View from City Road: New dawn for coal industry fades

There has been a flurry of activity in the coal industry recently, with private companies such as RJB Mining and Coal Investments revealing plans to reopen several former British Coal mines. But anyone seeing a new dawn for coal would have been thoroughly depressed by the picture that emerged at a coal conference yesterday: chronic over-capacity within a few years and increasing environmental regulation pushing coal aside still further in favour of nuclear power and natural gas.

One industry expert predicted that the core tonnage taken by the electricity industry would fall to 12 million tonnes after 1998 - around one third of current levels - when the contracts between British Coal and the generators, National Power and PowerGen, expire.

Sales outside the core electricity market will be hard to win in a battle between existing private mining companies, the successors to British Coal and foreign suppliers keen to launch an offensive in Britain. The UK market for domestic and industrial coal is also likely to decline, albeit slowly, and this country is not noted for its success in selling coal elsewhere.

British Coal has 17 core pits in operation, having shut more than 30, and has two more due to come on stream over the next 18 months. Under government pressure, the company is leasing out some of the pits it has already closed and will inevitably lose sales to these re- opened mines. Added to that is the thorny issue of the millions of tonnes of coal stocks held by British Coal and the generators.

The Government is unlikely to take the bull by the horns and close yet more mines.

That task and attendant costs are likely to be left to whoever takes over from British Coal - if anyone is fool enough to try.