EC investigating possible illegal state aid to mining company Iberpotash

Brussels (CNA).- The European Commission opened this Tuesday “an in-depth investigation” into the public funding that mining company Iberpotash, located about 80 kilometres north of Barcelona, may have received from the Catalan Government and the Spanish Ministry for the Environment. “The Spanish authorities fully financed EUR 7.9 million of costs to physically cover one of Iberpotash's waste heaps and reduce pollution” stated the EC’s press release The Commission will now assess whether these costs should have been borne by Iberpotash, as the polluter. Yet to be finally confirmed, this would entail a breach in the 'polluter pays' principle sincea public authority would have been bearing the clean-up costs rather than the company responsible for the pollution.

In 2012 the Commission received a complaint alleging that Iberpotash benefitted from several state aid measures to support its mining operations. Besides the potential violation of the ‘polluter pays’ principle, since a public authority would be bearing the clean-up costs rather than the company responsible for the pollution, the complaint also questioned the financial guarantees provided by Iberpotash “to regional public bodies to fulfil its environmental protection obligations”. These obligations relate to waste from Iberpotash's mines and the guarantees are supposed to cover the potential cost of rehabilitating the land.

The Commission investigation will now focus on whether the amount of the financial guarantee, set originally at EUR 2 million, is significantly lower than what is required by environmental rules, in particular the EU mining waste Directive and relevant national and regional rules. If confirmed, this would give a financial advantage to the company.

The EC believes that “both measures may give Iberpotash a selective advantage over its competitors, who have to bear those costs and may therefore involve State aid in the meaning of the EU rules”, states the EC’s press release.

Not the first European infraction for Iberpotash

Iberpotash (renamed ICL Iberia Súria & Sallent in 2014) owns and operates several potash mines in the Bages region, about 80 kilometres north of Barcelona. Potash is mainly used to make fertiliser. The mining and primary processing of potash also produces salt as a by-product. Iberpotash already has a European infraction procedure against it, which has been pending since 2014.

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.