Hargreaves commits to ‘break-even’ open-cast coal mining in Scotland until 2016

Open cast coal mineHargeaves plc – the company which operates the bulk of open-cast coal mining operations in Scotland – is committed to maintaining its overall Scottish operations at a break-even level until May 2016.

However, the Durham-based miner warned that before committing to operate specific sites, the group will first have to secure contract- or hedge-cover for each specific project.

“We will monitor coal price and selectively target production, particularly focusing on those reserves that have a low cost of production and yield higher quantities of speciality coals,” said a spokesman.

However, further falls in the price of coal this autumn have led to Hargreaves confirming that its Monckton mine in Yorkshire will close – ceasing production by 31 December with the loss of around 100 jobs

In Scotland, Hargreaves employs some 500 people across the Central Belt – at Broken Cross (South Lanarkshire), Duncanziemere, Dalleages and Netherton in Ayrshire, at St. Ninians and Muir Dean in Fife and at Glenmuckloch in Dumfries-shire.

A Hargreaves spokesman explained: “Our current financial year benefits from historic coal contracts and hedges which were put in place to protect committed production projects in Scotland from volatility in commodity prices. These projects and contracts expire toward the end of this financial year.

“On 9 September 2014, we noted that the benefit of these contracts and hedges in this financial year was between £8-9m, compared to the prevailing market prices, and that the Board was considering various mining plan scenarios in an effort to mitigate the impact as far as possible.

“Since then, the position has significantly worsened with 2016 forward coal prices falling by a further £4 per tonne from September. At these exceptionally low price levels we decided to depart from our long standing strategy and have not hedged or contracted to supply significant fixed tonnages for the next financial year.

“Consequently, our aim will be to maintain the overall Scottish mining operation at a break even level in the year to 31 May 2016.

“We remain confident that our mining assets in Scotland and Wales are important and potentially very valuable long-term assets.

“The team continue to work hard and, given the ongoing challenges around coal price, has intensified its efforts to drive value and cash from the renewable projects and property assets that were acquired with the ATH and Scottish Coal acquisitions.”

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