whether the
beneficiary companies derive an economic benefit and,
secondly, whether this benefit is granted to a specific
3.4.2. Aid granted to HUNOSA in 2003-2005
type of company. The aid clearly provides economic
benefits for coalmining companies in that there is a
(56) The
Spanish
authorities
explained
that
the
volume
of
direct subsidisation which covers current expenses that
restructuring aid will be kept strictly within the limits
these companies would normally have to bear them
of the costs arising from the outsourcing of social obli
selves. These expenses consist of the difference between
gations and provided the appropriate explanations.
the production costs and the foreseeable revenue plus the
costs arising from the restructuring, and the coalmining
companies benefit from the fact that they are partly
(57) The
apparent
contradiction
between
the
significant
effort
compensated for these costs. Moreover, the measures in
made in reduction of costs and the less significant
question are aimed solely at coalmining companies in
degression in production aid basically arose from
Spain. They therefore favour certain companies over
changes in revenues as a result of international prices
their competitors, i.e. they are selective.
for imported coal and the US dollar/euro exchange
rate. The Spanish authorities provided detailed
information with regard to the calculations of the
revenues and explained why the revenues are in general
(63) Pursuant to the third and fourth conditions of
lower than the international price of imported coal.
Article 87(1), the aid must not distort or threaten to
distort competition or affect or be liable to affect trade
between Member States. In the case in hand, the
measures do threaten to distort competition as they
(58) The
Spanish
authorities
also
provided
detailed
expla
reinforce the financial position and scope for action of
nations on aid to cover exceptional costs arising from
the beneficiary companies compared with their non-
the restructuring process.
beneficiary competitors. Even if intra-Community trade
in coal is very limited and the companies in question
do not export, companies established in other Member
3.4.3. Information on the recruitment of specialist technical
States have less scope for exporting their products to the
staff
Spanish market.
(59) The
Spanish
authorities
pointed
out
that
hiring
of
such
staff is strictly subject to the need to cover essential
posts, particularly for safety reasons. However, it should
(64) For
these
reasons,
the
measures
in
question
fall
within
be noted that so far, during the first 2 years of imple
the scope of Article 87(1) of the Treaty and may be
mentation of the plan, no new recruitment has taken
considered compatible with the common market only
place. Nevertheless the Spanish authorities have, as a
if they meet the conditions for qualifying for one of
precautionary measure, put forward as a maximum
the derogations provided for in the Treaty.
estimated number of such recruitments no more than
100 employees.
4.2. Application of Regulation (EC) No 1407/2002
4. ASSESSMENT OF THE AID
(65) Given that the ECSC Treaty and Decision No
4.1. Application of Article 87(1) of the Treaty
3632/1993/ECSC both expired on 23 July 2002 and
having regard to Article 87(3)(e) of the Treaty, the
(60) To
determine
whether
the
scheme’s
measures
constitute
compatibility of the notified measures has to be
aid within the meaning of Article 87(1) of the Treaty, it
assessed on the basis of Regulation (EC) No 1407/2002.

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(66) Regulation
(EC)
No
1407/2002
lays
down
the
rules
for
4.3. Previous Commission decisions
the granting of State aid to the coal industry with the
aim of contributing to the restructuring of the industry.
(72) In its letter of 30 March 2004 the Commission
These rules take account of the social and regional
considered that the Spanish authorities had not clearly
aspects of the sector’s restructuring and the need for
stated that the conditions laid down in previous
maintaining a minimum quantity of coal production to
Commission decisions, in particular Decision
guarantee access to coal reserves. The process of restruc
2002/826/ECSC, which have been taken on the basis
turing of the coal industry must be continued, given the
of the ECSC Treaty, would be respected. This Decision
competitive imbalance between Community coal and
authorises the granting of aid on condition that the
imported coal.
production units in question are included in a closure
plan and that by 2005 they reduce the production
capacity by 1 660 000 tonnes. Spain has to respect
(67) In
accordance
with
the
principle
of
proportionality,
the
these conditions. The fact that the ECSC Treaty has
production of subsidised coal must be limited to what is
expired and Regulation (EC) No 1407/2002 has entered
strictly necessary to make an effective contribution to the
into force does not affect commitments made in the past.
objective of security of supply of energy. In this context
These commitments have to be fully respected and the
the Commission refers also to its Communication ‘A
Commission has to ensure the fulfilment of the
Sustainable Europe for a Better World: A European
conditions laid down in decisions taken on the basis of
Union Strategy for Sustainable Development’, also
the ECSC Treaty.
known as the Gothenburg Sustainable Development
Strategy, which aims to ‘limit climate change and
increase the use of clean energy’ ( 9 ).
(73) The
previous
closure/activity-reduction
plan
based
on
Decision No 3632/93/ECSC was approved by Decision
(68) Member
States
may,
in
accordance
with
Article
4
of
2002/826/ECSC. On several occasions, in several letters
Regulation (EC) No 1407/2002, grant aid for the
to the Commission, the Spanish authorities have accepted
reduction of activity. One of the conditions that have
that past commitments must be fully respected and have
to be fulfilled is that the operation of the production
explicitly confirmed that the decisions on the closure of
units concerned shall form part of a closure plan.
the production units listed in paragraph 18 of Decision
2002/826/ECSC will be implemented in accordance with
the rules in force. This means the closure, by 2005 at the
(69) Member
States
may,
in
accordance
with
Article
5(3)
of
latest, of a production capacity of 1 660 000 tonnes.
