LAON says Scottish Coal job losses might not be the last

Published: 22 May 2013 15:200 comments


Of the 50 jobs lost as a result of the collapse of Scottish Coal, 25 were based in Fife.

Credit: Victor Habbick

Kelty, Oakley and Kinglassie open cast mines have stopped production with seven employees from St Ninians, Kelty being retained as security while liquidators KPMG wind up the business.

The Scottish Coal Company Ltd (SCCL) has attributed its pending administration to falling coal prices and rising operational costs which caused "significant cash flow pressures".

But analysis carried out by the Loose Anti Opencast Network (LAON), a group which acts as a medium between mining officials and those in opposition of open cast mine applications, has revealed further possible reasons for the demise of one of Scotland's largest coal mining companies.

LAON co-ordinator Steve Leary said: "Firstly, the Scottish Surface Mine industry faces a potential increase in rail freight charges from 2016 which will significantly raise the cost of transporting coal between Scotland and England. Between 2016 and 2019, this will rise from £2.83 to £4.04 per tonne.

"When the Office of the Rail Regulator carried out a consultation exercise in 2012 regarding its proposal to increase freight charges, SCCL responded by saying it would be especially hard hit if the charges were introduced and that 'it would lead to the closure of all Scottish coal mines supplying the power generation market in England'.

"Secondly, SCCL was sending so much of its coal to England because the quality was too poor to service the Scottish market.

"In the same letter regarding freight charges, the company explained that 'SCCL currently has the potential to provide coal which could generate around a third of Scotland's electricity needs. However, owing to the lower environmental emission limits at Scottish power stations, coal is being transported to England where the coal quality is fully compliant for coal-fired electricity generation. As a result, rail transport is even more important to the electricity supply than it would be if Scottish Coal was being transported the shorter distances into Scottish power stations'.

"Thirdly, given this degree of uncertainty over the future market for its coal, combined with rising transportation costs, financiers wouldn't advance further monies to SCCL.

"But if this analysis of the broader set of issues facing SCCL is correct, then it suggests the same impact on other Scottish surface mining firms.

"We believe the longer term issues highlighted here raise serious questions over the economic viability of the industry.

"The issues in question have already left a legacy of a number of derelict open cast sites across Scotland's central belt - many of which were once the responsibility of SCCL.

"If open cast mining is to continue in Scotland, we'd like to see the economic viability of each application more rigorously tested, as well as the provision of an up-front fully funded Restoration Bond before work on any new site starts."

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