State ordered to retrieve €10m state aid from Limerick refinery Aughinish

An EU court has ordered the Government to recover over €10m in illegal state aid from Co Limerick-based metals refinery Aughinish Alumina.

The plant — now owned by Russian aluminium giant Rusal — is Europe’s largest producer of alumina, a white powder extracted from bauxite to produce aluminium.

Aughinish has found itself at the centre of one of Europe’s longest-running court battles after the European Commission ruled in 2005 that it enjoyed unfair tax breaks.

The EU’s General Court ruled in favour of the commission yesterday, reversing two previous rulings in favour of the Government.

The illegal aid is repayable within two months unless the Government decides to appeal the case to the European Court of Justice, the EU’s highest court. 

A spokesman for the Department of Finance said the judgment “is being examined”.

Ireland is one of Europe’s main alumina exporters, along with France, Italy, Germany, Greece, Spain, and the UK.

Aughinish Alumina employs 450 people at its plant in Askeaton in Co Limerick, the only factory of its kind in Ireland. 

The Government granted the company tax exemptions in 1983 on purchases of heavy oil used in the alumina extraction process.

In 1992, EU governments approved minimum rates of tax on heavy oil, but said Ireland, France, and Italy could continue to apply lower rates, until 2006. 

The commission’s case against Ireland rests on €10.9m in tax breaks granted in 2002 and 2003, when Aughinish was owned by Swiss commodities conglomerate Glencore.

The commission said the exemptions constitute illegal state aid and distort competition in the EU since they confer an advantage only on certain firms or regions, despite the fact they were approved by EU governments.

In 2007, the General Court struck down the commission’s decision on the grounds it failed to “state reasons”, but the commission made an appeal to the European Court of Justice.

The case was sent back to the General Court, which then ruled against the commission for a second time in 2012, a ruling the commission also appealed.

This is the third time the court has ruled on the case.

Aughinish Alumina has also been subject to national and EU environmental probes after local farmers said toxic sludge and dust particles were emanating from the plant.

 The European Parliament’s petitions committee, after a 2007 site visit, described the plant as a “blot” on the local landscape, surrounded by “shining red mud pools”.

The Environmental Protection Agency granted the plan an Integrated Pollution Prevention and Control licence in 2008, after it was bought by Rusal, which means its activities “do not cause a significant adverse environmental impact”.

That licence has since been renewed, and in 2011 the plant launched a new bauxite residue disposal area on the site to cover its waste management needs until 2030.

Ireland is involved in a separate EU state aid investigation into tech giant Apple. MEP Marian Harkin said the court ruling, while separate from the Apple case, shows the commission’s willingness to crack down on tax matters.

“I wonder is this a sign of things to come, given there are some high-profile cases coming down the line,” she said.


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