U.K.'s Largest Coal Producer Enters Administration

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The largest remaining coal mining firm in the U.K. has entered into administration in a move that it claims will help save 2,000 jobs.

UK Coal (Doncaster, England) announced the move this week, four months after a major fire led to the closure of Daw Mill Colliery in Warwickshire, the largest deep coal mine still operating in the U.K., with the loss of up to 650 jobs. For additional information, see August 21, 2013, article - Daw Mill Coal Mine Shutting Down.

Daw Mill Colliery 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. The closure of Daw Mill has meant that UK Coal is putting both UK Coal Mine Holdings Ltd (UKCMHL) and UK Coal Operations Ltd (UKCOL) into administration. Pricewaterhouse Coopers (PwC) and BDO LLP have been appointed as administrators. They said that they have 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 government's Pension Protection Fund.

Coal mined by UK Coal is responsible for generating 6% of the U.K.'s electricity through supply deals with the massive 4,000-megawatt (MW) Drax power station in North Yorkshire and three other power stations in Nottinghamshire. UK Coal accounts for about half of the coal mined in the U.K.

"Today is very much a day of mixed emotions, but this is the best outcome that it was possible to achieve," claimed Kevin McCullough, Chief Executive of UK Coal. "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."

U.K. Energy Minister Michael Fallon, commented: "I would like to thank all parties involved for the tremendous effort they have made to ensure a future for UK Coal at this very difficult time. The restructuring announced by PwC today should secure more than 2,000 jobs and put the company on a stable footing for the future".

UK Coal has created a new parent company - UK Coal Production Ltd -- to oversee the new operation.

U.K. coal production has been on a steady decline since the 1980s when many uneconomic mines were forcibly shut by the then-U.K. government, under Margaret Thatcher. In April this year, one of Scotland's leading coal producers, Scottish Coal (Alloa, Clackmannanshire), went into liquidation with the loss of almost 600 jobs. The company operated six open cast coal mines in Scotland, located in East Ayrshire, South Lanarkshire and Fife. For additional information, see April 23, 2013, article - Scottish Coal Collapses.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.