Regulation (EC) No 1407/2002, grant production aid to
Based on the information provided by the Spanish
an undertaking, intended specifically for production units
authorities, the Commission has been able to check
or to a group of production units. One of the conditions
that the reduction of this production capacity has
that have to be fulfilled is that the operation of the
indeed been achieved.
production units concerned or of the group of the
group of production units in the same undertaking
forms part of a plan for accessing coal reserves.
(74) The Commission considers that the production units that
have reduced their production capacity are the same as
(70) Member
States
may,
in
accordance
with
Article
7
of
those already included in the closure/activity-reduction
Regulation (EC) No 1407/2002, grant aid to cover excep
plan based on Decision No 3632/93/ECSC. These are
tional costs arising from the rationalisation and restruc
the production units which are mentioned in paragraph
turing of the coal industry that are not related to current
18 of Decision 2002/826/ESCS.
production, provided that the amount paid does not
exceed such costs. The categories of costs resulting
from the rationalisation and restructuring of the coal
industry are defined in the Annex to the Regulation.
(75) According to the previous Spanish closure/activity-
reduction plan, the production units Antracitas de
(71) In
its
letter
of
30
March
2004
the
Commission
expressed
Gillon SA, ENDESA underground and ENCASUR under
its doubts as to whether the notified restructuring plan
ground should have been closed by the end of 2002.
was in conformity with the conditions and criteria set
However, in 2003 and partially in 2004, these
out in Regulation (EC) No 1407/2002 and whether it
production units were still operating.
complied with the objectives of this Regulation. The
Commission considered that it needed a more detailed
plan. Following this letter Spain provided the
Commission on several occasions with detailed
(76) Following several requests by the Commission, the
information concerning the restructuring plan. On the
underground units of ENDESA and ENCASUR and the
basis of this new information the Commission will here
production unit of Antracitas de Gillon were closed
inafter assess the restructuring plan and the aid for the
down. The opencast production unit of Promotora de
years 2003, 2004 and 2005 granted on the basis of the
Minas de Carbon was also closed, on 31 March 2004.
restructuring plan.
The Commission has received letters of commitment
confirming the closure of the production units
( 9 ) COM(2001)264 final, p. 11.
committed for closure by these undertakings in 2005.

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(77) On
the
basis
of
the
information
provided
by
Spain,
the
company as a single underground production unit, and
Commission has verified that the aid granted to these
followed a similar approach with regard to opencast
companies under Article 5 of Decision No
workings. The application of Regulation (EC) No
3632/93/ECSC in order to cover the exceptional costs
1407/2002 is based on the concept of ‘production
of closure of these production units does not exceed
unit’. On 30 March 2004 the Commission expressed
the costs.
doubts as to whether this information was detailed
enough in view of the conditions laid down in
Article 9 of Regulation (EC) No 1407/2002.
(78) Since the required reduction of production capacity has
been achieved by the production units listed in paragraph
18 of Decision 2002/826/ECSC and since the production
4.4.1. Distinction between aid for the reduction of activity and
units that were supposed to close down according to that
aid for accessing coal reserves
Decision, have finally been closed down, the Commission
concludes that Spain has respected the previous
(83) Following the opening of the procedure, Spain has clas
Commission decisions.
sified the aid according to whether it was granted under
Articles 4 or 5(3) of Regulation (EC) No 1407/2002.
During the period 2003-2005, the following production
4.4. Aid for reduction of activity (Article 4) of Regu
units received aid under Article 4: Antracitas de Gillon
lation (EC) No 1407/2002) and aid for accessing coal
S.A., Coto Minera Jove S.A., the underground production
reserves (Article 5(3) of the Regulation)
unit of Endesa, the underground production unit of
Encasur, González y Díez S.A., Industria y Comercial
(79) In
its
letter
of
30
March
2004
the
Commission
stated
Minera S.A. (INCOMISA), Mina Escobal S.L., Mina la
that the Spanish authorities had notified the overall
Camocha, Minas de Valdeloso S.L., Promotora de Minas
amount of operating aid to be granted. However, the
de Carbón S.A. and Virgilio Riesco S.A. Mina Escobal S.L.
Spanish authorities have neither notified the total
closed down in 2004 and Promotora de Minas de
amount of aid to the reduction of activity as referred
Carbón S.A. closed down in 2005. Other production
to in Article 4 of Regulation (EC) No 1407/2002 nor
units that received aid for the reduction of activity are
the total amount of aid for accessing coal reserves as
the two production units of the publicly owned coal
referred to in Article 5(3) of that Regulation. In
mining company Hunosa that have been closed down,
addition the Spanish authorities did not shed any light
i.e. Pumarabule and Figaredo. Other production units
on the criteria to be fulfilled by the production units in
received aid for accessing coal reserves. These production
order to be able to apply for aid.
units are mentioned in paragraph 21.
