Crisis stalks mining industry
WORKERS, JUNE 2006 ISSUE
While Blair makes friendly noises towards nuclear generation, the coal industry staggers from crisis to crisis. On the one hand mothballed Hatfield Main is set to be re-opened by Powerfuel, headed up by Richard Budge (formerly of UK Coal) and attracting over £800 million of Russian investment, and employing 350 miners. The target here is 100 million tonnes of coal reserves. In addition to re-opening the pit Budge is planning a clean-coal power station, meeting targets for CO2 global emissions.
On the other hand UK Coal, under financial pressure as a result of its pricing and the contracts it has signed with the electricity generators, is threatening to close five of its seven remaining pits – putting at risk 1,500 miners' jobs.
UK Coal's argument is based solely on greed and profit returns. The world price of coal has doubled over the past two years. But locked in by the contracts it accepted, UK Coal has not been able to capitalise on the rising prices. Electricity generation has begun to switch back to coal from gas as gas prices have rocketed and supplies have become scarce. UK generators are paying nearly £10 more per tonne of imported coal than they are for British coal.
The choice is stark: over 230 million tonnes of coal reserves in the Yorkshire coalfield could be lost to production within the next 18 months if UK Coal closes or reserves that are expected to last for the next 200 years are not available for Britain's power stations.
The recent government White Paper on Energy supports the prospect of 90% of Britain's energy needs being met by imports by 2020, an unbelievable situation considering Britain's huge coal reserves. As Russian investment moves into Hatfield, a collapse or takeover of UK Coal – with Russian, US, German and French mining companies hovering in the wings – seems imminent.