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Shortfall of £62m for East Ayrshire mining clean-up

24 May 2013

Shortfall of £62m for East Ayrshire mining clean-up
24 May 2013


Scottish Coal and Aardvark operated open cast mines in East Ayrshire

Taxpayers could be left with a bill for as much as £62m for restoring opencast mines in East Ayrshire.

A council report following the collapse of Scottish Coal and Aardvark (TMC) states there is not enough money set aside to pay for remedial work.

The value of bonds put in place to pay for the clear-up is far less than the projected cost of the work.

Campaigners have said they are appalled and accused the council of failing to enforce and monitor its own rules.

Following the financial collapse of both companies, liquidators from KPMG were appointed at Scottish Coal in April and at Aardvark in May.

Restoration bonds

As well as the economic fallout from job losses, East Ayrshire Council has been examining who will have to pay for cleaning up various opencast sites in the area previously operated by the firms.

A report to the council's cabinet on Friday states that KPMG has estimated total restoration costs for the East Ayrshire sites being "in the region of £48m to £90m".

It notes, however, that the potential value of restoration bonds - effectively insurance policies for cleaning up the mines - is about £16.1m for Scottish sites and £11.52m for Aardvark sites.

If the top-end KPMG estimate was correct, this could leave a potential liability of more than £62m for restoring the sites.

The council has appointed consultant mining engineers to draw up their own estimates for remedial work on the mines and report back by June.

The report states that while the estimates for cleaning up the sites may currently "be unreliable, they indicate significant liabilities".

Another potential complication, the report points out, is that "there is currently no certainty with regard to the extent that bond providers will honour the bond obligations".

East Ayrshire Council leader Douglas Reid said the coal companies had "reneged on their responsibilities" to clean up behind themselves and restore the land.

"The coal operators have failed to live up to their responsibilities and East Ayrshire Council will leave no stone unturned in minimising the effect of this situation on our communities and on the council itself," he said.

"I welcome the chief executive's proposal to independently review all of the procedures around the management, determination, implementation and monitoring of the planning processes in relation to opencast coal operations within East Ayrshire."

'Restoration bombshell'

He added: "We must, however, never lose sight of the fact that it was the responsibility of the coal companies to clean up behind themselves and restore their land - they didn't do this and they have reneged on their responsibilities to our communities."

Councillor Reid said East Ayrshire would now work with other councils affected - South Lanarkshire, North Lanarkshire and Midlothian - to prevent the mining sites from being abandoned.

The anti-coal campaign group Coal Action Scotland, however, said East Ayrshire Council must take its share of the blame for the liabilities which may be dumped on the taxpayer.

Spokesman Oliver Munnion said: "The restoration bombshell has finally been dropped - in East Ayrshire alone the shortfall could be up to £60m.

"What about South Lanarkshire, North Lanarkshire, Fife and other areas? We're looking at a £100m bill that will be dumped on the public purse.

"The mining companies have failed in their statutory obligations, but local authorities should have been enforcing the planning rules, and in this they have failed tragically. East Ayrshire Council are to blame as well as Scottish Coal and ATH Resources (Aardvark)."

RSPB Scotland has called for a full investigation.

Aedan Smith, the charity's head of planning, said: "Our immediate priority is to work with the industry, local authorities and the Scottish government to ensure that this does not result in a legacy of environmental degradation which is bad for wildlife and local communities.

"Some of these sites are in internationally-important wildlife sites and were only allowed to progress if full restoration would be delivered."


Jobs saved at collapsed mining firm Aardvark

16 May 2013


ATH Resources was the holding company for operators in Ayrshire, Fife and Dumfries and Galloway
until its collapse in December

More than 230 coal jobs have been saved after an energy and waste services group bought parts of collapsed surface mining firm Aardvark (TMC) for £10.4m.

The move came as liquidators were appointed for Aardvark, the main trading arm of ATH Resources, which was put into administration in December.

ATH said Hargreaves Surface Mining Limited (HSML) had acquired "certain assets" from Aardvark.

All 237 employees are to be offered new contracts of employment by HSML.

Aardvark has surface coal mining operations in East Ayrshire, Dumfries and Galloway, and Fife.

Earlier this year, Hargreaves bought £12.5m of debt from ATH's lender, Becap Capital, whose demand for repayment forced the company into administration.

The sector has been in crisis because of a slump in coal prices.

In a statement, ATH Resources said it had decided to wind up Aardvark voluntarily and appoint KPMG as liquidators.

Options 'explored'

The company said Aardvark directors had explored options for a "consensual, solvent, restructuring of the business" with HSML, while trying to avoid compulsory liquidation.

It continued: "The company was unable to secure the necessary stakeholder support to implement a solvent or consensual option, and the board was left with no choice but to seek to wind up the company.

"In recommending the voluntary winding up, the board has facilitated a plan whereby HSML has acquired certain assets of the company.

"All 237 employees are to be offered new contracts of employment by HSML."

Hargreaves Services chief executive Gordon Banham said the transaction brought to an end "a long and complex restructuring process".

He continued: "Whilst it has been a lengthy and difficult exercise, we are very pleased with the end result.

"In comparison with an unstructured liquidation, we have saved or created over 230 jobs and been able to continue mining operations at two of the key sites.

"The number of properties that have had to be disclaimed by the liquidators have been significantly reduced.

"The continuance of operations at Netherton and Duncanziemere, together with the planned resumption of activity at Glenmuckloch, will greatly assist in achieving long-term restoration."

Netherton and Duncanziemere are located in East Ayrshire, while Glenmuckloch is in Dumfries and Galloway.

HSML said it would provide site services to ensure that the mines continue in operation.