Business Irish

Monday 5 December 2016

State aid ruling on Aughinish refinery expected

Published 12/04/2016 | 02:30

Rusal Aughinish
Rusal Aughinish

The Government will find out next week if it's been successful in finally thwarting an effort by the European Commission to force Ireland to pay €10m that Brussels claims was given in the form of illegal state aid to the now Russian-owed Aughinish Alumina facility in Co Limerick.

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The Aughinish site is the largest alumina refinery in Europe and produces a powder that is used to make aluminium. The bulk of the bauxite it processes is shipped to the factory from Guinea in west Africa, with the remainder sourced from Brazil.

The Aughinish Alumina plant was solely owned by Swiss commodities giant Glencore between 2002 and 2004 when the plant availed of disputed tax breaks.

Glencore later merged its alumina assets with Russia's Rusal.

In 2005, the European Commission ruled that Aughinish Alumina had received €10m of illegal tax breaks during the period under review.

The Commission ordered the Government to recoup the money from Aughinish Alumina.

The Government had exempted the facility from paying excise duty on mineral oil it uses.

The Government appealed the Commission's finding to the European General Court in Luxembourg, which in 2007 overturned the Commission's order.

The Commission also said at the time that it would not seek to have all the State aid provided to Aughinish Alumina between 1983 and 2005 repaid. That could have totalled as much as €100m.

The European Commission then appealed the General Court's 2007 finding to the higher court, the European Court of Justice. It overturned the General Court's decision and sent the case back to be reheard by the General Court.

In 2012, the General Court again annulled the Commission decision, arguing that the EU Council of Ministers had previously made decisions permitting exemptions from excise duty, and that those decisions could not be ignored by the Commission.

But in 2013, the European Court of Justice again found that the General Court had erred in is judgment and sent the case back to examine a number of remaining arguments.

That hearing took place last year and the judgment will be revealed on Friday week.

There were four main issues to consider during that hearing, including the contention by the Irish Government that the Commission erred in law in incorrectly classifying the aid secured by Aughinish Alumina.

Revenue at the Aughinish Alumina plant was flat in 2014, at $608m. A decline in operating profits to $6m was largely as a result of interest payments resulting from a $400m deal with Glencore, where Rusal agreed to provide alumina to it.

Irish Independent

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