UK Coal debt deal keeps mines open
LONDON (Reuters) - UK Coal, Britain's biggest remaining coal miner, said it had avoided an imminent debt default and the closure of operations after completing a major debt restructuring deal with shareholders.
But the company, which on Monday changed its name to Coalfield Resources, warned that some mines may need to close unless they lowered costs which rose by over a third between 2005 and 2010.
"If (operators) run these mines well, they've got a future for the next decade. If they decide not to make the changes that are necessary...they will have a much shorter future," Jonson Cox, chairman of UK Coal, told Reuters.
The company, a supplier to Drax, western Europe's largest coal-fired power station, said it had raised new funds through the sale of its property portfolio to pension funds, enabling its eight mines to stay in business.
"Without it (the restructuring), it was almost certain that the coal mines would have been unable to trade beyond the first quarter of 2013," Cox said in a separate statement.
UK Coal employs almost half of Britain's 6,000 coalminers, compared with a workforce of almost 200,000 in 1984 when Britain's coal industry which was racked by a bitter year-long strike ahead of eventual privatisation in 1995.
Had UK Coal folded, its debts of 140 million pounds and pension liabilities of 450 million pounds would have become the responsibility of British taxpayers, Cox added.
UK Coal produced 7.3 million tonnes in 2011, according to figures on the company's website, but production could fall sharply this year because of declining reserves and weaker coal prices, analysts said, citing production for the first half of the year of 3.3 million tonnes.
The companies' mining operations and property portfolio will be split, with responsibility for the performance of mines delegated increasingly to managers and the workforce, the company said in a statement to the London Stock Exchange.
Cox said that the company's mines were at the mercy of global coal prices, which have fallen over 30 percent from the third quarter of last year to $96 per tonne for API2 coal swaps, putting pressure on high-cost producers.
UK mines supplied around a third of the coal consumed in Britain last year, according to figures from the Department of Energy and Climate Change. Countries such as Colombia and the United States are a major source of low-cost imports. ($1 = 0.6242 British pounds)
(Additional reporting by Brenton Cordeiro; Editing by David Cowell)
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