Jones said the company’s policy to only invest in mines that create “substantial value” had “led a reduction in the number of deep mines in operation”

For 2006 UK Coal reported a £17.5 million ($US34 million) profit, largely attributable to the company’s burgeoning property business.

There was good news on coal though, with 2006 seeing the highest coal burn at power stations since 1996, as record gas prices coupled with a low carbon price made coal the fuel of choice for generators for most of the year.

In response to demand, international coal prices rose throughout the year, from $53 per tonne in January to around $68/t by the end of 2006.

Deep mining improved its financial performance, producing a profit before exceptional items over three of the four quarters of the year.

In the third quarter, however, the division faced difficulties on several fronts, which contributed to a loss of 1.3Mt of production across several mines equating to some £44 million of lost revenues. These factors resulted in a loss for the year for ongoing mines of £28 million.

There were significant geological problems at Harworth and Rossington, which the company said “proved insurmountable and ultimately led to the decision to close or mothball these mines”.

Daw Mill’s output increased to 2.7Mt, although this was overshadowed by two fatalities within two months in 2006, and an additional fatality since the year-end in January 2007.

“The underlying potential of Daw Mill, which has two sets of state-of-the-art equipment and remaining reserves of some 21.5Mt, however, remains robust,” the company said.

At Kellingley output reached 2.1Mt. “The colliery continues to be strongly productive in an area of difficult geology with a move planned to a new area of reserve in 2008.”

At Thoresby output improved to 1.5Mt, despite a seven-week face gap from August when ground movements prevented recovery of vital equipment.

At Welbeck output of 1.2Mt exceeded 2005 following a period of intense operational review and revised working practices. This was achieved despite face gap delays of 15 weeks after encountering extremely difficult ground conditions caused by nearby old workings, which greatly slowed down a face transfer.

UK Coal said the colliery has now increased round-the-clock shift patterns and has reduced face cycle times by up to 30% by increasing shearer cutting speeds.