(80) Another of the Commission’s doubts concerned the fact
(84) On
the
basis
of
the
latest
information
received,
the
that the Spanish authorities had not defined the total
Commission therefore comes to the conclusion that the
production capacity that should be closed neither by
Spanish authorities have correctly divided the production
31 December 2005 or by 31 December 2007 as a
aid in aid for the reduction of activity and aid for
result of the closure plan, as required by Articles 4(a)
accessing coal reserves. In addition, the Spanish
and 9(4) of Regulation (EC) No 1407/2002 as one of
authorities have confirmed that the condition laid
the conditions to be fulfilled in order to qualify for aid to
down in Article 4(a) of Regulation (EC) No 1407/2002,
the reduction of activity. The estimated amount of aid
which states that production units that receive aid for the
can only be granted if the total reduction of capacity is
reduction of activity will close down by 2007 at the
notified.
latest, will be fulfilled.
(81) With
respect
to
the
production
capacity
and
minimum
4.4.2. Criteria to be applied
production level to guarantee access to coal resources, in
its letter to Spain of 30 March 2004, the Commission
(85) The
Commission
takes
note
of
the
fact
that
concerning
considered that the justification did not seem to comply
the criteria for eligibility for production aid, the Spanish
with the purpose of Article 1 of Regulation (EC) No
authorities have informed the Commission that the main
1407/2002. The plan for accessing coal reserves and
criterion that they will apply is the cost of production
aid for accession coal reserves should be justified on
per tce. This criterion is in line with Article 5 of Regu
the grounds of the need to maintain a minimum
lation (EC) No 1407/2002, as it can be considered as a
quantity of coal production to guarantee access to
clear indication that the aid will be granted to the units
reserves. The social and regional aspects of the restruc
with the best economic prospects.
turing of the sector can only be used as justification for
the closure plan and for the aid for the reduction of
activity.
(86) As
supplementary
criteria,
the
Spanish
authorities
apply
the criterion of the existence of a market, i.e. that there
should be a functioning power station within a 100 km
(82) The Spanish authorities have provided information
radius, and the solvency of the undertaking which owns
concerning the costs of production units. For each
the production unit. In this regard, a minimum
company, except Hunosa, Spain has defined the under
proportion between the undertaking’s capital and total
ground workings and related infrastructure of each
liabilities could be required. The latter criterion will

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contribute to the granting of aid to the units with the
accessing coal reserves. These criteria are in accordance
best economic prospects. The former has to be used
with Regulation (EC) No 1407/2002, in particular with
purely as a supplementary criterion. Because of
Articles 4(a) and 9(6)(a) thereof.
considerations of security of energy supply and also for
financial reasons, as there is a link with the transport
costs, the location can be taken into account, but must
not be the main factor to be taken into consideration.
(91) In this respect,
the Commission would remind the
Overall, the Commission considers that the criteria being
Spanish authorities that the social and regional
applied by the Spanish authorities are in line with Regu
situation cannot be taken into account when deciding
lation (EC) No 1407/2002.
on the strategic reserve to be maintained. Social and
region conditions can only be taken into account when
applying the conditions linked to the granting of aid for
the reduction of activity and aid to cover the exceptional
(87) Based on the information provided by the Spanish
costs of the restructuring process.
authorities, the Commission has checked the definition
of ‘production unit’ as used in the restructuring plan. In
the past, Spain carried out the analysis of the aid at
undertaking level, und underground coal workings were
4.4.3. Calculation of the revenues
calculated together with opencast workings. Spain has
now changed this analysis and it checked the aid per
(92) The Spanish authorities have provided detailed
production unit as defined in Regulation (EC) No
information on coal prices. In the additional information
1407/2002. Furthermore, in this respect, Spain has
provided by the Spanish government, it was explained
provided the Commission in this respect with the
that the State aid paid by the Spanish government was in
information required by Decision 2002/871/EC.
fact the difference between the production costs and the
Therefore, the Commission considers that the definition
average sales price of Spanish coal, which was lower than
of ‘production unit’ which Spain has used in its restruc
the average price of coal imported from third countries.
turing plan is in accordance with the Regulation.
This is mainly due to the lower quality of Spanish coal
and to a lesser extent also to the fact that the prices are
determined in long-term contracts while the price of
imported coal is a spot price of coal on a given day.
(88) The Commission takes note of the fact that the restruc
turing plan will result in a production capacity of
12 million tonnes. In view of the overall energy
situation in Spain, in particular the intention of the
(93) The
Spanish
authorities
have
explained
that
in
practice
Spanish authorities to reduce the share of coal in elec
the influence of the variation between the international
tricity production from 35,9 % to 15 % in 2011, the
price and the price of national coal is delayed by
reduction of capacity to 12 million tonnes appears to
approximately 9 months. On the other hand, the
be an appropriate measure which will help to reach
quality of the coal appears to be substantially lower
that target. Therefore, this level of production capacity,
that that of the coal being traded on the international
to be achieved by the end of 2005, can be considered as
market. This results in a much lower price for national
coal. The price paid differs per power plant, because coal
a strategic reserve in accordance with Regulation (EC) No
mined at different units differs in quality. For example,
1407/2002. Consequently, the production units that fall
the calorific value of coal can vary between 7 % and
under the part of the restructuring plan that concerns
35 % depending on the site where it has been extracted.
access to coal reserves are presumably eligible for aid

for accessing coal reserves, provided that the conditions
in Article 4 and 5 of the Regulation are fulfilled.
