UK Coal mining itself out of debt despite recent tragedy

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BRITAIN’S biggest coal miner UK Coal said recent trading has been in line with its expectations and it is making progress with its three-year turnaround plan.

The Doncaster-based group has been overhauling safety standards in recent weeks following the death of miner Gerry Gibson at its Kellingley deep mine in North Yorkshire in September.

UK Coal said its investigation into the tragedy is nearing completion and a Critical Safety Impact Review is examining all conditions and working behaviour, with findings already being implemented.

“The fatal accident at Kellingley on 27 September 2011 was a stark reminder of the importance of our safety improvement plan,” said the group.

UK Coal, which is burdened by a heavy, but shrinking, debt load, said it is pushing through changes to pensions and employment terms to cut costs.

In September it agreed significant changes to its final salary pension schemes with the trade unions and the schemes’ trustees.

This will halve the service cost of the two schemes and future accrual will be reviewed each year in line with affordability. “Changes to working practices and the restraint of labour costs are critical to the recovery of UK Coal,” said the group.

It added plans to change terms and conditions of employment have been rejected by members of the UDM and NUM trade unions.

It has agreed with the NUM to enter a conciliation process “to bring this matter to a close in the over-riding interest of the viability of UK Coal”.

It wants the UDM to agree to the same process.

A spokesman said the company will begin talks with employment dispute resolution service ACAS and the NUM next week, and hopes to also engage the UDM.

UK Coal said total production in its third quarter was 1.8m tonnes, down on the 2.2m tonnes mined a year earlier, and giving year-to-date production of 5.9m tonnes, in line with its expectations.

The company’s net bank debt continued to fall and stood at £68m on September 24 versus £141m at the end of December.

UK Coal, which has a vast estate of surplus land, said sales of property are making good progress. It has now sold £80m of land since November 2010.

Its recovery plan aims to squeeze value from its brownfield sites, of which Waverley in South Yorkshire is the biggest, at 710 acres.

The company has exchanged contracts with builders Taylor Wimpey, Barratt Homes and Harron Homes for the first construction phase, featuring 254 homes.

They have also exchanged contracts with engineering giant Rolls-Royce on 17.4 acres at the Waverley Advanced Manufacturing Park to construct a new manufacturing site.

“These are significant milestones to realising the site’s value,” said UK Coal.