Annexes to COM(2000)685 - Monitoring of Article 95 ECSC Steel Aid Cases, Fourteenth Report, October 2000

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dossier COM(2000)685 - Monitoring of Article 95 ECSC Steel Aid Cases, Fourteenth Report, October 2000.
document COM(2000)685 EN
date October 31, 2000
agreement (negotiated redundancy).

3 These figures do not correspond to the net reduction in the workforce given in the previous table because the companies have hired some new employees.

In 1999 PTE 29.79 million in social aid authorised under Article 4 of the Sixth Steel Aid Code was disbursed.

IV. Sales

The sales of billets on the Portuguese market by SN Serviços go exclusively to SN Longos. Prices for these products are fixed on normal market conditions for a period of three months. Residual steel production is sold on the market against market prices (Metal Bulletin spot prices). The average prices achieved by the different product groups were given in the monitoring report. The Commission has compared these prices with the average market prices and considers them to be within the normal range.

V. Financial performance

SN Serviços

The Portuguese authorities provided a full set of financial data and financial ratios in line with the Annex to the Commission's Decision. As set out in the 13th Report, SN Serviços made losses in 1998 and 1999 due to a general collapse of steel prices. However, financial results improved in the second semester of 1999 due to a improvement of steel prices as from the second half of 1999. Despite improved steel prices in the first semester of 2000 the company could not return to profitability in this period due to technical reasons: SN's obsolete installations have been out of order for at least 20 days during the monitored period.

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* provisional figures

VI. Aid

The aid authorised under Article 95 of the ECSC Treaty has been paid in six instalments between March 1994 and June 1995 as explained in the fourth monitoring report. The environmental aid approved under Article 3 of the Fifth Steel Aid Code has not so far been paid. The use of the social aid approved under Article 4(1) of the Fifth, respectively the Sixth Steel Aid Code is explained above under II.3 (financing of redundancies).


EKO Stahl GmbH, Germany

I. Introduction

On 21 December 1994 the Commission authorised [12] DEM 900.62 million [13] aid to EKO Stahl GmbH under Article 95 of the ECSC Treaty (see details in the previous monitoring reports).

[12] OJ L 386, 31.12.1994, p. 18.

[13] 1 EUR = 1,95 DEM. Total amount 462 million EUR

On 21 December 1994 the Commission further approved [14] regional investment aid of DEM 385 million [15] under Article 5 of the Fifth Steel Aid Code.

[14] OJ C 18, 17.1.1997, p. 7

[15] 197 million EUR

Authorisation of the aid was subject to several conditions. The following conditions are still monitored by the Commission:

- the new hot-rolling mill to reach a capacity of 900 kt/y by the end of 1997 and to be kept at that level until the end of January 2000. As from February 2000, the company is allowed to increase the capacity of this mill to 1,5 mio tonnes/year until the end of January 2005 (monitored, see II),

- the output of the new hot-rolling mill to be used only for further processing in the company's own cold-rolling facilities (so far observed).

The present report covers developments up to 30 June 2000 on the basis of the information provided by the German Government in its report submitted to the Commission on 14 March 2000. The present report concentrates on the two conditions still monitored by the Commission.

II. Capacity limitation

Limitation of the capacity of the new hot-rolling mill to 900 kt/y up until the end of January 2000 and thereafter to 1.5 million t/y up until the end of January 2005 is guaranteed by an electronic device that makes it technically impossible to exceed those ceilings. This technical solution was accepted in principle by the Commission in early 1996. For further details on the system, see the fifth monitoring report. The system has operated reliably and the records of the quantities produced have been regularly submitted to the Commission.

The authorised capacity increase as from February 2000 posed technical problems to the company as the electronic device is adjusted for the capacity year, which runs from July to June. On 15 March 1999 the Commission therefore agreed to a proposal from the German authorities that the production from July 1999 until July 2000 would be counted using the average production of the two thresholds which results in a yearly capacity of 1,150 million t for the capacity year July 1999 - June 2000 [16]. The machine has been adapted accordingly on 1 July 1999 and has been adjusted to 1,5 million t/y by 1 July 2000.

[16] details see 13th Report.

III. Production of the new hot-rolling mill

Hot-rolled strip produced in the new hot-rolling mill is used exclusively in the cold-rolling mill.

The production of hot rolled strip amounted to 1,149,981 tonnes in the period 1 July 1999 - 30 June 2000 which implies that, over the capacity year 1999-2000 the capacity limitation has been complied with.


