#StateAid: EC asks Spain to recover €5.8 from mining company Iberpotash SA

The European Commission has asked Spain to recover €5.8 million of illegal State aid granted to Iberpotash SA.  Iberpotash (renamed ICL Iberia Súria & Sallent in 2014) owns and operates several potash mines in the Catalonia region of Spain. (Potash is mainly used to make fertiliser. The mining and primary processing of potash also produces salt as a by-product).

In 2012 the Commission received a complaint alleging that Iberpotash benefitted from several state aid measures to support its mining operations, namely:

– Financial guarantees related to environmental protection

The first measure concerned the financial guarantees provided by Iberpotash to regional public bodies to fulfil its environmental protection obligations. These obligations related to waste from Iberpotash’s mines and the guarantees are supposed to cover the potential cost of rehabilitating the land.

– Financing of environmental protection measures

Second, the Spanish authorities fully financed €7.9 million of costs to physically cover one of Iberpotash’s waste heaps and reduce pollution.

The Commission assessed whether these costs should have been borne by Iberpotash, as the polluter.

EU state aid rules on environmental protection allow Member States under certain conditions to support projects that genuinely incentivise companies to change their behaviour and to improve their environmental footprint.

However, they do not allow States to provide support to merely cover costs that companies have to bear in any event in order to comply with mandatory environmental standards.

This would entail a breach in the ‘polluter pays’ principle, since a public authority would be bearing the clean-up costs rather than the company responsible for the pollution.

Other measures

In its preliminary decision in January 2016, the Commission concluded that three remaining measures outlined in the original complaint provide no selective advantage to Iberpotash and therefore involve no State aid.

These measures related to: a fee for the use of a brine collector, which is paid by Iberpotash as well as other users to cover its investment and operating costs; improvements in potable water treatment facilities funded by the authorities.

These improvements have not relieved Iberpotash of any of its environmental obligations. The purpose of the public authorities’ investment in these facilities was rather to ensure a supply of drinkable water to the population in the region in compliance with the required quality standards; and, the alleged financing of a study. This has not been confirmed by the collected evidence.

Final decision

In relation to two Iberpotash sites,  Súria in 2006 and Balsareny / Sallent in 2008, the Commission found that the restoration costs for the sites had been set at an unjustifiably low level.

As a result of both support measures, Iberpotash did not have to bear the costs of environmental protection that competing mining companies have to bear in the Union, thus gaining an undue competitive advantage.

On this basis, the Commission concluded that Iberpotash should pay the fees for the remediation of its sites up to 2016 and also the return of the investment. Iberpotash these amounts, totalling € 5.8 million.

More information will be available on the Commission’s Competition website, in the public case register under the case number SA.35818 once confidentiality aspects have been resolved.