Role for coal helps mine operator

90% of the firm's coal was bought by power stations.

The biggest demand from UK power stations for more than a decade has helped Britain's biggest producer of coal return to profit in 2006.

UK Coal said that more of the fuel was burned in the production of electricity than at any time since 1996.

It reported an annual pre-tax profit of £17.6m, against a loss of £32.8m the previous year.

It added the price received for coal had risen by 28% over the year to $68 a tonne by December, helping profits.

Coal was now responsible for 41% of energy generation n the UK - with power stations consuming 58 million tonnes in 2006, up from 52 million tonnes in 2005, the company said.

UK Coal sold 8.8 million tonnes of its product to the industry - 90% of its total output.

However, this was slightly less than a year ago, because of lower than expected production, it added.

Property goldmine

UK Coal, formerly known as RJB Mining. employs 4,000 staff and operates deep cast mines in Northumberland, Yorkshire, Nottinghamshire and Warwickshire.

It said its 50,000-acre property portfolio was worth over £800m - having gained 25% in value in a year - and the company is expected to seek planning permission for much of the land and sell it to developers.

UK Coal also closed two deep mines last year, and this week agreed to sell its mine in Maltby, South Yorkshire for £21.5m.

"In mining, we have made clear that we will focus only on accessing and mining reserves where there is a clear prospect of creating substantial value over time," said chairman David Jones.

"This has led to a reduction in the number of deep mines in operation, as well as creating an improvement in operating profit and a sounder basis for developing the business in future."