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Last Updated: Monday, 29 November, 2004, 16:45 GMT
Planning fears hit UK Coal shares
Miner after last shift at Selby
UK Coal axed its Selby pit in July
Shares in UK Coal have foundered after the company warned it would have to set aside millions of pounds to cover problems with planning permission.

UK Coal said planning permission hitches could lead to additional costs of up to 16m this year.

It also warned that work to restore the landscape around a Northumberland mine will cost more than planned after plans to extend the mine were blocked.

Shares in the group closed down 28.5p, or 16.9%, at 140p on Monday.

Higher costs

UK Coal said it had been forced to set aside 11m of its profits to meet tighter planning rules and costs, but warned that could rise by a further 5m.

Meanwhile, the group was refused planning permission to extend its mine in Stobwood, Northumbs - and if the rejection is upheld on appeal the cost of restoring the site will be more than it had accounted for.

In its trading statement, UK Coal warned higher planning and environmental costs have hit it hard, as have rising energy, steel and pension charges.

Overall, we are disappointed with the mining performance of the company in 2004
UK Coal

"Overall, we are disappointed with the mining performance of the company in 2004," UK Coal said in its trading statement.

Sales fell to 4.4 million tonnes in the four months to October, from 5.7 million tonnes during the same period a year earlier.

Meanwhile, its deep mining operations had underperformed in the first 10 months of the year, with production unchanged at 3.2 million tonnes.

Output had been hit by geological problems and the cost of moving equipment from one coalface to another, the firm said.

The UK's biggest mine operator also announced that it would be reviewing the viability of its underperforming collieries.

Mine review

The firm is to carry out a review of its mines and while it refused to rule out mine closure, it said there would be no job losses.

Last month, the group closed its Selby "superpit", which opened in 1976 and employed 3,500 miners at its height.

"We will take action to address the underlying problems in 2005 by resolving long- standing issues and by appropriate investment in collieries, " the firm said.

"This will allow the company to realise its full potential by returning it to profitability in 2006 and beyond," the firm added.

The firm said its operating performance had improved over recent weeks, under the leadership of new chief executive Gerry Spindler - a veteran of the US mining industry.

More than 60% of all coal mined in the UK is produced by the Doncaster-based company at collieries or surface mine sites principally located in the west and east Midlands, Yorkshire and the North East.

Most of the coal is used to generate electricity, with UK power stations consuming some 53.2 million tonnes in 2003 - the highest since 1996.

But while worldwide prices have improved 40% year-on-year, UK Coal has been unable to take full advantage of the rise thanks to long-term contracts.


SEE ALSO:
'Superpit' closes after 28 years
26 Oct 04 |  North Yorkshire
Coal group sinks deeper into red
08 Sep 04 |  South Yorkshire
UK Coal warns of threat to jobs
14 Jun 04 |  Business
Memories of the miners' strike
12 Mar 04 |  Working Lunch
Burning desire remains for coal
11 Mar 04 |  Business
Can the UK coal industry survive?
04 Mar 04 |  Business


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