(Corrects depth of underground fire in paragraph 3)
* Coalfield Resources says Daw Mill Colliery to close
* At least 550 miners at Daw Mill will lose jobs
* Second major British coal mine to close in 3 months
* Company may divert coal from other mines to supply E.ON
* Discussions with government continuing
By Brenton Cordeiro and Ankur Banerjee
March 7 Britain's largest coal mine will close
permanently with the loss of at least 550 jobs due to a fire
that has burned ferociously for two weeks, mine owner Coalfield
The closure of the Daw Mill Colliery in Warwickshire after
47 years of mining is a blow to Britain's coal industry as it
adjusts to greener government policy and vies with cheap imports
from Colombia, Russia and the United States.
The mine has been closed since fire broke out 540 metres
(1,800 ft) underground on Feb. 22. UK Coal, the operator of the
mine part-owned by Coalfield Resources, said on Feb. 25 that its
permanent closure was possible.
"The 650 (strong) workforce has already been put at risk of
redundancy, although a small, core team will remain on site to
safely secure the mine over the coming months," UK Coal said in
a statement on Thursday.
UK Coal spokesman Andrew Mackintosh said the company
expected to find jobs for 50 to 100 Daw Mill employees at other
mines within the company.
The closure is the second recent blow to a British coal
mining industry battling cheap imports and greener government
policy. Hargreaves Services said in December it would
close its century-old Maltby pit and cut 540 jobs.
Most deep coal mines closed in Britain after a 1984 miners'
strike, shrinking what had been an industry employing several
hundred thousand workers to a headcount of fewer than 6,000
workers by 2011.
UK Coal, Britain's largest coal miner, employs almost half
of these miners. Its six surface pits and three deep mines,
including Daw Mill, account for about 40 percent of Britain's
Daw Mill produced 1.5 million tonnes of coal last year.
Based on a price of $96 per tonne, the Wednesday close for API2
coal swaps, the mine would have generated revenue of
$144 million (96 million pounds) in 2012.
Daw Mill accounts for about a quarter of UK Coal's output.
UK Coal avoided a debt default and the closure of its
operations after a restructuring in December, which separated
its mining operations and property assets.
The company had already been cutting costs at Daw Mill.
Ninety-six employees lost their jobs in November.
"This ferocious fire has dealt a blow to everything we tried
to achieve over the last 12 months - in just 10 days," UK Coal
Chief Executive Kevin McCullough said in the statement.
The Daw Mill colliery has supplied German-owned utility E.ON
UK's Ratcliffe coal-fired power station.
Supplies to E.ON had not been interrupted as the company was
able to work through its stockpile, McCullough told Reuters in
an interview on March 1.
Mackintosh said UK Coal was looking to use coal from other
mines, including its deep mines at Kellingley and Thoresby, to
UK Coal said discussions were continuing with the government
"with a view to helping the company manage the closure of Daw
Mill and seeking a way forward for the remaining mines".
(Editing by Joyjeet Das and Robin Paxton)