Ryan and Miller link to bid for coal mines in Scotland

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Ryan, one of the UK's largest private mining companies, has joined Miller, a private construction group, to bid for British Coal's mines in Scotland.

The Government is expected next week to announce initial details of five regional packages, including one in Scotland, into which British Coal will be split for sale to the private sector later this year. Ministers have not ruled out selling more than one package to one buyer.

Industry sources say the sale of British Coal could fetch around pounds 500m. But much depends on the liabilities that the new owners will be required to take on, covering issues such as land subsidence and the restoration of former coal- mining sites.

Ryan and Miller said that Scotland is the most attractive part of British Coal as demand in the region is expected to rise sharply over the next few years.

The two companies already mine from open-cast sites in Scotland under contract to British Coal, producing 2.5 million tonnes a year between them.

The partners declined to comment on how they might finance any acquisition, but said they have had talks with banks and institutions that would be interested in supporting a bid.

British Coal's Scottish assets include about 10 big open-cast sites and one operational deep mine, Longannet. The total number of miners employed is about 2,000.

All of Longannet's output is sold to Scottish Power's adjacent generating plant under a contract that runs until 1998 and which will pass to the new owners once British Coal is privatised. Ryan and Miller say Longannet will be able to compete with world coal prices by 1998 and fend off competition from imports.

Demand for coal in Scotland is about 4.5 million tonnes and is likely to rise to 7 million by 1998. This will be largely due to a rise in electricity sales into England and Wales after a planned upgrade of the link between the electricity grids north and south of the border. Crispian Hotson, Ryan's chief executive, said Scotland's coal has the added benefit of being very low in sulphur. Environmental constraints, including the need to cut sulphuric emissions from power stations, are regarded as a threat to Britain's remaining coal mines.

Mr Hotson said Ryan, which has mining interests in Wales, may also be interested in bidding for British Coal mines in the North-east, though not in partnership with Miller.