Price surge boosts mining profits

Nottinghamshire was once one of Britain's biggest coal producers

The UK's largest coal producer says a surge in the price of coal is turning around its mining profits.

UK Coal said a 45% rise in the market price of coal since the start of the year would mean an annual profit, despite losses in the first six months.

The firm is now projecting full-year profits of about £70m.

It has already started tests on the viability of re-opening its Harworth site in Nottinghamshire - and a decision is due early next year.

UK Coal's chief executive John Lloyd said: "We need to prove that coal (at Harworth) is of the quality we believe it to be and it is workable and accessible."

Mothballed pit

It is possible that a new seam at Harworth could give it bigger reserves than Daw Mill in the West Midlands - Europe's biggest single colliery - which currently has about 22 million tonnes.

The Harworth pit was mothballed after closing in December 2006 and would take several years to prepare for production, a UK Coal spokesman said.

Demand has remained strong because UK electricity generators viewed coal as more profitable to burn than gas.

The company is Britain's biggest producer of coal, supplying about 15% of all the coal burned - equivalent to the energy needed to provide 5% of the country's electricity needs.

The average sale price in the first half of the year rose by 18% to £1.79 per gigajoule, but UK Coal said some production sold on the open market for up to £4.

Bottom-line losses for the half year were £9.9m against profits of £40.6m in the same period a year earlier.