Hargreaves to close all Scottish coal mines – bar one – by 2017 to focus on housing developments

Hargreaves coal mining pic2Durham-based coal mining company Hargreaves Services – which acquired the remains of Scottish Coal three years – ago is to shut all but one of its mines in Scotland by the end of 2017

Hargreaves’ existing sites in Scotland are Broken Cross (South Lanarkshire), Duncanziemere, House of Water and Netherton (East Ayrshire), Glenmuckloch (Dumfries and Galloway) and Muir Dean and St Ninians (Fife). It also runs two mines in England and Wales.

The company did not specify which one would remain operational.

It is closing these mines because of depressed coal prices, caused in large part by the announcement made by British Energy Minister Amber Rudd to close all UK coal-fired power stations by 2025.

Revenues for the first six months of 2015 collapsed to £174.8 million – a reduction of £176.4 million compared with the comparative period mainly reflecting the impact of lower volumes of coal sales for both our production and import businesses.

Underlying operating profit was £4.1 million compared with £21.9 milliin for the comparative period. A Hargreaves

Iain Cockburn, Financial Director, said: “Significant falls in international coal prices have made our coal production operations loss-making.

“Changes in UK carbon taxes in March 2015 and a dramatic fall in gas prices has significantly reduced the demand for thermal coal from UK power stations in the first half.

 “In response to these challenges we have reduced production levels in our Scottish operations and will continue to work through a program of further reduction to a position where the Group’s coal production in Scotland is on a single site by the middle of this calendar year. This operation will focus on the production of speciality coals”

 The combined surface mining operations in Scotland, England and Wales recorded a £3 million operating loss in the period compared with £8 million operating profit in the prior period.

 Production in the first half of the year was broadly in line with management’s expectations and across its open-cast coal sites in Scotland, Hargreaves mined in excess of 300,000 tonnes.

 Cockburn added: “The low level of profitability available from coal generation placed additional financial pressures on the owners and operators of coal fired plant.

 “There have been significant closures announced in the past twelve months, most recently the announcement by SSE that early closure of most of the generating capacity at Fiddlers Ferry is being considered and the announcement by Engie that it is considering closure of Rugeley power station this summer.

“The early closures of Fiddlers Ferry and Rugeley present further setbacks for our Industrial Services business.

 However, Hargreaves is now looking to develop new income streams from its property and land-holdings, including housing developments

 Although the development of property is not expected to generate a steady flow of profits and cash in the short term, the Hargreaves believes that, with appropriate investment, there is significant opportunity to create value above the current £24 million book value of its land holdings over the next five years.

Two key sites which offer significant ongoing development value are Blindwells, a 350-acre residential site 10 miles east of Edinburgh, and Westfield, another 350-acre industrial development site at Westfield in Fife

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