(94) In
general
Spanish
coal
is
of
inferior
quality,
because
of
high ash and water contents and/or due to a low volatile
content. There is no world market for low-quality coal,
(89) Furthermore,
the
main
criterion
and
the
cornerstone
of
as all coal-producing countries use their low-quality coal
the Regulation, that the aid has to be digressive, has been
close to the mining site. The use of these types of coal in
complied with. The aid, granted under Articles 4 and 5
power plants generates higher investment and main
of Regulation (EC) No 1407/2002, has been reduced by
tenance costs for the power plant owners, as not only
4 % annually. The Commission considers that such a
do they have to install special burners, which are more
reduction can be accepted. The Commission has taken
expensive to maintain and use, but the efficiency of these
into account that the Spanish authorities have announced
power plants is also lower than the efficiency of plants
that it is intended to continue reducing the aid by 4 %
using normal coal.
annually for the years 2006 and 2007.
(95) The
Spanish
authorities
have
explained
that
it
is
not
(90) In view of the above, the Commission considers that the
economically viable to improve the quality of the coal
Spanish authorities have sufficiently clarified the criteria
so much that it would become comparable to imported
applicable to the production units for them to be eligible
coal, as the production process would become much
either for aid for the reduction of activity or aid for
more expensive and less competitive.

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(96) Since
1998,
the
selling
price
of
coal
has
been
determined
authorities is based on all the contracts that are in force
via direct negotiations between the coal-producing
on a given day, including long-term contracts. As a
production units and the coal-fired power plants,
result, the Spanish price tends to be lower than the
without any intervention by the administration. The
spot price in periods of increasing spot prices and
administration can intervene only in case of serious
higher than the spot market price in periods of
conflicts. As evidence of the price paid to the coalmining
decreasing spot market prices. The long-term average of
companies, the Spanish authorities have provided the
the two indices is roughly equal: for the years 1996 to
contracts between some electricity companies that have
2004, the average MCIS Steam Coal Marker Price was
power plants fuelled with coal. The calculation of the
43,3 euro/tce. The Commission thus considers that the
price of coal includes a formula with regard to the
Spanish calculation of the price of hard coal does indeed
quality of coal in which, among others factors, content
accurately reflect the world market price for steam coal.
of volatile materials, ash, moisture and sulphur and the
calorific value are taken into account.
(101) Based on the above-mentioned parameters, in 2001 the
average price was EUR 45,85 and the forecast for 2005
(97) Coal
prices
in
Spain
are
based
on
long-term
contracts
was EUR 36. Revenues in 2001 were exceptionally high,
between the coalmining companies and their clients.
mainly due to the gross accounting of some exceptional
The contracts currently in force are valid up to
and atypical revenues for that year. As a consequence, a
31 December 2005. Prices are based on the following
reduction of 20 % in production costs has not resulted in
parameters:
an equal reduction of the total amount of production aid
to be granted for the period 2003-2005.
— Prices CIF ( 10 ) in US dollars for each period of coal
imports form third countries to the EU, expressed in
US dollars/tce and published by the EU.
(102) The total aid is established after presentation by each
production unit of its audit report, which contains the
figures of the production costs and the revenues. When
— The exchange rate between the US dollar and the
afterwards at the end of a coal year it appears that the
euro in the same period in order to establish the
difference between production costs and revenues has
price CIF in US dollars in its equivalent in euro.
been lower than forecasted, the total amount of aid
The dollar/euro exchange rate rose from 0,8955 in
will be reduced and the excessive aid will have to be
2001 to 1,25 in 2005.
reimbursed.
— In order to determine the price at the power plant,
(103) In the light of the foregoing, the Commission considers
the costs of transport between port and power plant
that Spain has explained in a detailed way how the
is deducted from the resulting price in euro since the
revenues of the coalmining companies have been
CIF price is the price to be paid for delivery in ports.
calculated. The information provided has convinced the
Commission that the right prices of coal have been used
in the calculation of the revenues. On the basis of the
— Finally, a quality correction, which is explained
information provided, in particular the contracts between
below, is applied.
power plants and coalmining companies, the
Commission has come to the conclusion that
Article 4(b) and (c) of Regulation (EC) No 1407/2002
(98) Spain
calculates
the
average
prices
for
imports
of
hard
have been respected in the sense that the production aid
coal to Spain. The calculation of these average import
has not exceeded the difference between the production
prices is based on statistic data provided by coal-
costs and the revenue for the respective years and the aid
importing companies in Spain and coal exporting
will not cause the prices of Community coal delivered to
companies from third countries.
be lower than those for coal of a similar quality from
third countries. The Commission will monitor closely to
ensure that in the new contracts to be negotiated
(99) In
order
for
this
system
to
function
properly,
it
is
crucial
between power plants and coal-mining companies from
that the prices calculated for hard coal do indeed reflect
1 January 2006, the currently high world market price of
the world market price for coal. In order to verify this,
coal will be duly taken into account in the calculation.
the Commission compared this price to the MCIS Steam
Finally, the Commission notes that the conditions laid
Coal Marker Prices, which is the standard reference index
down in Article 4(d) and (e) have also been respected.
for the spot market prices for coal.
