Commission approves state aid for east European steel mills

Commission approves state aid for east European steel mills

The European Commission has approved of the state aid packages for eastern European steel firms in return for capacity reductions. The steel makers in the Czech Republic and Poland will cut their capacities latest by 2006 in return of the European Commission's permission of these state aid packages. The most recent package that is about to be approved by the Council of Minister is worth €800 million (approximately $945 million) state aid for seven steel mills in Poland in return for a 10% production capacity cut. A €150 million state aid package was already approved by the Council for two Czech steel makers, in exchange of again 10% production capacity reduction. A total capacity of 1.3 million tons in Poland is set to be reduced based on the country's 1997 production. 240'000 tons of this amount has already been cut back in Poland. The total capacity to be cut in the Czech Republic is 550'000 tons. According to industry sources, the privatisation of PHS in Poland, that has found support from the European Commission will not be allowed to receive any further aid for privatization.