RJB will block moves to buy coal pits

Richard Budge, the embattled chief executive of RJB Mining, has told the Government he will block any approaches by rivals to buy pits earmarked for closure by the company. Chris Godsmark, Business Correspondent, reports as the RJB board prepares moves which could see 5,000 jobs go in the closure of up to eight pits.

It emerged yesterday that Midlands Mining, the private company which runs two pits, Annesley Bentinck and Silverdale, was interested in buying some RJB pits due to be closed in the looming coal industry shake-out. But RJB is understood to have told the Department of Trade and Industry it would not be prepared to sell the pits to rivals. John Battle, the Energy Minister, has asked the Coal Authority, the body left from the shell of the former British Coal, to examine the issue further.

Under the terms of the pounds 815m sale of British Coal's English pits to RJB in 1994, the group has sole control over their future. This leaves the Coal Authority only with powers to license the underground reserves. After closing pits, RJB has warned there is nothing to stop the company removing equipment, filling in the shafts and leaving no economically viable access to the coal.

The interest from Midlands Mining in buying the pits would depend on the company's success in cutting prices further than RJB and selling more coal to the power generators.

Jim Sorbie, head of Midlands, rescued the group's two pits from receivership of Coal Investments, the company created by Malcolm Edwards, former British Coal commercial director. Midlands has been criticised by mining unions for a pay deal which offers workers lower wages than RJB and more flexible hours.

Mr Battle said yesterday that Midlands' interest endorsed his belief that deep-mined coal had a long-term future: "It's very interesting that companies such as Midlands, which have bought other pits which have been declared unworkable, have managed to keep them going and have managed to sell coal and organise contracts for the future with the power generators."

Stuart Oliver, spokesman of the Federation of UK Coal Producers and for RJB, said the Government should focus on enlarging the markets for coal. "The real issue at stake is the size of the market. This is not about ownership of pits."

The board of RJB, led by Mr Budge, will meet today to begin moves towards closures, by setting in motion a review which will match production capacity with demand. The scheduled meeting comes after National Power, the largest coal-fired generator, last week confirmed it would halve its order for RJB coal when long-term contracts expire in April 1998.

The announcement of the first closures is not expected until later this month, when negotiations with PowerGen, the second-biggest generator, are expected to conclude. One possibility is that RJB would close the Selby complex, which includes five pits.