Although no price has been given for the privatisation of British Coal's mining operations, there has been speculation that it might raise about pounds 500m. The Government hopes to sell the mines by the end of this year, but the sale of other parts of the business is not included in the privatisation process and is the responsibility of British Coal's management. Among the non-core operations are: Coal Products, a Derbyshire manufacturer of smokeless fuels; British Fuels, a solid-fuel retail company; British Coal Enterprises, which specialises in job creation; and Compower, a computer subsidiary in Cannock, Staffordshire.
British Coal also has wholly owned pension-related businesses and research and development companies. In addition, it is the main shareholder in International Mining Consultants in Nottinghamshire, one of the largest coal-mining consultancies in the world.
British Coal is thought to have been approached by management buyout teams interested in taking over some of the non-core businesses, the sale of which may prove less complex than the Government's privatisation of the mines.
It remains unclear exactly how much of British Coal's massive liabilities - thought to be about pounds 2bn - the new colliery owners will have to shoulder. Potential owners will also be concerned about coal sales to the generators, National Power and PowerGen, when the existing supply contracts run out in 1998.
The Government hopes to sell up to 32 deep mines, but that includes some already operated under licence by private companies and six already closed but kept on a care- and-maintainence basis by British Coal. Only 16 of British Coal's deep mines remain in operation compared with 50 in October 1992.
The core of the industry, including deep and opencast mines, will be sold in up to five regional packages, although ministers have not ruled out selling more than one package to a single buyer. The six mines on care and maintenance will be offered separately, although there is some doubt as to whether buyers will be found. The mines could cost up to pounds 200m each to reopen.
Those companies known to be interested in buying parts of British Coal include: RJB Mining, one of the largest UK private mining companies; Ryan, the Welsh mining group that has formed a partnership to bid for the Scottish mines; and Coal Investments, run by British Coal's former commercial director, Malcolm Edwards. In addition, management buyout teams are interested in taking over their local mines.
The Government has sent out about 100 information packages. Potential bidders must make a 'pre-qualification application' by 25 May and will have to pay pounds 15,000 for further information on each regional package in which they are interested. Three-quarters of the money will be refunded to companies unsuccessful in the bidding.Reuse content