4.5. Aid to cover exceptional costs (Article 7 of
(100) The Spanish authorities explained the differences between
Regulation (EC) No 1407/2002)
the MCIS Steam Coal Marker Price and the average price
as calculated by them by pointing out that the former is
(104) In its letter of 30 March 2004, the Commission
based solely on the contracts concluded on a given day
considered that the Spanish authorities had not clarified
in the spot market, whereas the price calculated by the
the criteria to be taken into account when granting aid
on the basis of Article 7 of Regulation (EC) No
( 10 ) Cost, insurance and freight.
1407/2002 to cover exceptional costs that are not

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related to current production (inherited liabilities). By
4.6. Hunosa plan
letter of 3 October 2003 Spain notified the Commission
that these aids would be granted exclusively to
(107) With regard to Hunosa the Commission underlined in its
production units which were to close in the period
letter of 30 March 2004 that this company formed part
2003-2005 and that the amount of aid would not
of the closure plan that was based on Decision No
exceed the costs. However, Ministerial Order
3632/93/ECSC. Due to social and regional reasons,
ECO/2731/2003 of 24 September 2003 did not
however, the closure would take place after 2002. The
explicitly contain these conditions. The aforementioned
production costs of this company are very high
Order did not contain sufficient guarantees to ensure that
compared with those of other coalmining companies in
the aid to cover the costs of the closure of production
the Community. The Commission considered that the
units would not exceed these costs and that the
reduction in workforce and in production were below
production units concerned would be closed before
the European average. The Plan provides for the closure
31 December 2005. The Commission considered that
of two of the nine production units. In its letter of
the criteria laid down by Spain to calculate the aid to
3 October 2003, Spain announced a further reduction
cover the costs of closure of production units, based on
in production costs of 20 % amounting to a 25 %
the reduction of the provisioning of coal as laid down in
reduction of aid in 2005. The reduction of production
the contracts with the power plants and on aid of EUR
costs announced by Spain in its letter of 3 October 2003
13 for each thousand therms reduced, was not a
would result in a further reduction of aid to Hunosa of
sufficient guarantee for compliance with the conditions
EUR 179 460 750 in 2005.
of Article 7 of Regulation (EC) No 1407/2002. The
Commission also noted that the amounts of aid based
on this Article seemed to be very high and the question
(108) In its letter of 30 March 2004, the Commission
arose whether the proposed aid in this respect was not
considered that the proposal to reserve 30 % of the
too high in relation to the intensity of the restructuring
coal consumption (equivalent to approximately 100
process.
days of consumption) for the power plants in the
region, might be considered as incompatible with the
common market with regard to Hunosa.
(105) On the basis of the newly received information, the
4.6.1. The restructuring process of Hunosa
Commission notes that Ministerial Order
ECO/2731/2003 has been amended in order to bring it
(109) The Spanish authorities have confirmed their intention of
into line with the requirements of Article 7 of Regulation
continuing the restructuring process of Hunosa in line
(EC) No 1407/2002. Now the order only applies to
with Regulation (EC) No 1407/2002 in order to reduce
production units which close before 31 December
significantly the aid amounts, the production capacity
2005. Concerning the compensation of EUR 13 per
and the workforce as required. These restructuring
thousand therms for coal contracts cancelled as a result
measures have to be assessed against the background
of closure of the production units, the order has made it
of the social and regional importance of Hunosa in the
clear that that amount is a maximum and that only duly
Autonomous Community of Asturias.
substantiated actual costs of closure will be paid for. In
this respect, the Spanish authorities have declared that
over 2004 they have granted less aid. Concerning
(110) The Spanish authorities have provided the Commission
2004, the aid to cover exceptional costs actually
with detailed information concerning the restructuring
granted amounted to EUR 518 986 instead of the fore
process of Hunosa, the costs and revenues, the
casted EUR 555 227.
prospects and the amounts of aid to be granted.
(111) The plan contains the following elements:
(106) The Commission considers that Spain has given a
sufficient explanation of the exceptional costs linked to
the restructuring process to be covered. Spain has
— reduction of the workforce by 33,6 %;
specified the amounts to be granted per category as
mentioned in the Annex to Regulation (EC) No
— reduction of the production capacity by 25 % and the
1407/2002. Therefore, the Commission has been able
closure of two production units; Pumarabule and
to check that the amounts, which are mainly linked to
Figaredo (a reduction of 700 000 tonnes);
pre-retirement schemes, do not exceed the costs and the
aid to cover the exceptional costs of the restructuring can
be approved. Seen against the background of the
— closing of a washery;
reduction in workforce, the closure of mining capacity
and the digressive trend of granting of production aid,
the information provided by the Spanish authorities has
— increase of productivity by 21,4 %;
convinced the Commission that the costs to be covered
are not too high in relation to the intensity of the
restructuring process. In the following chapter, a
— reduction of production by 26,1 %;
separate assessment will be made of the aid to cover
the exceptional costs of the restructuring process
granted to the publicly owned company Hunosa.
