SA - 286

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According to the Italian authorities, the quantitative contribution of this activity to the mitigation of the environmental impact of coal production at the Nuraxi Figus mine can be assessed once the pilot implementation stage has been concluded. Carbosulcis is the sole beneficiary of the measure and will receive and has already received aid by means of State resources transferred directly from the State and the Sardinian Region's budget to offset its operating losses and to cover social and safety costs which constitutes an economic advantage.

The market for coal is fully open to competition. Consequently, the financial aid from the State strengthens the position of the beneficiary in relation to its competitors in the EU and has potentially distortive effects on competition and is liable to affect intra-EU trade.

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Carbosulcis produces coal used for the local production of electricity. Therefore this criterion is complied with. Italy intends to grant closure aid in the context of a closure plan of the mine. The Closure Plan submitted by Italy includes the legislative and other measures adopted by Italy described in recitals 11 to 61, including the financial measures planned to accompany the definitive and irrevocable closure of the units concerned, thus leading to an orderly winding down of activities of such units at the planned dates.

State aid to cover the production costs. The mine is operated by Carbosulcis, fully owned by the Region of Sardinia which issued and approved the Closure Plan. The Closure Plan includes the legislative and other measures adopted by Italy and the Region of Sardinia and described in recitals 11 to 61 put in place to accompany the orderly winding down of the activities of such unit within the planned dates.

As shown above in Table 1, the annual aid for coal production in the closing production unit does not exceed the difference between the foreseeable costs and foreseeable revenues. Italy considers that it is not possible to relate payments for Sulcis coal to a commercial reference price, similarly to the Commission's findings in the case of Hungary SA.

Italy submits that Sulcis' low grade coal cannot be procured from third countries and there is no market for coal of such low quality. The selling price paid by Portovesme thermal power plant to Carbosulcis takes account of the fluctuation of the price of the coal that is regularly traded on the world market and the quotation of standard grades of coal are reduced to take account of the particular grade being bought. According to Italy, this makes it impossible to determine a reference price for coal of a similar quality coming from third countries.

Thus Sulcis coal can, in theory, only compete with other coals within Sardinia and most importantly cannot be sold on the world market. The Commission cannot exclude that it is in fact possible to calculate a reference price for coal of similar quality. Consequently, Italy has committed itself to monitoring annually the price of Sulcis coal as calculated in the context of its sale to Portovesme thermal power plant using the relevant formula provided in the purchase contract to check if the price of Sulcis coal falls below the price of coal of a similar quality from third countries.

The amount of aid per ton equivalent will be updated according to the actual sale price for each coal year. The Commission concludes from Table 1 above that state aid to be granted follows the downward trend and complies with the the minimum level of reduction stipulated in the Council Decision.

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The degressivity criterion prescribed by the Council Decision is therefore complied with. The Italian authorities have provided an environmental protection plan to mitigate the environmental impact of coal production which includes renewable energy installations, and coal desulphurisation. The Commission notes that those Italian measures are directly related to the mine still active in coal production to be closed down. It should be noted that some of the measures referred to by Italy may involve the granting of State aid.

This Decision is without prejudice to Italy's obligations under EU environmental legislation. State aid to cover exceptional costs. The Commission notes that Italy does not plan grand aid that would exceed the costs arising from the closure of coal production. Pursuant to the Closure Plan, the granting of the aid is subject to the presentation of supporting documentation. Aid to cover exceptional costs will continue to be required also after the cessation of production in In any event, aid will be granted until so prior to the expiry of the Council Decision.

Theoretically, revenues can accrue from the sale of plants and machinery. However according to Italy this is unlikely given the age of those items at the end of The plants and machineries will therefore all be taken out of service and used to create a museum and industrial archaeology site, and preserved as a historic local monument. The Italian authorities contend that the sealing of the mine and the environmental clean-up cannot be expected to lead to an increase in the value of the land, because apart from the areas used for the renewable energy plants, the site will constitute abandoned industrial land and no further use can be foreseen.

Apart from the areas used for the renewable energy plants, once the land has been cleaned up it will be maintained in its current state, in order to preserve the historical memory of the mining industry, as provided in the agreement between Carbosulcis and the municipality of Gonnessa. The Italian authorities confirm that the costs covered by the aid are not related to the financing of costs resulting from non-compliance with environmental regulations, such as:.

The Commission would like, in addition, to remind the Italian authorities that in case of co-financing through Structural Funds of the Union, the rules applicable to those Funds must be respected.

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It follows that the aid meets the conditions laid down in the Council Decision as to cumulation and separation of accounts of the beneficiary, in case of any other economic activities which are not related to coal mining. Italy has submitted very detailed information in the context of the notification of the Closure Plan.

In particular, Italy has provided detailed costs estimates for the mine, broken down by individual items, for each year covered by the Closure Plan. It follows that the aid complies with the relevant conditions laid down in the Council Decision. The Commission has therefore concluded that both the Closure Plan and the aid which has already been granted and which is proposed to be granted can be authorised.

Italy will need to submit separate annual notifications where there is a discrepancy between the annual measures and the approved Closure Plan. Where any corrections are made to the amounts originally paid during a given coal year, the Italian authorities shall inform the Commission before the end of the following coal year. The State aid granted by Italy to Carbosulcis S. The two sets of provisions are, in substance, identical. For the purposes of this Decision, references to Articles and of the TFEU should be understood as references to Articles 87 and 88, respectively, of the EC Treaty where appropriate.

The data given In red are those resulting from the reclassification of the profit and loss accounts for and The costs covered by the undertakings for the reskilling of workers in order to help them find new jobs outside the coal industry, especially training costs;. Residual costs resulting from administrative, legal or tax provisions which are specific to the coal industry;. Additional underground safety work resulting from the closure of coal production units;. Mining damage, provided that it has been caused by the coal production units which have been closed or which are being closed;.

Making safe area and buildings and environmental restoration of the Nuraxi Figus site. Exceptional intrinsic depreciation provided that it results from the closure of coal production units;.

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    Cost Of Poor SA Governance: R286 Billion In Outflows

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