Generators deal staves pit closures off until June

The English coalfields were granted a six-month stay of execution yesterday after the Prime Minister, Tony Blair, disclosed that the three power generators had struck an agreement with RJB Mining that will avoid any pit closures or redundancies until June next year.

But, as Michael Harrison discovered, confusion reigns over the terms of the deal and how many collieries can be saved in the longer term.

Mr Blair told the Commons that National Power, PowerGen and Eastern Group had agreed supply arrangements with RJB for three months after the existing coal contracts run out in April so that a full review of energy policy can be carried out.

The agreement follows approaches to the three companies by a ministerial emissary of the Prime Minister asking them to do all they could to purchase more coal.

Under the rescue deal thrashed out with RJB, the generators are understood to have agreed to increase their emergency stockpiles of coal at the power stations to throw the pits a lifeline. One estimate was that stockpiles might be raised by as much as 8 million tonnes.

Current stockpiles are around 12 to13 million tonnes but Michael Clapham, Labour MP for Barnsley West and Penistone, has been urging the Government to increase this to 20 million tonnes.

Last night, however, it was far from clear how the agreement would be implemented and who would bear any financial losses arising from it. One of the generators said: "This is an agreement to sit down and help RJB through the next six months but the details have not been worked out. We don't know what volumes will be involved and at what price or what the split will be between the three of us."

It also emerged that PowerGen has still not signed a contract to buy any coal from RJB from next April. In the current financial year the three generators are contracted to buy 27 million tonnes from RJB. So far only National Power and Eastern have contracted to buy supplies next year and these contracts only cover 12 million tonnes of coal.

The stand-off with the generators had led to fears that up to half the 17 deep mines in England could close with the loss of at least 5,000 jobs as demand for RJB's coal fell by a half. PowerGen had indicated that it was not interested in buying more than 2 million tonnes of coal against the 9 million it is taking this year and then only if RJB agreed to cut its prices by a further 15 per cent from those already quoted.

Announcing the agreement in the Commons, Mr Blair said, to cheers: "This will allow the UK deep-mine coal industry to continue production at present levels without immediate redundancies or pit closures."

The Prime Minister added: "This is a six-month delay, however, and what is important is that we then use that opportunity to review the long- term energy requirements of the nation and make sure that we have an energy policy that is consistent both with a competitive industry and with the long-term energy needs of the country."

John Redwood, shadow president of the Board of Trade, said: "Any stay of execution for the coal industry is welcome but the Government's proposal is no substitute for setting out a proper energy policy. The Government needs to tell us soon what balance it wants between gas and coal-fired stations. Its hesitations and U-turns so far leave miners fearing for their jobs and the gas industry unsure of whether it should plan for an expanded future or not."

RJB Mining refused to comment on the details of the agreement but welcomed the announcement: "This is a positive step forward which will be warmly received in the coalfields."

National Power said that it had been "rather confused" by the announcement. A spokesman said it had already publicly undertaken to buy some more coal from UK suppliers in the coming months but only at competitive prices. The generator also appeared to pour cold water on the idea that stockpiles could be increased above current levels. These are already above the minimum security levels required by law and also above what National Power regards as commercially prudent levels.