— reduction of the production costs by 20 %;

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— reduction of total aid by 25 % during the period
irregular, mechanisation is difficult. Moreover, the
2003-2005, compared to a reduction of 12 % in
restructuring process, in particular the significant
the 4 previous years.
reduction of the workforce and the large number of
workers being retired early does not contribute to the
optimisation of production costs. Nevertheless, Hunosa
(112) Since 1986, the date of accession of Spain to the
has achieved a reduction in production costs by
Community, the data concerning the restructuring
improving management and focusing production in the
process are as follows:
units where mechanisation and technical mining were
easiest to achieve with the lowest costs. Thanks to the
use of other tools, the mechanisation and computeri
— 71,9 % reduction in the workforce of the companies
sation currently under way and the modernisation of
Hunosa and Minas de Figaredo, from 21 911 workers
installations and production processes, productivity has
in 1986 to 6 151 in 2001;
improved. This approach will lead to a further reduction
of production costs in the future.
— 47,3 % reduction in production capacity with regard
to underground mines;
(118) The Commission however notes that the 20 % reduction
in production costs during the period 2001-2005 has
not resulted in a 20 % reduction in production aid.
According to the Spanish authorities, this is due to the
— 53,3 % reduction in production;
differences in revenue between 2001 and 2005. In 2001
the average revenue was much higher than the average
revenue in 2005, which was EUR 37/tec.
— 40 % reduction of the total amount of production aid
since 1992 in current terms and 56 % in constant
value;
(119) The Spanish authorities have provided detailed expla
nations with regard to these revenues of Hunosa. The
price is established in long-term contracts, to a large
(113) During the period 1998-2004, the aid to Hunosa was
extent freely negotiated between Hunosa and its clients,
reduced by 32 % (adjusted value), which is above average
in a liberalised market.
in the Spanish mining sector, where the overall reduction
was 25,7 %. Since 1992, the total amounts of aid to
Hunosa have been reduced by 54 % in adjusted value
(120) On the basis of the newly-received information, the
and 69 % in constant value.
Commission considers that the apparent contradiction
between the significant efforts made to reduce costs
and the less significant degression in production aid
(114) Furthermore, it appears that the Spanish authorities have
basically arose from changes in income as a result of
continued the restructuring process of Hunosa beyond
international prices for imported coal and the dollar/euro
the restructuring plan for 2003-2005. In 2003, the
exchange rate. As explained in Chapter 4.4.3 on the
production aid actually granted was EUR 264 480 000,
calculation of the revenues, the revenues for the period
while that forecast was EUR 271 593 000, which means
2003-2005 were lower than for 2001. Based on the
an additional reduction of 2,6 %. The aid to cover excep
information provided in this respect by the Spanish
tional costs of restructuring amounted to EUR
authorities, in particular in the contracts between
240 689 000, while the forecast was EUR 302 557 000,
Hunosa and the five power plants that are fuelled with
which means a reduction of 20,4 %.
coal from Hunosa, the Commission has been able to
check that the right figures have been used in the calcu
lation of Hunosa’s revenues.
(115) With regard to the year 2004, production fell to
1 070 000 million tonnes, which is a further reduction
of 20 % with respect to the plan. By the end of 2004, the
4.6.2. Aid to Hunosa for reduction of activity
number of workers had fallen to 4 137. The total
amount of production aid actually granted in 2004
(121) The aid granted in the past for the reduction of activity
was EUR 254 682, instead of the forecasted EUR
concerns the production units of Hunosa that have been
247 483, a further reduction of 2,8 %.
closed. In this respect, the Commission considers that,

also as regards Hunosa, previous Commission decisions
have been respected.
(116) At the end of 2005, a workforce of 3 500 is expected.
This is a reduction of 14 %, which goes beyond the plan.
4.6.3. Aid to Hunosa for accessing coal reserves
(122) The Hunosa Plan provides for the closure of the Puma
(117) The fact that the production costs for Hunosa are so high
rabule and Figaredo mines, which means an irreversible
is mainly due to the physical characteristics of the mines.
reduction of capacity by 700
000 tonnes. The
The density of coal is very low, so for mining a large area
Commission understands that the other production
has to be covered which requires a high level of infra
plans can be assumed to form part of the plan for
structure. Because of this low density, which is also
accessing coal reserves. However, the Spanish authorities

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have indicated that this might be subject to changes in
(EUR thousand)
the period after 2005. The Commission can accept this
2003 2004 2005
view, because this leaves a margin for a further reduction
in the total amounts of aid granted in the years after
Safety work, costs 11 684 11
984 13
766
2005.
