The cash boost is expected to be announced in the next few weeks as part of the Government's energy white paper, aimed at bolstering pits in the wake of a dramatic fall in world coal prices.
Approved by the EU, the funding is believed made up of £60 million of direct Government aid, up to £50 million from the Coal Authority, the regulatory body responsible for closed pits and liquidising assets, and £100 million from coal producers. The government’s energy White Paper, will allow subsidies to be paid to mine owners as "viable investments".
Up to 30% of the cost of any improvement project or planned will be provided, with the rest to be provided by the coal producers
UK Coals’ Selby complex will not benefit from the scheme and will still close by spring 2004 after the coalfield lost more than £90 million during 1999-2002. The move is being vigorously opposed by the mine workers union, NUM which has presented Trade Secretary Patricia Hewitt with a new economic consultants' report claiming the complex can be viably kept open.
The pits most likely to benefit are UK Coal’s Maltby mine in Yorkshire with 520 employees, and Howarth in Nottinghamshire with 590 employees, and Tower in Wales.
The Yorkshire Post suggested that major investments by UK Coal are more likely at its Kellingley and Rossington pits. The new aid scheme will also be available to Richard Budge's Coalpower company and its Hatfield colliery near Doncaster.
Meanwhile, the Yorkshire Post reported last week that Coalpower was planning to expand Hatfield colliery near Doncaster in the wake of the announcement.
The company will bid for a share of the "investment aid" scheme to help fund the plan to break into the rich Barnsley coal seam and keep the colliery open for another 20 years.
And even if UK producers manage to hit efficiency targets, they could still be 30pc more expensive than their overseas rivals and unable to undercut them on major power contracts.
English coal producers remain cognisant of the stark fact that foreign coal being landed at European ports costs about half of the cost of UK production. UK Coal has set a target of £1.05 a gigajoule.
