Mr Clarke said British Coal was determined to maximise its sales outside the electricity industry. But those markets were limited and would be oversubscribed, he said.
'This is not likely to be a war without casualties,' he said. 'It seems inevitable that ultimately some producers will be squeezed from the market.'
He promised to do all he could to ensure that British Coal remained the preferred supplier, although he would not do business at any price.
Mr Clarke said collieries on lease and licence from British Coal to the private sector could produce more than three million tonnes a year. New operators include Malcolm Edwards, the former commercial director of British Coal.
Mr Clarke said British Coal's competitiveness had been transformed in the past year, with a 13 per cent reduction in deep mining costs.
The Government hopes to obtain royal assent in July for the bill privatising British Coal and to complete the sale early next year.Reuse content