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Hatfield To Re-Open

Ros Snowdon Deputy City Editor

Hatfield set for new lease of life
Colliery to reopen as former UK Coal boss aims to raise £35m

Ros Snowdon
Deputy City Editor

HATFIELD colliery is to reopen in April 2007 under new plans by Richard Budge, former RJB Mining and UK Coal chief, who is hoping to raise £35m on AIM to fund the project.

The re-opening will create 350 jobs for local coalminers and work is due to start on the mine next month.

Mr Budge's new company, Powerfuel, will start trading early next month and the company is expected to list with a market capitalisation of about £56m.

Hatfield, near Doncaster, has a chequered past. It opened in 1908, but was closed on economic grounds in 2001. The site was re-opened, but closed down in 2004 when the High Hazel Seam became exhausted.

Following a massive increase in coal prices over the past two years – up from $35 a tonne to $55 – UK coal is once more an attractive investment.

Powerfuel plans to drive 70 metres below the High Hazel Seam down to the Barnsley Seam, which contains some 27 million tonnes of recoverable coal, which is worth some £100m. The plan is to extract between 2 and 2.5 million tonnes a year, making it a 40-year project.

Mr Budge said the Barnsley Seam is the same seam that was mined at Selby before its closure in October 2004. The five collieries at Selby were producing a total of 10 million tonnes a year.

In addition, there is a site east of Hatfield which contains a further 75 million tonnes. Powerfuel will seek permission to work this coal in due course.

Asked whether he would be interested in taking on any other Yorkshire collieries, Mr Budge said he couldn't talk about other coalmines.

Analysts believe that if Hatfield proves a success, Powerfuel could take a look at UK Coal's Harworth and Rossington collieries, which are both due to be mothballed.

Powerfuel has agreed terms and conditions with E.On, a member of the Powergen group, for the supply of 600,000 tonnes of coal for 12 months. It is in discussion with E.On to extend this arrangement for a further three to five years. In addition, Drax has said it is interested in taking between 1 and 1.5 million tonnes of coal a year for a three-year period.

"Coal is set to provide a substantial proportion of the UK's fuel mix for electricity generation over the next decade," said Mr Budge. "Generator demand demonstrates there has never been a better time to reopen the Hatfield colliery."

In addition to the Hatfield colliery, Powerfuel owns 88 hectares of land surrounding the site that could be used to house a 430MW power plant and a business park for light industrial and office use.

Coal now provides around a third of the UK's energy needs and is more important than ever in light of the high cost of imported gas.

There are also serious worries about the security of gas supplies following Russia's recent row with the Ukraine over gas prices which led to a sharp fall in deliveries to several EU countries.

Mr Budge, who earned the nickname King Coal after buying up most of the British coal industry, said yesterday: "I have always been a great believer in coal and that it would become increasingly important to the UK."

18 February 2006