10th Apr 2014 12:23
LONDON (Alliance News) - British mining company UK Coal is to close two of its three remaining deep-pit coal mines, resulting in the loss of 1,300 jobs, the government confirmed on Thursday.
The government has agreed to give the country's largest coal producer a GBP10 million loan, in addition to an equal loan from the private sector, to facilitate the "managed closure" of the mines.
Energy Minister Michael Fallon said in a statement to parliament that taxpayers would be "better served" by the closure of the mines at Kellingley in North Yorkshire and Thoresby in Nottinghamshire.
The company's six surface mines will also be sold off as part of the deal.
Immediate insolvency would have caused "significant losses and liabilities" from redundancies and unpaid taxes, Fallon said.
In a statement, solid fuels and bulk material logistics company Hargreaves Services PLC said it is working closely with Government and key stakeholders with the intention of providing marketing and operational support on commercial terms, including the provision of a GBP5 million secured loan to UK Coal.
"We, alongside Government and other stakeholders, feel a responsibility to support a well-managed and respectful wind-down of UK Coal's operations, which employ around 2,000 people," Chief Executive Gordon Banham said in a statement. "In addition to the proposed GBP5 million loan, we would assist in the marketing of UK Coal stocks and provide a range of support services."
UK Coal has been hit by a strong pound and an influx of cheap imported coal, especially from the US due to the shale gas boom there.
Fallon said it had approached the government at the end of January to report that "the viability of the business was potentially in doubt."
UK Coal supplies 4% of the coal used to power British power stations, while 40% of the country's electricity needs are met by coal.
Hargreaves Services shares were down 0.7% to 839 pence Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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