Review will give coal a future, says RJB chief

THE CHIEF executive of Britain's biggest coal producer, RJB Mining, yesterday expressed confidence that the Government's energy review would give the coal industry a long-term future.

Addressing an industry gathering in London, Richard Budge said: "The future shape of the coal industry for the millennium will be determined very soon and, given the signs, we are optimistic that a satisfactory solution will be found."

Mr Budge was speaking ahead of publication today of a report on the coal industry from the Commons Trade and Industry Select Committee.

The report is expected to contain strong criticism of RJB Mining and also rule out direct intervention by the Government to guarantee coal a share of the electricity market by, for instance, extending the moratorium on further gas-fired power stations.

Ministers are attempting to put together a package of measures to give the coal industry a market of between 25 million and 30 million tonnes a year.

But a consumer watchdog warned yesterday that this would put electricity prices up. "Any requirement to burn up to 30 million tonnes will cost ," said Yvonne Constance, chairwoman of the electricity consumers committees.

Even a guaranteed market for 25-30 million tonnes would involve a reduction in current output of up to 12 million tonnes - equivalent to the closure of six pits with 4,000 job losses. There are a total of 23 deep mines in production today

RJB Mining has already cut both production and capacity with the closure of Bilsthorpe and the Asfordby complex. Mr Budge added: "Should it be decided that further shrinkage is required, then we will be able to respond."

But he added: "This country needs the current portfolio of mines that the UK coal industry has to offer. Any further closures would be unwarranted, uneconomic and increase our dependency upon primary energy imports from overseas."

The market for coal could be increased if the UK reduced imports of high- priced electricity from France through the cross-Channel interconnector and the Germans and Spanish stopped subsidising their own coal industries.

One option the Government is thought to be looking at is taxing gas-fired generating stations to discourage any more being built.

About 7,500 megawatts of gas-fired capacity is already in operation and a further 4,500 megawatts will come on stream by the early part of the next century. In addition planning consent has been granted for a further 4,000 megawatts.

If this extra capacity came on to the market, it would reduce the market for coal by another 11 million tonnes.

RJB Mining had contracted to supply the three coal-fired generators, National Power, PowerGen and Eastern, with just over half its production capacity for this year.

Under a Government-brokered deal, it obtained further contracts to maintain production at last year's level for three months until the end of June while the energy review is completed.

One generator said: "The Government cannot simply tell three private companies that their shareholders will have to buy coal that they do not want. If they want to create a market for 25-30 million tonnes of coal a year, they will have to find a way of choking off demand for gas."

Outlook, page 21