Production levels from the company's ongoing deep mines for the four months from July to October was 3.2 million tonnes, the same figure as a year before. Total mining unit costs were £1.32 per gigajoule compared with £1.27 per gigajoule in 2003.
UK Coal admitted its deep mining operations had underperformed in the first 10 months of 2004 but said Spindler has put in place plans including project cost management and new maintenance programmes which should improve the efficiency and effectiveness of the equipment.
“These actions along with sound operational management should bring benefits in the coming year and beyond. However costs in 2005, will increase due to higher energy, steel and pension charges,” the company said.
Geological faulting at Welbeck and Rossington collieries has resulted in revised mining plans, with these collieries switching to advancing longwall mining techniques rather than the preferred lower cost retreat mining. UK Coal said this was unavoidable if the operations were to continue and would be employed while investing in development of the next coalfaces to be worked in 2006.
Earlier, in UK Coal newsletter, NewScene, Spindler said he was overhauling pit-based incentive and bonus schemes in an attempt to increase motivation.
“I hear two arguments,” Spindler told the company newsletter. “(1) make the bonus right and the tonnes will be there: (2) the goals are too high and must be lowered. Without question, both of these arguments cannot be right; it is either one or the other.”
Solving the incentive pay problem will be one of the toughest commercial challenges the company faces he added.
Another issue was made public yesterday when The Guardian reported UK Coal would take £16 million hit in its 2004 accounts after buying out assets and liabilities from third-party surface contractor, Crouch Mining and then finding it could not get planning permission for its future work programme there. Planning permission to extend work there has just been rejected and although UK Coal is appealing against the decision, it is setting aside £11 million for early remedial work.
The company said that surface mine planning was becoming increasingly difficult in England and, as a result, it had identified plant which would become under-utilised in 2005. A further £5 million will go towards writing off the cost of potentially redundant equipment.
"The planning environment for surface mines is expected to remain difficult," the company said in its statement, adding: "UK Coal are lobbying intensively on this issue to enable the business to continue to develop, particularly regenerating severely blighted brownfield sites into viable mining operations with subsequent land development opportunities."
The company continues to review the viability of under performing collieries and is engaged in action to improve operational effectiveness.
