British Coal is selling British Fuels, its last big trading activity and the UK's largest fuel distribution company. British Fuels, which has a turnover of £500m and 2,000 employees, may be sold in three packages with completion due by the autumn.
The Harrogate-based British Fuels has three separate activities - solid fuel distribution, oil and gas distribution and Cawoods, a fuels company in Northern Ireland.
A bid for the entire company is expected from a management team led by David Port, managing director. Cawoods management is likely to launch a separate buyout bid for the Northern Ireland operations. Other potential bidders are independent mining companies including RJB Mining and Coal Investments and rival distributor Anglo United. Ray Proctor, British Coal director of finance and privatisation, said there had been a "substantial" number of expressions of interest.
Within the old British Coal empire, British Fuels is second only to the English coalfields in terms of turnover.
It makes a profit of about £10m and one industry source said profit margins were likely to be squeezed in the newly-privatised coal industry.
British Fuels is at the tail-end of a disposal queue that marks the end of an era in the UK. British Coal has raised more than £100m so far from the sale of non-mining assets and is poised to sell the smokeless fuel arm, Coal Products, to management for about £70m.
CINMan, the British Coal pension fund with some £16bn under management, was advertised for sale this month with applications due by 12 May.