Kellingley is due to take some miners from the Selby pits

The Doncaster-based firm plans to sell of its majority 97% stake in Gloucester Coal to an investment bank for �21.5m.

Some of the cash will be used to pay for new coalface tools at its sites in Kellingley, West Yorkshire and Daw Mill in Warwickshire, the company said.

UK Coal had been trying to sell its share of the Australian company for about two years.

It initially paid �12m for a 12% stake in the New South Wales-based company in May 1996, then increased its interest to more than 80% in October 1999.

Pit dispute

The sale will allow the company, formerly known as RJB Mining, to concentrate on improving its performance in the UK.

In March UK Coal announced it had slashed its losses thanks to a programme of restructuring and cost-cutting

It reported a pre-tax loss after exceptional items of �1.2m for 2003, substantially down from 2002's �83.1m loss.

Broker Seymour Pierce said the sale to bank ABN Amro Rothschild was at the top end of expectations and would help cover a capital spending gap of �55m.

The figure includes �30m of redundancy costs from the closure of the Selby pit.

Workers at Kellingley, which is due to take 240 workers from Selby, have been in dispute with the company over proposed changes to their working hours.