* Loan will prevent company insolvency
* Deep mines to close by Autumn 2015
* Surface mines to be sold
By Susanna Twidale
LONDON, April 10 Britain will give UK Coal a 10
million pound loan to help fund the closure over the next 18
months of its two deep mines which employ around 1,300 people,
the government said on Thursday.
The loan is needed to prevent UK Coal from slipping into
insolvency which would lead to "significant losses and
liabilities" for British taxpayers, Minister of State for Energy
Michael Fallon said in a statement.
The coal miner was placed in administration last year after
struggling with rising costs, hefty pension liabilities and
strong competition from cheaper imports.
Its business has deteriorated since due to a flood of U.S.
coal onto the market because of the development of shale gas
there, and the strength of sterling.
The government backing means the company will be able to
carry out a managed closure of its deep operational mines by
Autumn 2015 and look for a buyer for its surface mine business,
the statement said.
The government also said the loan is conditional on the
negotiation of final terms including assurances that all parties
including the trade unions back the plan to close the mines.
Last week, UK Coal started redundancy consultations with
staff at collieries in Thoresby in Nottinghamshire, which
employs 600, and Kellingley in Yorkshire with 700 employees.
UK Coal also owns six operational, smaller surface mines in
the North East, Derbyshire, Leicestershire and Shropshire which
will be sold.
The government said its investment in UK Coal would be
alongside private sector organisations, including an experienced
A source told Reuters last week rival coal producer
Hargreaves Services and regeneration company Harworth
Estates have also promised a combined 10 million loan to UK
(Reporting by Susanna Twidale; editing by Keiron Henderson)