Voest Alpine Erzberg GmbH, Austria

I. Introduction

On 29 November 1995 the Commission approved [17] state aid to Voest Alpine Erzberg GmbH (VAEG) to enable it to close down its mining operations gradually up to the year 2002. Approved aid amounts to ATS 272 million to cover operating losses over the period 1995-2002 and ATS 136 million [18] to cover the costs of closing down mines safely and in an environmentally friendly manner.

[17] OJ L 94, 16.4.1996, p. 17

[18] 1 EUR = ATS 13,703. ATS 272 million = 19,76 million EUR; ATS 136 million = 9,88 million EUR

The following annual ceilings were approved for the different types of aid are indicated below in the table under point 4.

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

- the annual aid ceilings and the production ceiling as given in the table above were not to be exceeded (so far observed; see under II.2.a),

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

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

This report covers developments up to 30 June 2000 on the basis of information provided by Austria in its eighth monitoring report, which was submitted, in line with the Commission's request, on 14 September 2000.

II. New monitoring report

1. The company

The company Voest Alpine Erzberg Gesellschaft mbH (VAEG) is held by ÖIA Bergbauholding Aktiengesellschaft, which in turn belongs to Österreichische lndustrieholding Aktiengesellschaft, an industrial holding company wholly owned by the Austrian State. VAEG is involved in the mining of low-density iron ore (~32 % Fe). The company has only one client, Voest Alpine Stahl AG (VASA), which was privatised in the autumn of 1995.

2. Operating aid

(a) Production and sales

In the first semester of 2000 VAEG produced 0,471 million tonnes of iron ore with an average content of 33.6% Fe and 0,383 million tonnes of low grade products which VASA can use for the blast-furnace burden (Möllerzusatzmaterial). These quantities were sold and delivered to VASA.

As in 1999, the ceiling for 2000 is 1 million tonnes of iron ore (cf. Article 1 of the Decision). In 1999 VAEG produced and sold 1,149,000 tonnes of iron ore. This was however due to unforeseen natural circumstances beyond control of VAEG and the Austrian authorities [19]. On 13 June 2000 the Commission agreed with the proposal of the Austrian authorities that the surplus of 149,000 tonnes would be deducted from the authorised production in 2000, which will therefore be only 851,000 tonnes.

[19] Details see 13th monitoring Report, p. 17

(b) Production costs

The production costs for the standard-grade iron totalled ATS 74,088 million, i.e. ATS 157,44 per tonne in the first semester of 2000. The production costs for the low grade products totalled ATS 29,114 million in the period under review, i.e. ATS 76 per tonne. The total amount of ATS 114,592 million includes closure and rehabilitation operations carried out in the first semester of 2000. A detailed overview of production costs is given in the Annex.

(c) Pricing

The standard-grade iron ore was sold at ATS 139.50 per tonne. This standard price has been set in November 1999 for the whole of 2000.

The low-grade material (Möllerzusatzmaterial) was sold at ATS 76 (EUR 5.52) per tonne, fixed on the basis of the market price for lime gravel (Kalkschotter).

The average price for deliveries of iron ore and low-grade material (Möllerzusatzmaterial) results in ATS 105,20 per tonne. Including the costs of transport to VASA/Linz, the price charged was ATS 684.14 (49.72EUR)per tonne Fe.

The information submitted by Austria in its tenth report confirm the information given by Voest Alpine Rohstoffbeschaffungs GmbH, a subsidiary of Voest-Alpine Stahl AG responsible for the purchase of raw material, that the above price per tonne Fe for iron ore is higher than the comparable price it has to pay for imported iron ore.

It may therefore be concluded that the prices charged in the first semester of 2000were not lower than required under Article 2 of the Commission's Decision of 29 November 1995.

(d) Operating aid

The total losses incurred by VAEG in the first half of 2000 were ATS -24,779 million (EUR-1,746 million).

Of the total losses sustained in this period, ATS 11,390 million related to closure operations. Further details on losses are given in the Annex.

In the first semester of 2000 a total amount of 20 million ATS for operating and closure aid has been disbursed (9 million operating and 11 million closure aid). The amount authorised for 2000 by the Commission is ATS 52 million (ATS 30 million operating aid and ATS 22 closure aid). Due to improvement of the operating result the company expects that in 2000 only part of the authorised operating aid will have to be disbursed..

3. Closure aid

The authorised maximum amount of closure aid for 2000 is ATS 22 million. In the first semester of 2000 ATS 11 million was paid, whereas the closure costs were ATS 11,390 million.

4. Aid payments in relation to aid authorised

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5. Evolution of workforce

The plan for reducing the workforce is as follows:

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Departing from the above plan, the workforce in production was reduced to 219 in 1999. Reduction of workforce is therefore ahead of plan.


Annex Comparison of production costs and revenues, first semester 2000

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