Tuesday, September 25, 2012

News: Maltby waits on results of mining investigations


Investigations into the mining of a new coal face at Maltby Colliery in Rotherham are continuing but the owners, Hargreaves Services, is warning that it may have to close if significant geological problems cannot be overcome.

Maltby occupies a site of 500 acres and employs over 500 staff and contractors. It is the last coking coal mine left in the UK and produces both high quality coking coal and power station coal. The colliery produces more than 1 million tonnes of coal per year.

Hargreaves invested millions in work to mine a new panel, called T125, where coal is expected to be approximately 25% thicker. However conditions never before encountered at the 100 year old mine meant that further development was abandoned.

The delay will result in a gap in production between the current seam finishing in October and work on the new seam starting, estimated at around 15 weeks, which could have an impact on the group's profit in the year ending May 31 2013 of between £12m and £16m.

In their preliminary report, the group reported that gas issues are still being encountered, causing delays, and that mining experts are reviewing the plans and performing additional investigative work to ensure that "there is a plan that satisfactorily addresses both the health and safety risks and the financial risks this may cause."

The outcome of this comprehensive review will be known by the end of October but if the T125 panel cannot be mined then Maltby Colliery may have to be mothballed.

Tim Ross, chairman of Hargreaves Services, said: "In the last few weeks we have become more concerned about the risks of working in the area of the T125 panel.

"As we develop the face line the experts are learning more about the features of the strata and risks these pose to the completion of development and the subsequent production from the panel.

"The panel T125 is a very attractive panel and we hope that concerns over gas levels do not prevent us from being able to continue to its production."

Gordon Banham, group chief executive at Hargreaves, added: "Along with the board I am unequivocal in my view that, should the presence of gas, water and oil in the vicinity of the panel put our employees at risk, in the opinion of our own management or the external consultants, we will not attempt to mine the T125 panel.

"We anticipate that the abandonment of the T125 panel would lead to the mothballing or even closure of the mine as it would probably be uneconomic to switch production to a later panel due to the long face gap entailed.

"We believe that prevarication on these types of issues, especially in the context of deep mines, can bring unacceptable levels of risk to employees, avoidable financial losses and destruction of shareholder value, none of which we will countenance.

"The closure or mothballing of Maltby would obviously be a disappointing development for the management and employees."

When Hargreaves acquired the site in 2007 for £21.5m, they intended to keep the colliery open to 2015 and this end date was subsequently extended to 2017.

Feasibility studies then extended the mine's life to 2025 at current output levels.

For the year ending May 31 2012, production has improved on the current seam at Maltby with the total saleable production increasing by 111k tonnes from 1,517k tonnes to 1,628k tonnes. The implementation of a fifth shift helped to increase underground production year on year.

In addition to supplying Drax power station, coal sales from Maltby outside of the division generated £60.3m of revenue compared to £53.1m in the previous year.

Overall, Hargreaves Services reported pre-tax profits of £43.1m for the year, up 16.8% on the previous year. Turnover increased 24.6% to £688.3m.

Hargreaves Services website

Images: Hargreaves Services


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