Several major issues continue to threaten the viability of the UK coal industry but the new Labour government has apparently decided the political gains of investing in, what many call, a dying industry, are worthwhile.
In 1947 the UK coal industry employed 718,000 miners in 958 pits producing 200 million tonnes. Last year 13,000 miners produced 36.7Mt from mines which include 17 deep mines, 13 of which are owned by the UK's biggest coal miner, RJB Mining.
Among the threats faced by UK coal producers are being forced to compete with heavily subsidised foreign imports from European countries such as Poland, which are up to 30% cheaper. The October 1999 lifting of restrictions on gas-fired stations coupled with environmental pressures has also adversely affected the viability of UK coal.
RJB Mining asked for £73m in aid to prevent the closures of its plants at Ellington in Northumberland and Clipstone in Nottinghamshire, and the sacrifice of 450 jobs. Rather unexpectedly, in late April, the government promised £100m in aid for embattled producers. Some questioned what this said about the consistency of New Labour's economic policies. Others said the government was simply pandering to "Labour heartlands" for purely political gain.
RJB meanwhile welcomed the Government’s announcement of the two-year package of what it calls 'transitional support' for the industry. For the meantime, the threat of closures of the company's Ellington and Clipstone collieries, has abated. The question is for how long?
More importantly, what is the plan for the big cheque? According to ministers, aid would be granted pit by pit, and linked to productivity. The scheme also requires employers to retrain miners should pits close.
RJB said the decision would enable it to seek and secure additional sales which would provide long-term security to both producers and buyers. RJB will also focus its attention on developing new areas of coal. This all seems to suggest that RJB plans to be in coal for a little longer than two years.
Richard Budge, chief executive of RJB, said, "The decision will be welcomed by mining communities, the many thousands who work in support industries, and not least, all those who have campaigned so tirelessly to support RJB’s submission for assistance in line with that provided to other European producers."
Once the details of the package are finalised RJB will be able to finalise a crucial job-saving supply contract to the Drax power station in Yorkshire until 2006.
"The Government’s action is a positive response to ensure Britain maintains a secure low-cost supply of energy which would otherwise be lost to the nation," Budge said.
At this stage there appear to be more than two agendas surrounding the aid package. Is the intention to prop up and underwrite markets that no longer exist? Is it to emulate the subsidies that British miners have so long complained about? Is it to secure jobs for the next two years? Is it to restructure the industry so that its evaporation will be less painful?
It would appear, by all accounts, that RJB does not intend to evaporate.
