Hargreaves sees better production at colliery

The group, the UK's leading energy support services provider, hopes to make up production at Maltby following completion of a new face.

A problematic face at Maltby, one of the UK's last working deep mines, was completed at the end of July. The company had been beset by teething issues with new equipment, but these have now been sorted out and the group has drawn up targets to produce one million tonnes of coal this year.

This means a production run of around 20,000 tonnes a week.

Hargreaves, which also owns the Monckton coke works near Barnsley, said coke markets remain strong and the group is confident it can achieve its coke price targets.

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.

The company said that trading in the six months to November 30 is in line with management expectations.

It added that its production, energy and commodities, and transport and industrial services divisions are all trading in line with management hopes.

The group said it is confident it will meet its year end net debt and cash generation targets and it is positive on the full year outlook.

The company 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 to develop the old Tower Colliery in Wales early in the New Year, which means it could start producing in 2011.

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 is focusing on organic growth after deciding not to pursue a merger with rival coal miner UK Coal in June.