UK Coal chairman John Robinson warned shareholders at the company’s May AGM that the market for coal in the UK remains very competitive but that progress was being made to displace imports at world market competitive prices.

According to the UK Coal newsletter, NewScene, a sharp fall in electricity prices in the UK, coupled with fluctuations in gas prices and the ongoing effect of new electricity arrangements, had increased competition between power producers and volatility within the coal market.

During the first months of 2002 power stations usage fell by only 1% despite predictions of a bigger slump. UK Coal expects the power generation market to consume 44Mt this year, compared with 50Mt last year.

The company’s deep mines produced 5.9Mt with Daw Mill, Rossington and Thoresby registering improved performances. Ellington was in full production during the period as well.

In other company news UK Coal is nearing completion of a review of the mining prospects in the three-pit Selby complex. An independent study has been carried out by IMC Group consulting to provide the company with an assessment against which to compare its own conclusions.

The threat of strike action has meanwhile been averted after a series of 24-hour stoppages were called off by NACODS, the official’s union. The union has accepted a deal for 800 members to receive a 2% pay rise. UK Coal chief executive, Gordon McPhie said the deal would enable the company to maintain progress on improving efficiencies and reducing costs free from the threat of industrial action.

The company's drive to improve productivity and reduce costs continues to make good progress. A major campaign, know as Project 105 is showing positive effects, Robinson said at the AGM. The project aims to reduce the company’s average unit cost to 105 pence a gigajoule.