The problem has not been investment - it's all about geology

Alec Galloway, UK COAL

Last year, UK COAL discovered two underground faults which led to plans for a multi-million pound development to gain access to eight million tonnes of untapped coal, being shelved.

An independent review of the pit was commissioned and paid for by the Department of Trade and Industry to look into the faults.

The company told unions on Wednesday that the adverse geological conditions in the "limited" remaining reserves meant further investment could not be justified.

The pit, which dates back to 1860, will cease production in September when two existing coal faces are exhausted.

The salvage of underground equipment will take a further two months.

The Prince of Wales Colliery dates back to the 1860's

UK COAL said the in-depth review had shown that the pit would make "substantial losses" for the foreseeable future because of difficult mining conditions.

The most optimistic forecast showed losses of �36 million over the next two years, rising to �164 million under different options.

Alec Galloway, UK COAL's Deep Mines managing director said: "Prince of Wales has made a major contribution to meeting Britain's energy needs.

"The problem has not been investment - it's all about geology.

"There can rarely have been such an in-depth review of options in an effort to maintain mining operations.

Specific problems

"Regrettably, none of them stack-up financially."

The pit, one of 14 operated by UK COAL, produced coal mainly for power stations.

Energy Minister Brian Wilson said it was important to note that production was being increased at other pits.

"This closure does not reflect any general turndown in the industry but the apparently insuperable difficulties which are specific to the Prince of Wales colliery."

The government would work closely with the company to secure as many jobs as possible, the minister pledged.