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A sharp rise in coal prices has helped prospects for the industry. |
Mining group UK Coal has slashed its losses, thanks to a programme of restructuring and cost-cutting.
The UK's largest coal producer reported a pre-tax loss after exceptional items of £1.2m for 2003, substantially down from 2002's £83.1m loss.
UK Coal, which owns eight deep mines and 13 opencast sites, supplies coal for the main UK electricity generators.
Previously called RJB Mining, it bought the bulk of the British coal industry when it was privatised in 1994.
In the last year the Doncaster-based company has introduced flexible working hours at its Maltby Colliery in South Yorkshire, including a new weekend shift that has increased production from 90 hours to 120.
And it announced that its Selby complex, in North Yorkshire, is to close by summer 2004.
In its annual report UK Coal said Selby had continued to put in a poor performance with geological and engineering problems leading to a fall in output by a million tonnes to 3.6m.
"The company continues to focus on its extensive property portfolio, with proceeds from the sales and rental income both showing increases," said Gordon McPhie, chief executive of UK Coal.
"We have a slow start to production in 2004, but expect to recover this later in the year."
UK Coal added that although there has been a sharp rise in the worldwide price of coal, this had only been of "limited benefit" because most of its coal is sold on long-term contracts.
The company sold 18.9 million tonnes of coal in the UK last year.
Looking ahead, UK Coal says it has the potential to run a profitable business for as long as reserves allow, but only if two challenges are met - continuing to improve efficiency, and persuading the government to come round to its way of thinking on forthcoming European regulations on sulphur dioxide emissions.
Regarding improved efficiency the company cites the developments at Maltby, and similar working patterns which are planned for its Kellingley facility, despite resistance from the unions.
"The challenge is to bring the industry round to accept the change and benefit from it as we will benefit from it," said Pat O'Brien, managing director of mining operations at UK Coal.
"Change is not easy in this industry, but it has to be that way if we're going to get the efficiencies out of the machines we are buying."
For forthcoming anti-pollution laws, namely stringent European regulations on sulphur dioxide emissions that come into force in 2008, UK Coal hopes that the government will press for desulphurisation units to be fitted at coal-fired power stations rather than simply limiting emissions.
It says the latter would mean pit closures because the high sulphur content of much UK coal would encourage the power companies to import cleaner sources from overseas.
This issue is now at the consultation stage, but UK Coal has said that it fears the government is leaning towards choosing reduced emissions.
Despite these concerns, Nigel Yaxley, marketing director at UK Coal, says the future still remains optimistic.
"If you look at the size of the UK market last year, it was about 53 million tonnes of coal burnt, which was the highest figure since 1996," he said.
"Various factors, not least the emission trading for carbon dioxide is going to drive down the size of that market to about 38 million tonnes.
"But even at that level there is sufficient market to burn all of the coal that we and our UK competitors can sensibly produce."