UK Coal plans to close biggest mine

UK Coal is consulting on closing the biggest coal mine in the UK under plans to restructure the business, jeopardising 800 jobs. The group is considering closing Daw Mill near Coventry by early 2014 when current coal panels will have been exhausted and has stopped work to extend production beyond then. UK Coal is a major supplier to Britain's coal-fired power stations from three deep mines and six surface mines. It said Daw Mill has considerable long-term resources but production is 175,000 tonnes behind budget. The company returned to profit earlier this year for the first time in four years but chairman Jonson Cox recently said Daw Mill was the greatest risk to output this year due to a change in the coal face. The pit has been dogged by productivity problems in recent years, including a four-month gap in production which cost it £75 million two years ago. UK Coal recently agreed a deal with unions which included a two- year pay freeze and a new shift system. But with production having failed to hit targets, UK Coal announced that it would carry out a review over the mine's future. It said it wants to ensure that financial uncertainty at Daw Mill does not impact on the rest of its business, which includes the two other deep mines at Thoresby in Nottinghamshire and Kellingley in North Yorkshire. Former miners' union leader Arthur Scargill recently visited the Daw Mill site to urge workers at the pit to hold their ground and fight for their rights. UK Coal said an increase in production and a fall in operating costs in coming months could secure its future but added that the mine would only be sustainable under a "lower risk operating model". The company said it has also entered into negotiations with its main banker, Lloyds, and that it was confident it will be able secure new facilities on the back of its restructuring plans. It swung from an interim loss of £93.2 million to a profit of £22.1 million in the six months to June as revenues jumped more than 80% to £256 million and average prices rose by 20%. UK Coal had posted losses totalling £270 million over the previous three years due to persistent production problems. It bought the English assets of British Coal for £815 million in 1994 when the state-owned business was privatised.