UK Coal rescues 2,000 jobs in administration deal

UK Coal has entered administration in a deal that will save the viable parts of the business along with 2,000 jobs but will lead to the redundancies of 350 from the troubled Daw Mill colliery.

Daw Mill was subject to a devastating fire in March that caused the closure of the colliery.

Production of coal from Daw Mill represented around a third of UK Coal’s revenue and the forced closure of the mine had threatened the ongoing viability of UK Coal Operations’ remaining two deep mines and six surface mines.

In a statement UK Coal said “a result of the problems that the Daw Mill fire created for UK Coal, both UK Coal Mine Holdings and UK Coal Operations have today gone into administration”.

Administrators from PriceWaterhouse Cooper (PwC) have now separated out the viable operations of the group and agreed a compromise with major creditors, including the Industry Wide Pension Funds, which will see the pension schemes transfer to the Pension Protection Fund “in due course”.

The viable mining operations have now been restructured and their assets will now be held in individual companies owned by a new business which will operate as UK Coal Production Ltd.

The company said that although 350 employees at Daw Mill will be made redundant, 120 will be redeployed to other mines.

Kevin McCullough, chief executive of UK Coal, said “Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve.

“Entering administration and the subsequent restructuring was the only way we could preserve any of the business and while I’m delighted we’ve saved 2,000 jobs, we’ve also had to make some very difficult decisions.

“I’m pleased that we managed to transfer 120 of our Daw Mill colleagues to our other mines following the fire. Our thoughts today also rest with the 350 colleagues who will now, regrettably, be made redundant as a result of Daw Mill closing.”