Mining coal in Britain remains a profitable business, results from UK Coal prove

By TAMSIN BROWN
Updated: 19:05 EDT, 23 August 2011

Mining coal in Britain remains a profitable business, results from UK Coal prove.

The company which operates three deep mines and six surface mines, said it returned to the black at the half year mark for the first time in four years thanks to better production and higher coal prices.

At the coal face: Better production and higher coal prices have boosted UK Coal

But chairman Jonson Cox, hired eight months ago to turn the business around, warned there was still ‘much to do’.

Despite paying down £35m of borrowings through property disposals, the company is still sitting on a £207.3m debt mountain and the black hole in its pension funds has grown to £156.3m from £135.1m at the end of 2010.

UK Coal (up 0.5p to 39p) has been in negotiations with unions over the funding deficit as well as changes to the terms and conditions of staff employment including an increase in the length of some miners’ shifts.

It made half-year pre-tax profits of £22.1m after losses of £93.2m last time. No dividend is being paid.

Steel group Severfield-Rowen (down 15p to 155.25p) slashed its dividend to 1.5p from 5p after profits fell to £2m from £6.3m, hit by the weak construction market.