Blow for coal as profits suffer and MPs reject industry pleas for help

Click to follow
The Independent Online
BRITAIN'S biggest coal producer, RJB Mining, suffered a double setback yesterday, as an influential committee of MPs ruled out government intervention to rescue the coal industry and shareholders were warned of declining profits and dividends.

The report from the Commons Trade and Industry Select Committee urged the Government to lift its moratorium on consent for further gas-fired stations as soon as possible.

The committee said the deep-mined coal industry was now so small that any further mine closures would cause its "complete annihilation". But it ruled out preserving a given level of capacity no matter what the economic and environmental cost and accused RJB, led by Richard Budge, the chief executive, of having been the architect of its own troubles.

The committee said: "The commercial judgement and negotiating tactics of RJB Mining are both open to criticism." The company could have been "more energetic" in driving down costs but instead "anticipated all along that it would be rescued by some package of Government assistance".

Publication of the report came as RJB announced a 9 per cent fall in profits last year from pounds 189m to pounds 172.5m. The company also said dividends this year were likely to be cut and its banking facilities would have to be renegotiated if sales fell significantly.

Martin O'Neill, chairman of the select committee, said there could be a future for British coal if the Government took steps to open up the generating market, curb imports of electricity from France and back the development of clean coal technology. The committee called for the shelving of tougher environmental controls on power station sulphur emissions.

Mr O'Neill said it was inevitable there would be some pit closures. RJB has 27 million tonnes of capacity but is only likely to get contracts this year for 17 million tonnes. The Government is thought to be working on a plan to secure a market for coal of 25-30 million tonnes. Generators speculate it may curb the "dash to gas" by refusing consent for some stations that already have planning approval and forcing operators to hold stocks of gas oil at stations.