Miner to continue march through Europe

The firm, which owns Yorkshire's Maltby colliery and employs more than 1,000 in the region, is expanding across Europe through its energy and commodities arm, to capitalise on recovering coal demand on the continent.

Group revenue over the six months to the end of November fell 29 per cent to 211.6m as coal prices tumbled. But pre-tax profits rose more than 20 per cent to 14.7m.

Energy and commodities, the largest of Hargreaves' four divisions, sources, processes and trades coal, selling it for use in sectors including alloy production, steam railways, home and hospital heating.

It recently set up a coal trading business in Ghent, Belgium and is looking to set up a coal trading hub in Poland as the country increasingly turns to imported coal.

"In the UK we now have 60 to 70 per cent of what we would call niche markets," said chief executive Gordon Banham. "There's little chance for that to grow really.

"The European market is 25 times the size of the UK market. We are just taking our business model here and replicating it in Europe."

Currently, European earnings make up a third of its energy division's profits. Hargreaves hopes to grow this organically to at least 50 per cent over the next two to three years. Analysts believe this could add 2m to profits in 2011.

Mr Banham said he is also "quietly confident" of a spell of uninterrupted mining at Maltby, which suffered during the six months as geological problems and new equipment reduced production by about 55,000 tonnes.

One of the UK's few remaining operational deep mines, Hargreaves bought Maltby from UK Coal in 2007.

It has spent more than 20m on upgrading the mine through new mining and gas capture equipment.

"We are confident that the mechanical and geological issues encountered will not be repeated in the second half," the group said.

Hargreaves also aims to expand its mining operations with opencast mining at the former Tower Colliery in Wales.

It intends to submit a planning application for the site next month, and expects a decision by the end of the year.

The group aims to mine about a million tonnes a year for seven years at Tower, and has entered into a joint agreement with former miners and families who own the site, where the group will earn 35 per cent of any profits generated.

"The local community are very supportive," said Mr Banham.

Hargreaves added its Monckton coke works near Barnsley performed well over the period and is well placed to gain from increasing stability and rising prices.

Mr Banham said the group is gaining market share from rival plants

which were forced to close during the recession.

"There's a shortage of coke and it's driving prices up," he said. Already this year about 20,000 tonnes have been shipped to South Africa where Monckton coke is highly prized in the alloy industry.

Increased capital spend drove group net debt up to 80.1m from 69.2m in May.

Hargreaves recommended increasing its interim dividend by 16 per cent to 4.4p per share.

Analysts at Evolution Securities upgraded the group's earnings outlook for next year by six per cent based on strong European trading.

House brokers Brewin Dolphin said: "In the short and medium term, there are some strong opportunities to drive further growth."

At forefront of green power

Hargreaves Services is helping drive the green power revolution through its Rocpower venture.

It recently launched its first power plant in Wakefield, West Yorkshire. Rocpower capitalises on Government support for small distributed renewable power plants.

The eight mega watt Wakefield plant provides enough electricity to continually heat 15,000 homes. In its first year of production, it could generate revenues of 4m.

The 3.5m plant is the first of six plants, with a planning decision on another two expected in May. It is power-ed by secondary bio-fuels unsuitable for use as food, such as used cooking oil.