Budge coal mine calls in the administrators

The future of Coalpower, the company set up by Richard Budge - the man dubbed King Coal after buying most of the country's coal industry - hung in the balance last night after it collapsed into administration.

Ernst & Young, the administrators, said they were looking for a buyer for the business that owns one of the country's last deep-mine collieries - the Hatfield colliery near Doncaster.

Mr Budge, Coalpower's chairman and managing director, is widely expected to be involved in any potential rescue of the business - which employs about 220 people - possibly by attempting to stage a buyout.

The collapse follows a "sustained period of trading losses and cash flow pressures", the administrators said yesterday. Since Coalpower was set up two years ago, it has lost in the order of £14m. Hunter Kelly, joint administrator at Ernst & Young, said: "The colliery has suffered financially in recent years as a result of geological and mechanical problems on the existing coal face, which has led to significantly lower levels of production than anticipated."

The Coal Authority - owed £1.6m by Coalpower - finally called the administrators in.

Ernst & Young emphasised that the wages for all employees would be paid and said they were "hopeful" that a buyer would come forward "in the short term". They will now conduct an assessment of the mine's viability over the coming weeks combined with an "intensive marketing exercise" for the colliery's sale.

The Labour MP Kevin Hughes, whose Doncaster North constituency includes Hatfield, said: "I will be doing all I can to ensure the Hatfield mine continues operating. It has 80 million tonnes of accessible reserves and is important for the UK's electricity generating needs."

Coalpower was set up in 2001 by the former head of RJB Mining, now called UK Coal, specifically to rescue Hatfield. It had recently won conditional approval for a £15m government grant to help it stay open.