Short-term support, long-term hope
Just last week in our news piece ‘The Mining Minority’ we talked of the prospect of just a single deep-pit coal mine being left in operation in the UK.
In the face of this, Michael Fallon, the energy minister, confirmed plans to extend a £10m loan to delay the seemingly inevitable shutdown.
As part of a consortium ‘rescue’ package from the government, coal suppliers and other organisations, a total of 2,000 jobs could be saved and ensure continued operations, at least for a short while.
UK Coal, the operator of Kellingley in Yorkshire and Thoresby in Nottinghamshire said
“This package will help the company avoid an immediate insolvency and allow the solvent closure of the deep mines and the repayment of the loans”
As we reported last week, UK Coal identified the below market cost of imported surplus American coal supplies for its current plight.
However UK Coal still expects the pits to close by the end of 2015.
Mr 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.”
However there may be more and crucially longer-term positive news on the horizon.
Friend of Business Juice, Better Capital, the private equity firm run by Jon Moulton, has expressed interest in acquiring elements of UK Coal’s portfolio.
Whilst Mr Moulton offered to provide an alternative source of funding for an “orderly wind down”, he told the FT he was looking at “all options” and that he thought the business could indeed have a longer-term future.
Here’s hoping, given Coal’s huge relevance to our current fuel mix, 38% in 2012/13, the market clearly exists, the question is do we have the economic will to make it work.