Thousands more coal jobs 'at risk' as market shrinks

THE MARKET for British Coal could fall to as little as 20 million tons over the next five years, the Government was told yesterday in one of three consultants' reports into pit closures and energy policy.

The study by the consultants, Caminus, said that this could mean the loss of thousands more jobs in addition to the 30,000 losses announced last October.

According to a British Coal source, a market of this size could mean there would be only 12 deep mines left and a mining workforce of 10,000. The October proposals, now under Government review, would have left 20 deep mines and a mining workforce of 15,000.

In comparison, a report by the American firm J T Boyd says that up to 13 of the pits earmarked for closure or mothballing could become economically viable. In spite of this, Boyd said that it regards British Coal's October assessment as 'reasonable' because of issues relating to specific mines sites. The report also added that: 'No colliery can be viable, regardless of the cost of production, if there is not a market for its output.'

A third report, by Ernst & Young, says that British Coal headquarters and management staff could be reduced by up to 3,000 from about 6,500 at present. This could result in savings of up to pounds 73m a year, irrespective of the closure of any mines.

Tim Eggar, the energy minister, said that, taken together, the reports 'broadly confirm' the assessment which led to the pit closures announcement.

At that time British Coal blamed the closures on falling sales to the electricity generators, National Power and PowerGen and the increased use of nuclear power and gas for electricity generation.

Arthur Scargill, president of the National Union of Mineworkers, attacked as 'ludicrous' the Boyd view that miners' working hours should increase. It would mean more redundancies, he said.

Mr Eggar said that the consultants' views were not those of the Government or British Coal, but their findings would form part of the Department of Trade and Industry's review of the planned pit closures with a view to publishing a White Paper next month.

Robin Cook, Labour's trade and industry spokesman, said: 'Three months after the storm broke and several hundreds of pages of reports later, the Government does not appear to be any nearer to finding a solution to the problem it has created. Time is running out for Michael Heseltine who now has only a few weeks to find the formula that will save Britain's coal industry.'

The reports are littered with a variety of assumptions regarding the energy market, the cost of UK and foreign coal and the ability of British Coal to increase its productivity and change its culture dramatically. The Boyd report shows that up to 13 of the pits earmarked for closure could be viable, assuming radical changes to working practices and mining regulations. It also assumes that compulsory redundancy would be possible for all employees.

Even without those changes - but with the rapid introduction of new technology - Boyd says that six mines could be saved.

The Boyd 'best six' are Maltby, Hatfield, Prince of Wales, Frickley, Point of Ayr and Bentley. The consultants call for special consideration to be given to Point of Ayr for technological reasons, irrespective of the outcome of the Government's review.

In spite of the upbeat assessment of the viability of the pits, Boyd said that British Coal's selection in October of 31 pits to be closed was 'reasonable'. The worst case view of the market in the Caminus study is 10 million tons less than envisaged in contracts currently under negotiation with the generators, and which prompted the October closures announcement.

This small market assumes that international fuel costs will be low and that 12,000 megawatts of gas- fired generating plant will be built in the UK. At the other end of the scale, Caminus says that the market could be 40 million tons. However, this depends on a substantial rise in world fuel costs and assumes only 9,000 megawatt of gas-fired plants go ahead.

Caminus approves the 'dash for gas' in electricty generation while acknowledging it is one of the greatest threats to coal. It says: 'Gas prices would need to increase to about double the level of existing contract prices, in real terms, for coal to become economically attractive in new plant.'

Gerard McCloskey, who runs a coal information service, said that the Caminus report avoided the central issue of comparing coal prices with those of gas and nuclear power: 'I believe their estimates of international prices are much too low. The choice of prices is either incompetent or deliberately misleading.'

British Coal said that the consultants' reports 'broadly confirm' its decisions and supported its analysis of the situation.