British Coal to axe 25,000 in closure of 30 collieries

BRITISH COAL is to close 30 pits with the loss of 25,000 jobs in preparation for privatisation next year - a reduction of around 60 per cent in its present mining capacity.

Ministers were hoping that the politically highly-charged announcement would be made by the end of September, but difficulties in agreeing new contracts between British Coal and the electricity industry could lead to a prolonged delay.

To soften the blow, the Government is planning massive packages of aid to the worst-hit areas in Nottinghamshire and Derbyshire. Ministers hope to be able to offer aid similar in size and scope to that given to the steel towns of Corby and Consett.

Areas dominated by the Union of Democractic Mineworkers, which boycotted the coal strike of 1984/5, will be worst hit by the closures. One of the most severely affected towns will be Mansfield, where unemployment will rise to well over 20 per cent.

The closures will leave British Coal with just 20 pits employing some 25,000. In the mid-1980s, the British coal industry employed more than 220,000.

Ministers are leaving open the option of floating the remaining pits on the stock market as a single company, but it is thought more likely they will be sold off piecemeal to trade buyers such as Hanson and foreign mineral extraction concerns.

A spokesman for the Department of Trade and Industry denied that any hit list of pits earmarked for closure exists. British Coal said: 'Any such list would not be sourced from us. We need to have future contracts with the generators secured before we can make those decisions.'

However, ministers have instructed civil servants to construct aid packages based on the planned closure of 30 pits. British Coal has already indicated that a large number of pits will not survive indefinitely.

These include Easington and Vane Tempest in the North-east, Markham Main in South Yorkshire and four collieries in the Midlands and Wales - Bolsover, Parkside, Bettws and Taffmerthyr.

At present, British Coal has 50 working deep mines compared with 169 in the mid-1980s. According to the British Association of Colliery Managers, once the numbers fall to 40, further closures would involve modern, profitable mines.

At the same time, negotiations over coal contracts have reached deadlock, with no proposals on the table from British Coal. At stake is what price generators pay for their coal and the quantities they are committed to purchase.

Present contracts expire next spring and generators want to switch more to cheap coal imports and natural gas. At the moment, British Coal sells 65 million tons - around 80 per cent of its output - to National Power and PowerGen.

The generators are refusing to sign a coal deal unless the regional supply companies sign parallel contracts to buy all the electricity generated from the coal.

Sources in the electricity industry say that ministers will have to take the initiative to force a compromise. It would be highly embarrassing for the Government to be seen to force a deal on privatised electricity companies. But British Coal itself cannot be privatised until a deal is secured.

Another source of disagreement is the desire of generators not to pass on the entire benefit of lower coal prices.

(Photograph omitted)