The interim results were described as “disappointing” by UK Coal chief executive Gordon McPhie as the company could only muster a dividend of 5 pence per share.

Sales volumes reached 7.4 million tonnes, deep mine production contributing the larger chunk of 6Mt in output.

“Production performance was disappointing in the first half year, limiting sales, and

unit costs have increased,” said McPhie.

“The second half performance should improve with fewer production gaps at the deep mines, and a return to full production at Kellingley Colliery. We continue to work to mitigate the effect of cost increases through Project 105 and other initiatives.

“International coal prices have remained high throughout the period and should be reflected in higher prices in 2005 and beyond. We therefore continue to invest in improved production equipment and in accessing new reserves at our deep mines

assisted by the Government’s Coal Investment Aid programme.

“In contrast, the surface mining business is reducing in size through lack of planning approvals.”