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Brussels, 27th June 2007

State aid: Commission endorses €106 million aid for two separate investment projects in the pulp and paper sector in Figueira da Foz Portugal

The European Commission has authorised, under EC Treaty state aid rules, €59.32 million of aid, which the Portuguese Government intends to grant to Celbi, a subsidiary of the Altri group, for the extension of its existing pulp production plant in Figueira da Foz, and €46.5 million of aid to Soporcel, a subsidiary of the Portucel Soporcel group, for the extension and modernisation of a pulp and paper production plant, also in Figueira da Foz. The Commission's investigation concerning both investment projects found the measures to be compatible with the Single Market, as they met the requirements of the applicable (1998) Regional Aid Guidelines and the rules for regional aid for large investment projects (see IP/02/242).

Competition Commissioner Neelie Kroes said: “I am pleased to approve aid for two important investment projects which will contribute to regional development and job creation in a disadvantaged region of Portugal.”

Soporcel's investment project, which is spread over 6 years, is aimed at extending and modernising the existing pulp and paper production plant for the production of uncoated woodfree paper. The investment project involves eligible costs of €200 million, and an aid amount of €46.5 million. Celbi's investment project is aimed at the extension of the existing plant in order to increase its bleached eucalyptus kraft pulp production. The eligible investment costs are €319 million, and the envisaged aid amount is €59.32 million.

Both projects are to be carried out in the region of Figueira da Foz, a disadvantaged area with an abnormally low standard of living and serious underemployment, eligible for regional aid under Article 87(3)(a) of the EC Treaty. The projects are expected to create some 1900 indirect jobs, mainly in the forestry sector.

The aid would be granted under aid schemes previously approved by the Commission. However, due to the high aid amounts involved, the aid to Celbi and Soporcel had to be notified to the Commission for individual clearance.

The Commission’s assessment of regional aid to large investment projects focuses on the market power of the beneficiary and on the production capacity created by the investment on the European market.

The Commission found that the relevant thresholds would not be exceeded. Portucel Soporcel'sand Altri's share of the relevant markets will be less than 25%, both before and after the planned investment. Moreover, the Commission verified that the capacity increase generated by the projects would be below 5% of the apparent consumption of the product concerned in the EEA.

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