Scotland business

Hargreaves to halt output at most Scottish opencast mines

Open cast mining

Solid fuel supplier Hargreaves Services is to halt coal production at all but one of its seven opencast sites in Scotland over the next few months.

The firm said operations had become loss-making as a result of falls in coal and gas prices.

It has already been cutting output in Scotland in response to reduced demand for thermal coal from power stations.

By mid-2016 it will focus on just one unidentified site, producing coal for domestic and industrial use.

The company also said it would "deliver restoration commitments at the remaining Scottish sites as efficiently as possible".

Hargreaves did not say what impact the move would have on jobs. In July 2014 it had a headcount of 500.

Its existing sites in Scotland are Broken Cross (South Lanarkshire), Duncanziemere, House of Water and Netherton (East Ayrshire), Glenmuckloch (Dumfries and Galloway) and Muir Dean and St Ninians (Fife). It also runs two mines in England and Wales.

Hargreaves recently announced that it would halt coal extraction at Muir Dean this month as a result of an "ongoing lack of demand".

In its interim first-half results to the end of November, Hargreaves said its combined surface mining operations in Scotland, England and Wales recorded a £3m operating loss, compared with a profit of £8m in the previous reporting period.

In a statement, Hargreaves said: "Significant falls in international coal prices have made our coal production operations loss-making.

"Changes in carbon taxes in March 2015 and a dramatic fall in gas prices has significantly reduced the demand for thermal coal from UK power stations in the first half.

"In response to these challenges the group has reduced production levels in its Scottish operations and, as previously communicated, will continue to work through a programme of further reduction to a position where the group's coal production in Scotland is on a single site by the middle of this calendar year.

"This operation will focus on the production of speciality coals."

Hargreaves mined more than 300,000 tonnes of coal across its Scottish sites in the first half, but said that extremely mild and wet weather continued to adversely affect its production and restoration operations.

It added: "Since the announcement in December 2015 that forward mining plans would be reduced, a decision has been taken to target 350,000 tonnes of production.

"The group remains committed to completing all of its current restoration schemes and has made the decision to invest in new and enhanced coal processing facilities which will reduce the group's exposure to loss-making thermal coal.

"The enhanced processing capability will improve yields of speciality coal from our production operations and help to support our valuable trading channels in industrial and domestic markets."

'Dying industry'

The Scottish Opencast Communities Alliance called on government and the coal industry to work together to restore abandoned opencast sites in Scotland "before it is too late".

Chairman Malcolm Spaven said: "Weak companies in a dying industry won't pay for restoration.

"We need all parties - Scottish and UK governments, local government, agencies like the Scottish Mines Restoration Trust, the Coal Authority and the Forestry Commission - to work together to pool all available money before this industry ceases to exist and communities are blighted forever."

He added: "We urgently need to know the cost of the remaining restoration required at each site so that the scale of the task facing abandoned communities is understood."

Related Topics

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites