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C 240/4 EN Official Journal of the European Communities 31.7.

98

STATE AID
C 41/98 (ex N 204/98)
Germany

(98/C 240/04)
(Text with EEA relevance)

(Article 6(5) of Decision NoØ2496/96/EGKS)

Commission notice pursuant to Article 6(5) of Decision No 2496/96/EGKS to other Member


States and interested parties concerning the aid granted for the protection of the environment in
favour of ESF Elbestahlwerk Feralpi GmbH by the German Federal State of Saxony

By means of the letter reproduced below, the By communication dated 20 March 1998, registered 25
Commission informed the German Government of its March 1998, your Government notified, pursuant to
decision, adopted on 3 June 1998, to initiate the Article 6(1) of the sixth Steel Aid Code a plan to grant
procedure: aid for investments aiming at increased environmental
protection to ESF.

‘In March 1993 the Commission authorised, under The erection and operation of the plant of ESF in Riesa
Article 5(3) of the fifth Steel Aid CodeØ(Î), regional was authorised under German environmental legislation
investment aid for ESF Elbestahlwerk Feralpi GmbH (Bundesimmissionsschutzgesetz — BImSchG) by admin-
(ESF, created in 1992 through an asset deal from the istrative decision of 12 August 1994. The decision
bankrupt’s estate of Stahl- und Walzwerk Riesa AG) imposed certain maximum emission thresholds regarding
covering investments of DEM 85 million. An investment noise and Dioxine/Furane to be respected which were
allowance of DEM 19,55 million, an investment subsequently exceeded significantly. The noise emission
premium of DEM 5,3 million, an ERP environment during the night was at up to 53 dbA instead of 43 dbA,
Loan of DEM 6,215 million and a public guarantee the Dioxine/Furane emissions were at up to 6 ng/Nm3
covering loans of DEM 60,6 million were approved. instead of 0,1 ng/Nm3.

Several attempts to meet the requirements failed so that


In December 1994 supplementary investment aid was the responsible administration decided in May 1997 to
approved covering additional investments of DEM 51 order the closing of the plant by 1 August 1998 if the
million. An investment allowance of DEM 11,73 million, maximum noise emissions were not respected by that
an investment premium of DEM 4,08 million and a date and by 1 November 1998 if the maximum Dioxine/
guarantee covering a loan of DEM 23,975 million were Furane emissions were not respected by that date. The
authorisedØ(Ï). company subsequently drafted an investment plan to
meet the requirements. This plan consists of the
following measures:

On 18 November 1997 the Commission decided to


initiate the procedure provided for in Article 6(5) of the In order to reduce the noise emission from handling the
sixth Steel Aid CodeØØ(Ð) with regard to additional aid scrap the stock area would be covered by a new building.
granted after the end of 1994 and certain elements of In addition the handling equipment such as cranes and
authorised investment aid which were allegedly misued ground vehicles would be modified. To reduce noise
for operating purposesØØ(Ñ). This procedure is still emissions from the rolling mill the entire building will be
pending. equipped by additional walls and a special ventilation
system.

In order to meet the requirements regarding Dioxine/


(Î)ÙDecision No 3855/91/ECSC (OJ LØ362, 31.12.1991, p. 57). Furane emissions additional fume collection systems,
(Ï)ÙOJ C 401, 31.12.1994. cooling installations and filters would be installed. The
(Ð)ÙDecision No 2496/96/ECSC (OJ L 338, 28.12.1996, p. 42). technology is known and operated in other German steel
(Ñ)ÙState aid NNØ108/97 (OJ C 51, 18.2.1998, p. 3) works.
31.7.98 EN Official Journal of the European Communities C 240/5

The investment necessary is as follows:

Housing of the scrap stock DEM Ù7,79 million

Modification of scrap handling equipment DEM Ù1,670 million

Walls and ventilation for the rolling mill DEM Ù4,000 million

Reduction of Dioxine/Furane emission DEM Ù3,500 million

Total investmentÙÙ DEM 17,149 million

Your authorities intend to grant an investment allowance There is no information indicating that the aid aims at
(Investitionszuschuß) of DEM 4,887 million under the significantly higher levels of environmental protection
26th framework programme improvement of regional than those required by mandatory standards.
economic structures, the main regional investment
programme of Germany, an investment premium (Inves-
titionszulage) of DEM 0,6 million and a public
guarantee covering DEM 11,622 million. Consequently,
32Ø% of the investment costs would be covered by
investment aid, the remaining 68Ø% would be financed It is therefore to be concluded that the aid does not seem
by a loan covered entirely by a public guarantee. to be compatible with the common market pursuant to
Article 3 of the Steel Aid Code. It does furthermore not
aim at research and development, closure so that the
derogations of Articles 2 and 4 of the Steel Aid Code are
not applicable. The Commission should consequently,
Your Government is of the opinion that the aid may be
pursuant to Article 6(5) of the Steel Aid Code, initiate
authorised pursuant to Article 3 of the sixth Steel Aid
the procedure described in that provision.
Code because the investments to be aided would only
serve to increase the protection of the environment.
Nevertheless, the aid is presented in the notification as a
regional aid in an Objective 1 region.

The Commission consequently decided to initiate the


procedure pursuant to Article 6(5) of the Steel Aid Code
ESF is a company falling within Article 80 of the ECSC with regard to the intended aid measures. As part of the
Treaty because it produces products listed in Annex I to procedure, the Commission requests your Government
the ECSC Treaty, so that the provisions of the ECSC to provide any information or comments it might
Treaty and the Steel Aid Code are applicable. Article 3 consider relevant in this case within one month of being
of the sixth Steel Aid Code stipulates that the notified of this letter.
Community guidelines on State aid for environmental
protectionØ(Ò) shall be applied to the steel industry in
conformity with the criteria set out in the Annex to the
Steel Aid Code. According to these rules aid to help firm
adapting existing installations to new mandatory
standards may be deemed compatible with the common The Commission reminds you that any aid granted
market under certain conditions. In the current case, the without prior notification or without awaiting the
mandatory standards to be met are not new but were Commission’s final decision is unlawful and, in principle,
imposed by the relevant legislation and administrative will have to be recovered from the recipient firm.
practice at the outset of the operation of the new instal- Repayment should be made in accordance with the
lations on the site of the former Stahl- und Walzwerk procedures and provisions of German law with interest,
Riesa AG. Therefore, the aid may not be justified as aid based on the interest rate used as reference rate in the
to meet new mandatory environmental standards. In assessment of regional aid schemes, starting to run on
addition, the maximum intensity for such aid is 15Ø%. the date on which the aid was granted.
ESF does not meet the criteria to be regarded as an
SME. The aid intensity proposed is more than 32Ø%.

The Commission requests your Government to inform


the recipient firm and the Government of Saxony of the
(Ò)ÙOJ C 72, 10.3.1994, p. 3. initiation of the procedure.
C 240/6 EN Official Journal of the European Communities 31.7.98

The Commission further informs your Government that the measures in question within one month of the date of
it will publish a notice in the Official Journal of the the publication of this notice to:
European Communities giving the other Member States
and other parties concerned notice to submit their European Commission
comments. The ESA will be informed in accordance with Rue de la Loi/Wetstraat 200
Protocol 27 of the EEA Agreement.’ B-1049 Brussels

The Commission hereby gives the other Member States The comments will be communicated to the German
and interested parties notice to submit their comments on Government.