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Government is extending a £10 million loan to UK Coal to manage the closure of two deep-pit coal mines, energy and business minister Michael Fallon has confirmed.
This will be matched by the private sector, with coal supplier Hargreaves Services and land manager Harworth Estates investing £5 million each.
The funding will allow UK Coal to avoid immediate insolvency and phase out its Kellingley and Thoresby mines, which employ 1,300 people, by late 2015. The two mines’ closure will leave only one deep pit mine in the UK, the employee-owned Hatfield colliery.
Fallon said: “Our commercial loan, as part of this private sector-led initiative, can support a managed closure that is in the best interests of the taxpayer and employees. The only alternative was immediate insolvency.”
A strong pound and glut of cheap coal on the international markets have left UK mines struggling to compete. UK Coal continues to run six surface mines, however.
Kevin McCullough, chief executive of UK Coal, said: “We are pleased that the government has indicated a commitment to this deal which will give other parties the confidence to conclude their own positions.
“This proposal offers the best opportunities for our workforce, our customers and our suppliers. Without the support to close the business on a phased basis to 2015, we would have been announcing an immediate insolvency and 2,000 job losses. We will work with government departments and agencies to find alternative work, or support, for employees as they leave the business over the next eighteen months.
“Regrettably, the historically low international coal price and a strong pound, mean our costs are too high to sustain an ongoing business and this is the only option available to the business.”
Coal power generation company Eggborough, which itself hangs in the balance, voiced support as UK Coal revealed its troubles last week. Chief executive Neil O’Hara said failure to save the mining company would have a “disastrous” impact on energy security and prices.
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