More redundancies are in the pipeline

UK Coal, which operates 12 pits and employs about 7,000 people, has been hit by mounting problems at its largest pit complex at Selby, in North Yorkshire.

The site, which includes three deep mines, has lost UK Coal about �120m over the past four years, largely due to geological problems.

It is due to close within the next year with the loss of 2,000 jobs.

Cost-cutting

The cost of redundancies at Selby and the nearby Prince of Wales colliery added up to a �55.6m drag on profits, the company revealed on Thursday.

Stripping out these and other one-off costs, the company said it actually made a profit of �8.4m in 2002.

The company, which was formerly known as RJB Mining, has benefited from a ruthless cost-cutting programme over the past two years.

But it has also had to battle low international coal prices and continuing geological problems.

Rethink urged

The collapse last November of TXU Europe, which led to the temporary suspension of deliveries to the giant AES Drax power station, has also had an impact.

UK Coal's turnover fell from �662.5m in 2001 to �596.6m, Thursday's figures revealed.

But chief executive Gordon McPhie said the business was showing signs of recovery, with the geological problems facing its Daw Mill site in the West Midlands easing.

The first of Selby's three deep pits, Wistow, is due to close by Christmas, followed by the other two, Stillingfleet and Riccall, next year.

The National Union of Mineworkers published a report last month urging a rethink.

But Energy Minister Brian Wilson said it seemed unlikely to change the position that there was not an economic future for Selby.