Pit sales decided almost entirely on price, says Eggar

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The Independent Online
THE SALE of British Coal has been decided almost entirely on price, the Government admitted yesterday.

Announcing preferred bidders for the five regional packages, Tim Eggar, Minister for Energy, said: 'We looked at a range of criteria, but the predominant one was financial.'

RJB Mining, the company floated on the stock market last year, has been named as the preferred bidder for three of the five regional packages of operational pits and for two deep mines where production has ceased.

Richard Budge, chief executive of RJB Mining, who was advised by Barclays de Zoete Wedd, said that bank debt relating to the acquisition of the mines would be arranged by Barclays Mining Finance and details of the acquisiton would be sent to shareholders in due course.

Shares in RJB Mining were suspended at 348p ahead of the Government's announcement because of the size of the acquisition. No price has been given for the mines but the Government has said that the entire industry will fetch hundreds of millions of pounds.

Mr Budge said: 'The proposed acquisition will make RJB the major player in coal mining in the UK and presents RJB with the opportunity to benefit from the long-term development of coal as a source of energy.'

Celtic Energy, a management buyout, is the preferred bidder for the sought-after South Wales regional package, which comprises opencast sites. Mining Scotland, a private consortium, has been named as the preferred buyer for the Scotland region, which combines opencast mines with the Longannet colliery.

The Government's decision is a blow to Coal Investments, the company set up by Malcolm Edwards, former commercial director of British Coal. Mr Edwards was regarded as RJB's main rival for the English coalfields. He succeeded in winning only the mothballed Annesley Bettinck colliery, although Coal Investments also has a 20 per cent stake in Mining Scotland.

Mr Edwards, who is believed to be bitterly disappointed by the outcome, was not available for comment. Coal Investments said its participation in Mining Scotland would be financed through an equity issue. Shares in Coal Investments fell by 20p to 118p.

Shares in Waverly Mining, which has an option to subscribe for up to 30 per cent of Mining Scotland, rose by 11p to 92p.

Tower Colliery, in South Wales, another mothballed pit, is set to be won by an employee buyout team. Miners made redundant at Tower, which closed in April, celebrated yesterday at news that their bid had triumphed.

About 170 men paid up to pounds 8,000 each from their redundancy money, raising pounds 1.36m, enough to persuade City institutions and banks to pledge a reported pounds 15m.

In conjunction with their advisers, Price Waterhouse, the miners have produced a business plan envisaging an annual output of 500,000 tonnes. Philip Weekes, a former director of the National Coal Board in South Wales, will chair the new company.

The reprieve comes at a crucial time for the Cynon Valley, one of Britain's unemployment blackspots. The local council yesterday voted the miners pounds 10,000 to support their efforts.

Mr Eggar said that the sale of the industry was due to be completed by Christmas.

He added that discussions continued with potential buyers of Goldthorpe and Frances collieries, which are being kept on a care and maintenance basis. No bids have been received for Kiveton colliery, which is now expected to close.

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