A production crisis has hit the West Midlands’ last remaining pit following “unacceptable delays” underground and severe losses of £124.6 million at owner UK Coal.
Daw Mill Colliery, in North Warwickshire, the sole surviving deep mine in the region, has warned of a costly “face gap” which could leave it without coal production for many weeks.
The pit, which employs an 800-strong workforce from throughout the region, including Tamworth, Nuneaton, Birmingham, Solihull and as far afield as Nottingham, suffered a four-month production gap last summer which racked up major losses for UK Coal.
And the firm has closed its final salary pension scheme to divert funds elsewhere in the business.
Daw Mill is one of just three fully-operational collieries run by UK Coal and the only surviving pit from a region which for decades boasted dozens of deep mines in Staffordshire and Warwickshire, employing thousands of miners.
But UK Coal has announced losses for 2010 of £124.6 million amid a grim warning from new chairman Jonson Cox of an “unacceptable performance”.
Mr Cox said: “Each of our three ongoing deep mines has underperformed its investment programme in developing new coal faces at some point in the last three years.
“The most notable was Daw Mill where, in early 2010, a four-month face gap caused the group to burn through the majority of the cash it had raised from its 2009 equity issue.
“Whether caused by geological conditions or poor management and planning, if the next panel of coal is not ready before the previous face is exhausted, the result is a ‘face gap’ or a gap in production and pressure on the development of the subsequent face.
“It was confirmed in January that slow progress in 2011 was likely to cause a face gap again this year at Daw Mill.
“On learning of the potential 2011 face gap, we promptly appointed a new manager of Daw Mill in February.”
Mr Cox said the new manager had acted quickly “in developing and initiating a delivery plan.
“This includes the improvement of underground transport capabilities, new working patterns and enhanced maintenance and availability of key capital equipment.
“In recent weeks, we have benefited from full engagement in our recovery plan of key members of the development workforce at Daw Mill to mitigate the possibility of a face gap.”
In a statement on UK Coal’s overall performance, Mr Cox said: “It is clear that the group is in a poor position: over-financed by debt, encumbered with production costs which are too high and over-exposed to the market for brownfield property.”
He said UK Coal’s losses of £124.6 million for 2010 followed “pre-tax losses of £129.1 million in 2009 and £15.6 million in 2008, bringing three years of unacceptable performance in a row.
“The viability of UK Coal over the medium term depends on appropriately rewarding the equity capital required to finance the business.
“The board fully appreciates that investors deserve a far better return than they have experienced over recent years.”
Despite its recent difficulties, Daw Mill is the most technologically advanced pit in Europe, mining a five-metre thick section of a coal seam around 750 metres below the rolling North Warwickshire countryside.