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Released October 07, 2016 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has cleared a deal between Sweden's state-owned Vattenfall AB (Stockholm) and Czech energy company Energetický a Prùmyslový Holding (EPH) (Brno) that allows Vattenfall to exit the German coal-fired power and coal mining sectors.
In April, Industrial Info reported on the proposed deal, a key part of Vattenfall's strategy to move away from fossil-fuels and invest in more renewable energy projects. EPH has agreed to take on 3.4 billion euro ($3.9 billion) of assets and 2 billion euro ($2.3 billion) of liabilities and provisions, including re-cultivation obligations. For additional information, see April 21, 2016, article--Vattenfall Exits German Coal Sector.
"The investigation has shown that the proposed transaction will not have an adverse effect on the market for the excavation and supply of lignite as neither of the parties exerts any competitive constraint on each other," the Commission stated. "Vattenfall's activities are limited to the Lusatia region in Germany while EPH, via its subsidiary Mibrag, operates open-cast mines in Central Germany. The Commission considered that switching lignite supply between Vattenfall mines and EPH mines would be unlikely in the future for several reasons, including high transportation costs and differences in lignite quality between Vattenfall and EPH mines."
It added: "Moreover, lignite will still face increasing competition from other sources of energy such as natural gas in the years ahead due to Germany's energy policy aiming to reduce CO2 emissions, which will significantly constrain the parties after the transaction."
The sale includes the power plants Jänschwalde, Boxberg, Schwarze Pumpe and Lippendorf block R as well as open cast mines Jänschwalde, Nochten, Welzow-Süd, Reichwalde and the recently closed mine Cottbus Nord. The plants and mines have been financially draining in recent years, as European wholesale power prices languish at their lowest point in more than a decade. In 2015, Vattenfall wrote down the value of its German lignite assets by $1.8 billion.
Vattenfall is wholly owned by the Swedish state, which agreed to the German assets' sale in July. "The government supports the proposed transfer of Vattenfall's coal operations," said Sweden's industry minister Mikael Damberg on announcing the government's approval. "Vattenfall is on the way to becoming a climate-neutral business. The divestment is strategically correct and the best financial alternative."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
In April, Industrial Info reported on the proposed deal, a key part of Vattenfall's strategy to move away from fossil-fuels and invest in more renewable energy projects. EPH has agreed to take on 3.4 billion euro ($3.9 billion) of assets and 2 billion euro ($2.3 billion) of liabilities and provisions, including re-cultivation obligations. For additional information, see April 21, 2016, article--Vattenfall Exits German Coal Sector.
"The investigation has shown that the proposed transaction will not have an adverse effect on the market for the excavation and supply of lignite as neither of the parties exerts any competitive constraint on each other," the Commission stated. "Vattenfall's activities are limited to the Lusatia region in Germany while EPH, via its subsidiary Mibrag, operates open-cast mines in Central Germany. The Commission considered that switching lignite supply between Vattenfall mines and EPH mines would be unlikely in the future for several reasons, including high transportation costs and differences in lignite quality between Vattenfall and EPH mines."
It added: "Moreover, lignite will still face increasing competition from other sources of energy such as natural gas in the years ahead due to Germany's energy policy aiming to reduce CO2 emissions, which will significantly constrain the parties after the transaction."
The sale includes the power plants Jänschwalde, Boxberg, Schwarze Pumpe and Lippendorf block R as well as open cast mines Jänschwalde, Nochten, Welzow-Süd, Reichwalde and the recently closed mine Cottbus Nord. The plants and mines have been financially draining in recent years, as European wholesale power prices languish at their lowest point in more than a decade. In 2015, Vattenfall wrote down the value of its German lignite assets by $1.8 billion.
Vattenfall is wholly owned by the Swedish state, which agreed to the German assets' sale in July. "The government supports the proposed transfer of Vattenfall's coal operations," said Sweden's industry minister Mikael Damberg on announcing the government's approval. "Vattenfall is on the way to becoming a climate-neutral business. The divestment is strategically correct and the best financial alternative."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
