MALTBY Colliery’s coal targets will fall by 100,000 tonnes this year due to a thin coal seam, but work on a much more productive seam will start in October, boosting future revenues.
The South Yorkshire coal mine will end work on the geologically challenging T15 panel this autumn, said parent company Hargreaves Services.
The new T125 panel is 50 metres wider at 400 metres and the coal is 25 per cent thicker, which should significantly improve the yield.
Hargreaves’ chief executive Gordon Banham said the challenging T15 panel had produced coal which was 10 per cent thinner than expected.
“The new T125 panel is 5km away from the shaft bottom whereas the old T15 panel is 7km away. That means there is less possibility of a breakdown and less distance to the shaft,” he said.
“The coal is a lot richer at the new panel as it’s 25 per cent thicker so we should get 25 per cent more coal. We’ll be cutting less stone and more coal which is easier.”
The new panel will last for 18 months.
Mr Banham said Hargreaves has had a difficult four years since it bought Maltby, but the group has worked hard with miners and the unions to keep the mine going.
“The rewards will be reaped over the next five years. We are committed to Maltby and we want to invest in it. It has a life until 2025,” he said.
Hargreaves’ close relationship with Maltby’s miners and the unions led to the addition of a fifth shift last year which allows it to mine coal around the clock.
Mr Banham was speaking yesterday as Hargreaves announced a 12 per cent fall in underlying pre-tax profits to £15.7m in the six months to November 30.
The group said underlying operating profits at its production division fell from £4.6m to £1.3m as a result of lower underground production at Maltby.
Despite the difficulties at the coal mine, Hargreaves said it has traded strongly over the past three months and the group is confident it can achieve full-year profit targets.
Reduced production at Maltby has been compensated for by strong trading at the Monckton coke works near Barnsley and in the energy and commodities division.
Monckton’s low phosphorous coke is proving very popular and prices have risen.
Monckton’s Xstrata contract will end at the end of this year and Hargreaves is talking to other buyers to secure a new contract.
It said that it expects the Xstrata contract will be replaced with a contract that pays more money.
Hargreaves said its contract to manage production at Hatfield colliery near Doncaster has been extended for a further two years with an option to extend for a further year.
Mr Banham said that when Hargreaves took over the management of Hatfield colliery in April 2011 it was producing 700,000 tonnes of coal a year. Now it is forecast to produce one million tonnes of coal a year.
Hargreaves runs Hatfield on behalf of ING Bank.
The industrial services division, which is headquartered in Dodworth near Barnsley, has succeeded with its plans to break into the steel sector and now staff are working at steel plants in Scunthorpe, Redcar and Port Talbot.
Traditionally, employees at the industrial services division have worked at power stations throughout the UK, but they are now also handling material at the three steel plants.
As a result the division’s headcount is expected to rise from 1,000 staff to 1,200.
Analyst Jon Lienard at N+1 Brewin said: “Hargreaves has produced a solid set of interim results and once again the outlook is positive for a strong second half and an improving 2013.
“The outlook for 2013 is bright, underpinned by a likely acceleration of Tower cash generation, energy and commodities expansion in Europe (particularly PCI coal into the steel sector), new industrial services contracts and more friendly geology at Maltby,” he added.
Analyst Peter Ashworth at Charles Stanley Securities said: “The interim results are broadly in line with management’s expectations.
“The performance was impacted by a number of factors including the face change at Maltby. There is likely to be a greater weighting of trading and profits towards the second half.
“Notably Tower Colliery is coming on stream ahead of expectations and its 2012 output has been successfully contracted. Trading has been strong in the second half to date and the group is confident of meeting its full year targets.”