Hargreaves confident of recovering Maltby shortfall

Hargreaves, the UK's leading energy support services provider, said Maltby Colliery near Rotherham is now running at forecast production levels.

A problematic face at Maltby, one of the UK's last working deep mines, was completed at the end of July.

The mine is now slightly behind targeted production in the current year, but the company hopes that this shortfall can be recovered.

Finance director Iain Cockburn said the company had been beset by teething issues with new equipment, but these have now been sorted out.

"We are confident we can catch up with the shortfall," he said. "We're now back on track. We should produce one million tonnes of coal this year."

This means a production run of around 20,000 tonnes a week, which is the level achieved by the group last week.

Hargreaves said underlying pre-tax profits for the year to May 31 rose 20 per cent to 34.3m.

Operating profits rose in three of its four divisions, with only the production division showing a decline after output fell at Maltby.

The company said it will focus on organic growth after deciding not to pursue a merger with troubled rival coal miner UK Coal in June.

Doncaster-based UK Coal restructured its board in July and appointed two separate managing directors to run its coal and property operations.

Hargreaves said that its Monckton coke works near Barnsley continues to perform well with consistent, stable production levels. Monckton recently won a three-year contract with Xstrata in South Africa to sell up to 100,000 tonnes of coke a year, at prices believed to be well ahead of a previous deal.

Hargreaves estimates that it has a 60-70 per cent market share of the UK's niche coal market, which includes demand for domestic heating and steam railways, and is looking to expand further in Europe by recruiting more traders.

The company said it hopes to get planning permission by the end of the year to develop the old Tower Colliery in Wales which means it could start producing in 2011.

Analysts at Brewin Dolphin retained their pre-tax profit forecast of 40.5m for 2011.

Shares closed the day down 15p at 620p.