Coal can still be king, says Hargreaves

Announcing annual results, Durham-based Hargreaves Services said pressure on power plants to cut emissions, and the high cost of renewable energy, are likely to push up prices for households and businesses.

The group, which recently closed Maltby deep mine in South Yorkshire with the loss of more than 500 jobs, said price rises and a power generation squeeze could force politicians to reconsider coal as an alternative fuel. The company predicted that the new nuclear, gas and renewable plants would need time to replace the ageing coal power stations.

Chief executive Gordon Banham said yesterday: “Our own view is that coal fired generation will remain an important element of the UK energy mix well into the second half of the 2020s and probably even beyond.

“Forecasts of the rapid demise of coal usage in the UK are not well founded.”

The group, which also runs Monckton coking plant near Barnsley in South Yorkshire, quoted statistics from the Department of Energy and Climate Change showing the UK burned 61m tonnes of coal in the year to the end of April, up from 44m a year earlier.

It said that, while overall demand is likely to fall, the size of the UK coal market will be “more than adequate to sustain our business for many years to come”.

The group plunged to £50m annual losses after closing Maltby earlier this year, but has since been snapping up surface mines in Scotland.

It bought the rights to surface mines in Scotland from failed mining groups ATH and Scottish Coal to consolidate its position as a “key UK coal producer and distributor”, leaving it with more than 24m tonnes of provable reserves.

The group funded the acquisitions through a £42.3m cash call in April, and said they provide a “springboard” to rapidly develop its surface mining business. It is talking to the Office of Fair Trading about any competition concerns from future deals.

Losses of £49.6m in the year to the end of May compared with profits of £30.8m a year earlier, as it was hit by the closure of Maltby, where it encountered dangerous geological conditions, and a fraud in Belgium.

But revenues surged by more than a third to £843.3m as it supplied much more coal to power stations and steel producers.

Despite weaker coal prices, revenues in its coal mining arm increased by £173m to £585m during the year.

It sold almost six million tonnes of the fuel, up from 3.8m a year earlier.

The closure of Maltby forced it to buy overseas coal for Monckton, which produces coke used in steel production.

Coke has been made on the Monckton site at Royston in South Yorkshire for more than 130 years.

Monckton is the only independent coke production plant in the UK. Monckton produces coke for use in glass, detergents and steel manufacturing; and coke used for home heating.

Volumes sold by the plant fell by 25,000 tonnes to 236,000.

The company booked a £1.6m hit from the failure of UK Coal, the country’s biggest deep coal miner, which it had a supply deal with.

Stripping out the impact of Maltby’s closure, which resulted in hundreds of redundancies, Hargreaves’ pre-tax profits fell 4.2 per cent to £43.1m.

In April, members of the NUM buried Maltby’s final piece of coal close to the village’s miners’ memorial, in a ceremony to mark the end of mining at the pit.

Coal had been part of life in Maltby, near Rotherham, since the colliery opened in 1908.

When the National Coal Board was abolished, the pit was bought by RJB Mining, later renamed UK Coal, in 1994.

In 1997 production was stopped temporarily, but it began again months later, and the colliery was sold to Hargreaves Services in 2007.