UK Coal teams up with investor for ‘green’ technology project

UK Coal has revealed plans to generate energy from waste on sites across the north through a joint venture with its biggest shareholder, Peel Holdings.

The Doncaster-based coal miner yesterday said it plans to work with Peel to build ‘green’ technology including waste-to-energy power plants, using disused corners of its vast estate.

The debt-laden group, which is undergoing a deep restructuring, said the 11 sites will help squeeze value from its property portfolio.

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Manchester-based conglomerate Peel is already a leader in renewable power projects and will fund the ventures which could include anaerobic digesters, gasification and recycling plants. They will be fed with household and commercial waste.

UK Coal executive chairman Jonson Cox said: “This proposed waste to energy joint venture with the Peel Group will enable UK Coal to benefit from, and mitigate the risk and cost of, the development of 11 sites in the company’s property portfolio.

“These sites have not been identified as suitable for alternative development uses. This represents part of UK Coal’s focus on simultaneously unlocking and developing the maximum value from its property portfolio.”

Last week the troubled miner said it had started implementing a strategic recovery review.

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Mr Cox’s recovery plan includes stabilising mining production at Daw Mill in the West Midlands, Thoresby in Nottinghamshire and Kellingley, near Knottingley, in West Yorkshire.

It is also selling surplus land and last week said it has sold land worth £33.6m since January, which will go to paying down debt. This stood at £220.7m at the end of March.

The group’s land division, Harworth Estates, recently exchanged contracts to sell 764 acres of farming land to housebuilder Taylor Wimpey for £10m, a price which could rise depending on development. The land was worth £12.6m in December.

The company announced the waste-to-energy venture as the Government published its long-awaited waste review, which revealed plans to prioritise anaerobic digestion.

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Owen Michaelson, managing director of the group’s property division, said the timing of the joint venture was a coincidence, but added the Government review vindicates its decision.

“It’s on the Government’s agenda that we should be more responsible in the way that we manage our waste and use it as a resource,” he said.

“Peel have a lot of experience in bringing forward waste infrastructure. They made an approach some time ago and we spoke to a number of other parties.

“This infrastructure needs to go somewhere. It needs to go near centres of population. “

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Mr Michaelson, a non-executive director of Peel Holdings and a former director of the conglomerate, added the waste plans are far from complete and it is unclear what they could earn.

“We have not made any decision on what we should use the sites for,” he said. “This is such an early stage in the process.

“Nothing is going to happen for two to three years yet.”

Four of the 11 potential sites are in Yorkshire – Houghton Main near Barnsley, Kellingley, North Selby and Waverley in South Yorkshire.

These are typically industrial sites where the group has been unable to develop alternative commercial uses.

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Peel, which holds 29.09 per cent of UK Coal’s shares, is an expert in waste schemes and is already developing a £500m ecopark including a 95 megawatt waste-to-energy plant near Chester. It expects the site to be capable of powering 150,000 homes.

In total the waste sites could take up 123 acres, a fraction of the group’s 33,000-acre estate.

UK Coal already has a number of waste schemes in place, including sites in Derbyshire and Nottinghamshire.

It said its waste adviser, Eunomia, estimates there may be a 10 million tonne capacity gap to deal with waste by 2015.

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The group will create a special purpose vehicle (SPV) for each site, which will be jointly owned by Peel and the group. Each SPV could pay UK Coal £20,000, plus an agreed base value for each site.

Charles Kernot, analyst at house broker Evolution Securities, said: “UK Coal is undoubtedly moving forwards. The coal mines are on track this year, and (the) announcement demonstrates that the group is focussed on unlocking the value of its property portfolio.”

Shares in UK Coal lifted 5.8 per cent, climbing 2.25p to 40.75p.

The joint venture will need shareholder approval as it is classed as a related party transaction. A meeting will be held on July 11 to vote on the deal.