RJB shares jump on 'clean coal' environment prospects

Shares in RJB Mining, Britain's biggest coal producer, leapt 10 per cent yesterday as hopes grew that a future Labour government would support its plans for a new generation of environmentally-friendly clean coal power stations.

The company was also bolstered by confirmation that National Power, the country's largest electricity generator, is joining RJB and Texaco to study the feasibility of building a 400-megawatt clean coal station next to RJB's Kellingley pit in west Yorkshire.

Both RJB and National Power warned, however, that government backing was essential to support the commercial development of the new technology.

They are suggesting that the next government allow the new stations to be subsidised in the same way as nuclear and renewable energy are through a levy included in electricity bills.

Richard Budge, chief executive of RJB, said that the pounds 150m cost of this could be met by keeping the levy at its present level of 3.7 per cent rather than reducing it to 2.2 per cent next year.

He warned that consumers would end up paying either way since if the "dash for gas" by generators continued then alternative coal generation would not be available.

"If we are to retain, in the short term, an electricity market for coal of around 40-45 million tonnes a year then a considerable burn in clean coal power stations will have to be achieved," Mr Budge told a gathering of coal industry executives in London.

The first integrated gasification clean coal plant that RJB wants to build at Kellingley would cost about pounds 300m and produce electricity at a cost of 3p a unit, compared with 2.2p for gas-fired stations and the current pool price of 2.5p.

RJB estimates that there is a UK market for about 5,000-megawatts of clean coal power generating a turnover of pounds 1bn a year.

But the company says that the world-wide market for the technology could be worth up to $500bn (pounds 307bn) by 2010.

Building 5,000-megawatts of clean coal plant would be enough to satisfy about 10 per cent of demand in Britain and would create a market for 10- 12 million tonnes of coal.

At present RJB supplies 30 million tonnes a year to the three main coal- fired generators.

But these contracts are due to expire next April and a fall in sales is likely without the go-ahead for new environmentally friendly coal stations.

Keith Henry, chief executive of National Power, said that at present it was cheaper to fit anti-pollution kit to existing coal-fired stations than build new ones based on the clean coal technology.

However, he added: "It has the potential to be the best option for new build as it meets tougher environmental restrictions."

The flue gas desulphurisation equipment fitted to coal stations now filters out sulphur emissions but does not stop the main greenhouse gas carbon monoxide. Nor does it improve plant efficiency.

The new clean coal stations being examined by RBJ and its partners are up to 40 per cent more efficient.

National Power is already involved in a project to build a 335 megawatt clean coal plant at Puertollano in Spain.

A clean coal plant based on Texaco's technology has meanwhile recently opened in Tampa, Florida.