Kellingley Colliery to close after Government agrees £10m for wind down plan

Kellingley Colliery
Kellingley Colliery
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ONE OF Yorkshire last remaining deep pit coal mines will close after the Government decided there was no case for investment to keep the site open long term.

Energy Minister Michael Fallon announced today that a £10m loan, alongside £10m from the private sector, would support the “managed closure” of the mines at Kellingley in North Yorkshire and Thoresby in Nottinghamshire.

Together the sites, operated by UK Coal, employ 1,300 people. They are to be wound down by autumn 2015.

The Government backing spares the company the prospect of immediate insolvency which would have cost the Treasury “significant losses and liabilities” from redundancies and unpaid taxes.

In a written statement to MPs, Mr Fallon said: “The taxpayer is better served by supporting a managed closure of the mines.

“However, deep coal mining remains an inherently risky business. There is no value for money case for a level of investment that would keep the deep mines open beyond this managed wind-down period to autumn 2015.

“Private sector investors who wish to put in the substantial investment that would be needed to maintain the mines beyond autumn 2015 without government support remain free to do so.”

Mr Fallon said the Government intended to participate in a private sector-led consortium “to avoid the immediate insolvency of UK Coal”.

The proposal, which ministers have been considering since March 21, would see the deep pits face a phased shutdown and UK Coal’s six surface mines sold off.

At Kellingley, 700 jobs will go, with jobs also likely to go at UK Coal’s head office in Doncaster.

Hatfield, near Doncaster, will be the UK’s last remaining deep mine.

Mr Fallon told MPs that the Government’s agreement to participate was subject to final terms “that provide adequate protection to taxpayers” as well as assurance of backing from all parties including trade unions.

He said a “rapid response service” would be available to help employees try to find new work and retraining.

Mr Fallon said directors of UK Coal had approached the Government at the end of January to report that a falling coal price, exchange rates and other factors meant that “the viability of the business was potentially in doubt”.

It is understood that private sector investment will come from rival mining group Hargreaves Services and Harworth Estates, landlord of the two mines.

Mr Fallon said in a separate statement: “We are doing everything we can to help in this unique situation.

“Our commercial loan, as part of this private sector-led initiative, can support a managed closure that is in the best interests of the taxpayer and employees. The only alternative was immediate insolvency.

“It has been a real collective effort to get to this point, but this remains a challenging situation and all parties need to continue working closely together.”

Last week councils in Wakefield, Selby and North Yorkshire announced they were already looking at providing re-training for affected staff.

Shadow home secretary Yvette Cooper, MP for Pontefract, Castleford and Normanton, which neighbours Kellingley, last week met with National Union of Mineworkers representatives at the pit and was shown plans that could see the colliery producing coal for the next 20 years.