UK Coal may close biggest mine

UK Coal is consulting on closing the biggest coal mine in the UK under plans to restructure the business, jeopardising 800 jobs.

The group is considering closing Daw Mill near Coventry by early 2014 when current coal panels will have been exhausted and has stopped work to extend production beyond then.

UK Coal is a major supplier to Britain's coal-fired power stations from three deep mines and six surface mines.

It said Daw Mill has considerable long-term resources but production is 175,000 tonnes behind budget.

The company returned to profit earlier this year for the first time in four years but chairman Jonson Cox recently said Daw Mill was the greatest risk to output this year due to a change in the coal face.

The pit has been dogged by productivity problems in recent years, including a four-month gap in production which cost it £75 million two years ago.

UK Coal recently agreed a deal with unions which included a two-year pay freeze and a new shift system. But with production having failed to hit targets, UK Coal announced that it would carry out a review over the mine's future.

It said it wants to ensure that financial uncertainty at Daw Mill does not impact on the rest of its business, which includes the two other deep mines at Thoresby in Nottinghamshire and Kellingley in North Yorkshire.

UK Coal said an increase in production and a fall in operating costs in coming months could secure its future but added that the mine would only be sustainable under a "lower risk operating model".

The company said it has also entered into negotiations with its main banker, Lloyds, and that it was confident it will be able secure new facilities on the back of its restructuring plans.