RJB strikes pounds 1bn coal deal with PowerGen

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The Independent Online
THE FUTURE of the British coal industry was secured yesterday after RJB Mining, the country's biggest producer, signed a pounds 1bn deal with PowerGen to supply 35 million tonnes of coal over the next five years.

Coming after earlier deals with National Power and Eastern, the two other big coal-fired generators, this agreement will guarantee the future of most of RJB's 15 deep mines and its 9,000-strong workforce. Industry sources said, however, that RJB still needs to tie up additional top-up deals with National Power to avoid cutbacks at some of its collieries in Yorkshire.

The deals with the generators follow the moratorium imposed by the Government on approvals for further gas-fired power stations, which have eaten away a large part of the market for coal.

RJB has contracts to supply the three generators with 81 million tonnes between now and March 2003. For each of the next three years it will supply the generators with about 21 million tonnes of coal, compared with the 26 million tonnes supplied in 1997-98, the last year of the guaranteed contracts agreed at the time of British Coal's privatisation.

Shares in RJB climbed by 6 per cent to 71.5p as the City welcomed the news of the contracts, which are thought to have been priced at around pounds 1.20 a gigajoule - 20 per cent below the price of the old contracts.

Richard Budge, chief executive of RJB, said: "This contract underpins the Government's objective of maintaining a diverse energy mix for power generation and is very good news for job security."

Nick Baldwin, PowerGen's director of UK operations, said the deal with RJB had reduced its exposure to the risks of buying coal on the international market where supplies are less secure.

In addition to the 35 million tonnes for PowerGen, RJB is supplying 28 million tonnes to Eastern between this year and 2003 and 18 million tonnes to National Power over the three years to 2001.

Over the past 12 months RJB has reduced its production capacity with the closure of three pits - Asfordby, Bilsthorpe and Point of Ayr. Together the pits produced about 4 million tonnes a year.