BRUSSELS (June 27, 2006) — The European Commission (EC) has authorized $116.5 million in aid to South Korea's Hankook Tire Co. Ltd. for the tire maker's planned tire plant in Hungary.
The aid will be paid in the form of grants by the Ministry for Economy and Transport and the Ministry for Employment and Labour, as well as a tax relief awarded by the Ministry of Finance, the EC said.
Hankook is planning to build a $535 million, 5.69 million-sq.-ft. passenger tire plant in DunaÃºjvÃ¡ros, Hungary, to supply its growing business in Europe. Hankook's sales in Europe are projected to hit $400 million this year, the company said earlier.
The new plant, due to start production in 2007, will employ 1,500 and turn out 10 million tires a year at full capacity, which should be reached by 2010.
The EC granted aid to Hankook based on Article 87(3) of the EC Treaty, which allows state aid to promote the economic development of certain disadvantaged areas within the European Union. The Commission said it considered this aid to be compatible with the rules on regional aid to large investment projects.