related to the rehabili
tation of former coal
mining sites
(123) In order to explain why the production of Hunosa forms
Exceptional intrinsic 9 514 10
902 22
905
part of the plan for accessing coal reserves, the Spanish
depreciation
authorities refer to the accessibility of the reserves from a
technical viewpoint, the demand of the power plants
Total technical costs 21
198 22
886 36
638
located nearby, the quality of the coal and the needs of
power plants equipped with technical installations suited
to the quality of the coal produced at Hunosa. The
Costs of pre-retirement 277
969 273
019 247
300
Commission notes that Spain has abandoned the
criterion of a 100-day supply for the nearest power
Indemnities 3
005 2
705 2
404
plant. As explained by the Spanish authorities, this was
merely a hypothetical example and was never meant to
Supply of coal 385 373 361
be used as a criterion. However, the fact that it is an
example does not detract from the fact that the Spanish
authorities have taken the decision that Hunosa’s reserves
Total social costs 281
359 276
097 250
065
should cover a certain percentage of the demand of the
power plants located in the same area. In view of the
Total 302
557 298
983 286
203
flexibility of this criterion, the Commission notes that the
Spanish authorities can be expected not to infringe the
free movement of goods.
(126) Hunosa’s forecasts concerning pre-retirements for the
period 2002-2005 are for 2 622 workers with a cost
of approximately EUR 417 000 each. These costs can
(124) Following the reasoning of the Spanish authorities, the
vary, as has been shown with regard to the year 2003.
Commission considers that the production of
The aid actually granted was 20 % less than that fore
approximately 1 million tonnes in 2005 can be
casted.
considered to form part of the strategic reserve of coal
production the Spanish authorities would like to
maintain. The Commission agrees with the Spanish
analysis that the 2003-2005 Hunosa Plan constitutes a
(127) In accordance with Article 1 of Regulation (EC) No
transitional but essential means of determining at a later
1407/2002, the Commission has taken account of the
stage the production units which will be included in the
fact that in the affected area, Hunosa provides 20 % of
new plan for the period 2006-2010 concerning accessing
direct employment and that it is difficult to create alter
coal reserves. In view of the significant reduction of both
native employment as 18 000 jobs have already been
production and amount of aid, the plan is in accordance
created since 1986. Hunosa is economically and
with the conditions laid down in Regulation (EC) No
socially very important for the Autonomous
1407/2002 and constitutes a useful basis for continuing
Community of Asturias. The Commission understands
the restructuring process. As Hunosa’s reserves are
that Spain needs time to develop other alternative
needed to achieve a total coal production of 12 million
economic activities in the region.
tonnes in 2005, the Commission can accept that the
reserves from Hunosa will, during the period 2003-
2005, form part of the plan for accessing coal reserves.
However, the Commission reminds the Spanish
(128) On the basis of the information provided by the Spanish
authorities that the plan for accessing coal reserves, in
authorities, the Commission considers that this aid fulfils
particular Hunosa’s place in this plan in view of its high
the conditions of Article 7 of Regulation (EC) No
production costs, will have to be reviewed for the period
1407/2002. The aid covers the measures mentioned in
2006-2010. Hunosa’s production and possible subsidies
the Annex to the Regulation and does not exceed the
will have to be reduced substantially during this period.
costs.
4.6.4. Aid to cover exceptional costs of the restructuring
4.6.5. Hiring new employees
process to Hunosa
(129) According to the information provided by Spain, it
(125) The Spanish authorities have provided detailed
appears that in the period 2003-2005 no new
information concerning the aid to cover the exceptional
recruitment of miners took place. The Commission is
costs of the restructuring process, referred to Article 7 of
satisfied with this approach and reminds the Spanish
Regulation (EC) No 1407/2002, and have broken down
authorities that this is an important factor when
the costs into technical and social costs as shown in the
assessing the compatibility of the restructuring
table below.
measures, both now and in the future.

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4.6.6. Conclusion on Hunosa’s restructuring plan
remain very high. Even though world market prices have
risen, the unfavourable economic position of Spanish
(130) The Commission considers that Hunosa has made
coal compared to imported coal will not significantly
significant efforts to restructure and that, in this stage,
change over the coming years.
in view of its social and regional importance, it would
not be reasonable to ask for stricter measures. Therefore,
the Commission concludes that the restructuring plan for
Hunosa is in accordance with the purpose and provisions
of Regulation (EC) No 1407/2002. The aid was granted
(134) The Commission considers that the data submitted and
with a view to contributing to the restructuring process
framework outlined for 2006 and 2007 constitute a
and took account of the social and regional aspects of
good approach containing all the necessary conditions.
Hunosa’s position in the Autonomous Community of
Spain has guaranteed that it will continue to reduce both
Asturias. The doubts expressed by the Commission
production and the total amount of aid for these years at
when the procedure was opened, in particular concerning
the same pace as for the years 2003-2005. The
the calculation of the amounts of aid granted and the
Commission therefore accepts the current level and
criteria to be taken into account, were dispelled by the
relevance of the information provided by Spain for
Spanish authorities, since the authorities provided addi
2006 and 2007. The detailed data concerning the total
tional detailed information and took additional restruc
volume of aid in accordance with Articles 4 and 5 of
turing measures which go beyond the restructuring plan
Regulation (EC) No 1407/2002 for the period from
initially notified. However, the Commission would
2006 to 2007 will be submitted by Spain at a later
remind the Spanish authorities that Hunosa’s position
stage, together with the restructuring measures for the
in the light of the new restructuring measures and the
period up to 2010. The Commission considers that
plan for accessing coal reserves for the period 2006-
this timetable is justified in view of the social and
2010 should be reconsidered and that new restructuring
regional implications of the closure of the production
measures are necessary.
