UK Coal, which took over privatised mines, is to hive off property interests and split collieries into separate companies
Britain’s largest remaining coal mining business has reported a £20m first-half pre-tax loss and been forced to hatch a radical plan to try to pay off a £450m hole in its pension pot.
UK Coal, which inherited most of the privatised mines in England and Wales, is to hive off its property interests and divide its collieries into self-standing companies.
Bank debt is to be lifted off the mining business under an agreement with financiers that must be still endorsed by shareholders. Management is also hoping to reverse a vote by staff against new streamlined working conditions at the closure-threatened Daw Mill mine in Warwickshire (above).
Jonson Cox, chairman of UK Coal, admitted the total pension liabilities of the business now stood at £900m but he remained confident the £450m deficit could be filled, even if Daw Mill has to close.
He admitted the division into separate companies was designed to ensure that the financial collapse of one mine would not bring down the rest, and the pension deficit must be paid off by revenues produced from these operations which may only run for another 10 years at most.
The company, which has three deep mines and a number of open cast operations, has seen its production slump from 4.1m tonnes to 3.3m over the same period of 2011 due to geological and operational problems at Daw Mill and Thoresby in Nottinghamshire. In the first six months of 2011, UK Coal reported a profit before tax of £22m.