UK Coal soars as Whitehall gives thumbs up to Dark Lord

Robert Lea
27 Apr 2009

It has been feted as the Return of King Coal or the Rise of the Dark Lord of the energy sector.

And the shock re-emergence of the dark stuff at the centre of Whitehall energy policy has sent the prospects of UK Coal, the stockmarket-quoted remnant of the British coal industry, soaring, according to its bosses.

Energy Secretary Ed Miliband last week gave the go-ahead for the construction of four new coal-fired power stations — the first to be built in the UK since the Seventies.

To placate the environmental lobby, these new plants will be fitted with “carbon capture and storage” facilities. CCS takes the carbon dioxide emitted from burning fossil fuels and aims to store it in spent oil or gas fields under the North Sea. It is, however, a technology as yet unproved anywhere on a commercial scale and is only now getting the go-ahead in the UK after the commitment by the Treasury to £90 million of research and development tax breaks.

But UK Coal chief executive Jon Lloyd said: “This bodes extremely well for the indigenous coal industry.

“It puts coal right back at the centre of the energy mix, putting coal forward as part of the solution to energy security in this country.”

If UK Coal is to take advantage of any such new era, it will have to do operationally better than last year. Its 2008 results out today reveal a £15 million slump into the red after geological and technological problems at its deep mine collieries at Thoresby in Nottinghamshire and Kellingley in West Yorkshire.

Lloyd said new virgin coal seams and an expected continued performance from Daw Mill on the Warwickshire coalfield should significantly increase output.

Financially UK Coal has also arranged better contracts with its main customers, Drax, E.On and EDF which operate the big coal-fired plants of the Midlands and Yorkshire and has added Scottish & Southern Energy's giant Ferrybridge plant as a new customer.