units, taking into account the fact that Spain has
explicitly stated that it will meet the condition that the
aid must also follow a downward trend in the period
after 2005. This last element is crucial to the
4.7. General assessment of 2003-2005 restructuring
Commission’s assessment, since the ultimate purpose of
plan
the framework established by the aforementioned Regu
lation is to guarantee a final significant reduction of the
(131) The restructuring plan contains the elements of the plan
aid granted to the coal industry.
for accessing coal reserves referred to in Article 9(6) of
Regulation (EC) No 1407/2002 and the closure plan
referred to in Article 9(4) of that Regulation. The
Commission can therefore take a favourable decision
on the proposed plans pursuant to Article 10(1) of the
(135) Spain has chosen to continue the system of granting aid
Regulation. At the same time, on the basis of
used in the past. On the one hand, the restructuring
Article 10(2) of the Regulation, the Commission can
measures are in the interest of the security of supply of
take decisions on the annual aid which the Spanish
energy and on the other hand these measures allow a
authorities have granted or intend to grant to the coal
continuation of the restructuring process. The notified
industry for the years 2003, 2004 and 2005. When
amount of the aid is necessary, because it ensures
deciding on the conformity of this aid, the Commission
access to coal reserves and the reduction of the coal
has to take into account the conditions and criteria set
mining activity, which is considered essential. Without
out in Articles 4 to 8 and the compliance with the
aid, production would have to be stopped in Spain as
objectives of this Regulation.
coal mining is not competitive.
(132) The Commission considers that, in accordance with the
(136) The Commission considers that the estimated volume of
restructuring measures notified by Spain, the reduction in
production capacity, fixed at 12 million tce for 2005 in
State aid will lead to a further permanent reduction in
Spanish energy supply, can be justified in the light of its
coal production. In accordance with Article 6 of Regu
security of supply policy and its overall energy policy. In
lation (EC) No 1407/2002, the overall amount of aid is
this assessment, the Commission has taken account of
following a downward trend and does not exceed, for
the fact that Spain will increase the percentage of
any year after 2003, the amount of aid authorised by the
renewable energies in its energy mix for the period up
Commission for the year 2001. Regarding the access to
to 2010.
coal reserves, as laid down in Article 5(3) of the Regu
lation, Spain proposes that, in 2005, access to coal
reserves should be guaranteed with a total capacity of
12 million tce. To achieve this goal, the production
capacity has been reduced by 1 600 000 tonnes.
(137) Given that the restructuring measures notified will have
important consequences for the job market, in assessing
the plan the Commission has taken into account the
need to minimise, as far as possible, the social and
(133) Although the average production costs in the Spanish
regional effects of the restructuring of the Spanish coal
coal industry have fallen slightly, production costs
industry.

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(138) On the basis of the notification, the Commission
2004 in breach of Article 88(3) of the Treaty.
considers that the planning for the Spanish coal
However, after analysing the measures and the
industry is based on the following objectives: degressivity
information submitted by Spain on the basis of
of the financial aid required, reduction of production and
Article 10 of Regulation (EC) No 1407/2002, the
production costs, ensuring supplies to customers of
Commission finds the restructuring plan for the coal
appropriate quality and in good time, a socially
industry for the period 2003-2005 and the State aid
acceptable reduction in employment and consideration
for the years 2003-2005 based on the restructuring
of the regional effect of the measures.
plan to be compatible with the common market. Spain
is therefore authorised to pay the aid,
(139) The Commission therefore concludes that the Spanish
restructuring plan for 2003-2005 is detailed and offers
a good approach, with the necessary conditions in place,
HAS ADOPTED THIS DECISION:
for 2006 and 2007. In addition, the plan offers an
accurate overview of the role of coal in energy policy
and environmental policy in the context of the supply of
Article 1
primary energy until 2010.
The restructuring plan for the coal industry and the State aid for
the years 2003-2005 applied by Spain for the years 2003 and
(140) In the light of the above and taking into account that
2004 are compatible with the common market within the
measures have been taken which go beyond the restruc
meaning of Article 87(3) of the EC Treaty. Spain is therefore
turing plan as initially notified, the Commission takes the
hereby authorised to pay the aid.
view that the plan submitted by Spain is compatible with
the objectives and criteria of Regulation (EC) No
1407/2002, in particular with the criteria laid down in
Article 9(4) and (6) thereof. As the aid for the years
Article 2
2003, 2004 and 2005 has been granted or will be
granted on the basis of and in line with the restructuring
This Decision is addressed to the Kingdom of Spain.
plan, the Commission concludes on the basis of
Article 10(2) of the aforementioned Regulation that
this aid has been granted in accordance with the Regu
Done at Brussels, 21 December 2005.
lation.
5. CONCLUSION
For the Commission
(141) The Commission finds that Spain has unlawfully granted
Andris PIEBALGS
State aid to the coal industry for the years 2003 and
Member of the Commission

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