A war of the words is heating up over the Drax power station

UK Coal, current supplier of the North Yorkshire power station, had said BHP's offer would see its supplies to the site halted, leaving 9,000 jobs under threat.

BHP has offered to buy Drax's debts for �95m, but that offer would be conditional on it being given control of the plant's coal supply arrangements.

The Anglo-American mining giant is expected to use its own coal from cheaper mines in South Africa and South America to fuel Drax if its bid is accepted.

UK Coal said that would lead to the closure of at least three of its mines and the loss of 3,000 UK Coal posts and 6,000 related jobs.

Currently, UK Coal holds the contract to supply Drax - a deal worth up to �250m a year and about a third of its total output.

It also signed a five-year supply deal with the power station in 2001.

Supply worries

But a spokesman for BHP Billiton said that the group intended to honour all of the power plant's supply contracts.

"What we have offered to do is be coal supply manager for Drax, which means we will source coal from everywhere.

BHP Billiton denies claims its bid for the Drax plant would mean job cuts

"UK Coal's existing contracts will be honoured.

"Even if we become Drax's coal supplier that doesn't preclude us from getting other supplies in the UK and elsewhere."

Over the weekend UK Coal chief executive Gordon McPhie said he would consult the Office of Fair Trading about the deal, saying the coal supply arrangements were anti-competitive.

The huge Drax power station became available earlier this month when its American owner AES abandoned restructuring plans for its �1.3bn debt when it failed to reach agreement with creditors.

The plant has been hit by a slump in wholesale electricity prices, and was plunged into crisis last year when its biggest customer, electricity supplier TXU, was put into administration and failed to pay a �50m bill.

Investment bank Goldman Sachs and International Power are also interested in the site, but their bids were trumped by BHP's eleventh hour offer.

Their bids were due to lapse on Friday, but the deadlines have now been extended after the plant's owner asked for more time to consider the offers.