BRUSSELS—The European Commission has approved a regional investment aid of nearly $128 million to Nexen Tyre Corp. Czech SRO to build a tire plant in Zatec, Czech Republic, according to an EC release on July 23.
The Commission said that the aid granted by the Czech Republic was compatible with EU state aid rules, and that it promoted regional development without distorting competition in the internal market.
“This tire production plant will create at least 1,000 new jobs in Zatec and contribute significantly to the economic development of the region,” according to EU competition commissioner Margrethe Vestager.
“I am pleased we today approved state aid to make this happen. It is a good use of public money in line with EU state aid rules,” she added.
In October 2014, the Czech Republic notified the EC of its plans to give an aid of about $127.7 million to Nexen. The aid consisted of a direct grant of about $43.5 million, an employment grant of about $11.1 million and about $73.3 million arising in tax relief and from the reduced land costs.
Nexen Tire singed the investment agreement with the Czech government in June last year . Nexen is investing about $907.3 million to build the new plant on about 2 million square feet of land in Zatec.
The project, according to Nexen, is intended to help the company meet its rising demand in Europe, and to supply original equipment tires to car makers, including Fiat, Volkswagen and its Skoda Auto and Seat units.
Currently, there are around 30 car manufacturing plants within a 250 mile radius of Zatec.
Nexen's plant is set to begin operating in 2018 and then to gradually increase its capacity to over 12 million units a year. The firm currently operates two tire plants in Korea and one in Qingdao, China.