'Biggest ever' coal deal revealed

Longannet in Fife is one of Scottish Power's two coal-fired power stations

A coal-supply deal worth up to £700m has been announced which is believed to be the biggest ever in Scotland.

The five-year agreement between Scottish Power and Scottish Coal will mean the creation of more than 100 jobs.

It was described by First Minister Alex Salmond as a "declaration of faith" in coal as a fuel source.

A significant proportion of Scottish Power's supply requirements will be met under the deal.

It will be worth up to £700m, depending on the amount of coal needed.

Ignacio Galan, chairman and chief executive of Scottish Power's parent firm, Iberdrola, discussed the deal with Mr Salmond on Wednesday and also met Finance Secretary John Swinney.

Mr Galan said: "Through this agreement, Scottish Power is also demonstrating its support for Scottish coal, offering important opportunities for Scottish jobs and the Scottish economy, while reinforcing our commitment to coal generation in Scotland."

'Protect workforce'

Mr Salmond said he met with Mr Galan on the day he became first minister on a trip to Longannet to discuss the firm's plans for coal.

He described the deal as "a declaration of faith in coal" and said it "shows that coal is a fuel of the future and not the past".

The coal is expected to come from reserves in Fife, the Lothians, Lanarkshire and Ayrshire. The firm currently mines in nine separate sites spread across the central belt of Scotland.

Scottish Power uses between four and six million tonnes of coal per year at two coal-fired stations, Longannet in Fife and Cockenzie in East Lothian.

Brian Staples, deputy chairman of Scottish Resources Group which owns Scottish Coal, said the deal would protect the current workforce and create more than 100 new jobs.