UK coal seeking £79m to save deepmine pits

Britain's largest coal miner, UK Coal, yesterday lodged a bid for £79m of government aid to safeguard the future of 4,000 workers at its eight remaining deep pits.

It said investment aid from the Department of Trade and Industry would finance the exploitation of 100 million tonnes of coal reserves.

Gordon McPhie, the company's chief executive, said: "All these mines have reserves that, with the appropriate investment, would extend their lives and safeguard jobs."

It said the application covered all its eight deep mines in the Midlands, Yorkshire and the North East, which it will operate after it shuts the Selby complex in North Yorkshire next year with the loss of 2,100 jobs. But the company acknowledged that investment aid - set up after the financial collapse of nuclear producer British Energy - had a budget of just £60m.

A DTI spokesman insisted that the budget had been capped for three years. "There are no plans to go above it," he said.

UK Coal now employs just 8,000 people at 12 underground and 13 surface mines. This compares with 720,000 people at 958 mines in 1947.

Demand for British-mined coal has collapsed in the face of cheaper imports and the construction of more gas-fired and nuclear power stations.

British coal companies have received about £165m in aid since 2000. UK Coal, formerly known as RJB Mining, has been profitable only once in the past four years.

UK Coal's shares closed up 2p at 99p, taking its gains this year to 94 per cent. Its aid bid comes amidst growing warmth within Whitehall for selective aid for industry.

Last month more than 2,000 chemical workers' jobs were saved after the DTI gave a £50m aid package to a factory that was under threat of closure. That in turn came a day after the Ministry of Defence saved hundreds of jobs by awarding a contract for jet trainers to BAE Systems over a cheaper bid from foreign rivals.