UK coal operations provide boost to Hargreaves’ profit

The group, which runs the Monckton coke works near Barnsley, said profits rose 22 per cent thanks to strong performances from its energy and commodity businesses and transport.

The group said its performance was driven by the first contribution from its Scottish surface mining operations and the strong performance of its UK coal operations.

Gordon Banham, Hargreaves’ chief executive, said the new surface mining operations in Scotland helped to offset a reduction in Monckton coke revenues.

Against the backdrop of challenging steel markets, he said Monckton’s performance during the first half was in line with plan as volumes were contracted through the end of last year.

Monckton produces 200,000 tonnes of coke for use in the production of glass, detergents and steel manufacturing.

Looking ahead, Hargreaves said that Monckton’s domestic volumes, which make up half of its output, are largely contracted to the end of 2015. On the export front Monckton is experiencing some pricing pressure as contracts were renegotiated at the turn of the calendar year.

The group said the closure programme at Maltby colliery is in line with plan.

Chairman Tim Ross said: “We expect the mine shafts to have been filled and capped by the end of the financial year as part of Maltby’s overall restoration programme.

“The process to sell the underground equipment is ongoing and the group provided Hatfield Colliery Partnership Limited with a short-term option to acquire certain items of underground plant and equipment.

“There have been a number of enquiries to date and some realisations have already been achieved and further amounts are expected to be achieved by the end of the financial year.”

The group said it is confident of achieving full value for the assets.

Analyst Nick Spoliar, at WH Ireland, said: “After a slow start at some of the new Scottish sites, Hargreaves is now operational on seven surface mining sites, giving a good platform for the second half of 2014 and beyond.

”Industrial services and Monckton performed in line with expectations.

“Overall, we view the business as having shaken off last year’s concerns about the deep mine, now closed, and Belgium. We note the encouraging view of the board about the many broad and deep opportunities.”

Following the announcement of UK Coal’s insolvency and restructuring last year, Hargreaves said it worked hard to mitigate the loss of the associated supply contract, under which UK Coal supplied around 270,000 tonnes of coal for the industrial and domestic markets.