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European Commission - Press release

State aid: Commission approves aid to alleviate social costs of closing uncompetitive coal mine in the Czech Republic

Brussels, 12 February 2015

The European Commission has approved, under EU state aid rules, public funding to facilitate the closure of an uncompetitive coal mine in the Czech Republic (the Paskov mine), operated by the Czech mining company OKD a.s. The aid aims to ease the closure process and provide financial support to those working in the Paskov mine.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Uncompetitive coal mines cannot be kept in the market indefinitely on state support - but the Commission and Member States can find solutions to help coal miners through this difficult transition. I am glad that today's decision will allow the Czech authorities to support the workers that will lose their jobs due to the unavoidable closure of the Paskov coal mine."

After several unsuccessful attempts made by OKD to restructure the Paskov mine to return it to economic viability, the company decided to close the mine. In September 2014, Czech authorities notified to the Commission their plan to support OKD with the costs involved in the closure.

The proposed Czech measure will contribute to funding one-off severance payments to workers who have lost or will lose their jobs due to the closure, as well as to provide special bonuses to workers who have been exposed to occupational health risks working in the mine.

The Commission concluded that the plan is in line with EU state aid rules, in particular Council Decision 2010/787/EU, which in the process of closing uncompetitive coal mines allows Member States to fund certain exceptional costs arising in order to alleviate the social and environmental impact.

Background

The Paskov mine is located in the Moravian-Silesian Region in the Czech Republic. It is operated by the Czech mining company OKDa.s. and primarily produces coking coal (a key fuel in steel production).

In December 2010, the Council of the European Union adopted Council Decision 2010/787/EU on state aid to facilitate the closure of uncompetitive coal mines. Under the Decision state support to the coal industry is only allowed to facilitate the closure of a mine as well as to cover exceptional costs resulting from the closure. The Decision was adopted against the back drop of the European Union's policy of encouraging renewable energy sources and a sustainable and safe low-carbon economy and the diminishing role of indigenous coal in the overall energy mix of EU Member States.

Closure aid can cover operational losses subject to certain limits and must be based on an agreed closure plan. The Council Decision requires that a mine receiving closure aid must be wound down by the end of 2018 at the latest.

Aid to cover exceptional costs resulting from closure activities can be paid out even after the closure until 2027 and must also be based on an agreed closure plan.

The non-confidential version of the decision will be made available under the case number SA.39570 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

 

IP/15/4401

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