Reopen the Hatfield colliery in Yorkshire

Former RJB Mining and UK Coal chief, Richard Budge has unveiled plans to reopen the Hatfield colliery in Yorkshire, UK by May of next year as a reflection of the revived fortunes in the UK coal industry.

Mr Budge – or King Coal as he’s dubbed due to him once buying up most of the UK coal industry – has taken advantage of continued high international coal prices and governmental concern over energy security by breathing life into the previously mothballed Yorkshire colliery.

With financial backing being filtered through his recently floated new company – Powerfuel – King Coal is planning to mine 27 Mt of coal at Hatfield between 2007 and 2023 and there are plans in the pipeline for the construction of a clean coal power station on the Hatfield site with operation projected to be by 2009.

Despite previous problems to mine at Hatfield, Mr Budge is bullish about its resurgence as an increase in the price of coal over the past three years has meant UK coal mines are more economically viable than they were during the UK Government’s last energy review in 2003.

However, despite the return to favour of coal the UK industry is still far from being a global contender as the country’s few remaining mines still face financial challenges and plans to open new mines are often thwarted by harsh planning policies.

But Mr Budge remains upbeat over the outlook of the UK commenting, “there is every prospect” of new mines opening given the improved market and speaking in the Financial Times he said: “The market has come to the project. Coal prices are 50% higher – US$60/t not US$30/t – and gas prices are 50p a therm not 20p a therm.”

Higher coal prices mean mining coal is now more lucrative and the steep rise in the price of gas signifies coal is still a relatively cheap option for power companies.

In 2001 Mr Budge bought the Hatfield colliery, but after only three short years the pit was closed due to a fall in coal prices and a delay in a governmental subsidiary scheme for the industry.

Speaking with Coal Magazine, John Delaney, corporate affairs manager at The Coal Authority expresses his delight at the reopening of Hatfield: “We are more than pleased,” he said. “We are always looking for an economically viable development and this is a tangible way forward for the industry here in the UK.”

But is it? UK Coal, the biggest coal produce in the country, has warned that the much-trumpeted renaissance of the UK coal industry could be about to come to a shuddering halt unless power companies pay more for their fuel (see Comment, p3, issue 10).

In a submission to the government’s energy review the producer is threatening to close five of its seven pits and cut 1,500 jobs unless it can force through price rises with some of its major customers like Eon, Drax and Electricité de France.

Thoresby, Welbeck and Kellingley are being touted as possible pit closures in the “near future”, in addition to Harworth and Rossington, accounting for 233 Mt of reserves.

Despite the return of coal, UK Coal has been unable to take advantage of these rises because it is locked into long-term contracts.

Talks have opened with power companies, with the outcome of which being vital to ensure the continued viability of the UK coal industry.

Worryingly on top of this, during his speech to the Confederation of British Industry on May 16, UK Prime Minister Tony Blair, said: “I received the first cut of the Review. The facts are stark. By 2025, if current policy is unchanged, there will be a dramatic gap on our targets to reduce CO2 emissions; we will become heavily dependent on gas; and at the same time move from being 80/90%, self-reliant in gas to 80/90% dependent on foreign imports, mostly from the Middle East and Africa and Russia.

“These facts put the replacement of nuclear power stations, a big push on renewables and a step-change on energy efficiency, engaging both business and consumers, back on the agenda with a vengeance. If we don’t take these long-term decisions now, we will be committing a serious dereliction of our duty to the future of this country.”

Commenting on Mr Blair’s speech, Steve Kemp NUM national secretary, said: “Whilst we are waiting for the results of the Energy Review later this summer it is nevertheless extremely disappointing that the Prime Minister has once again ignored, in his speech to the CBI, the vital and essential role that British deep-mined coal can play as part of the nation’s energy requirements.

“We would urge the prime minister to carefully read our submission to the Energy Review and invest in the clean coal technologies now available and those being developed and let British deep-mined coal play a full part in sustaining our energy supply without the need to rely on imported energy sources.” (See p21 for full comment.)

It is common knowledge that Mr Blair is a supporter of nuclear power and it is his support, which could ultimately end the much-hyped rebirth of the UK coal industry. Only time will tell if this is so.

By Bree Freeman

Editor, Coal Magazine