Loose Anti Opencast Network (LAON) press release 2013-25, 24 April 2013
(See also information from Coal Action Scotland below this press release)
The collapse of the Scottish Coal Company has, according to those charged with liquidating the business, been caused by the following:
“Scottish Coal has been suffering from well published difficulties. A combination of falling prices, rising operational costs (particularly fuel) and a number of Scottish Coal sites exhausting their reserves has contributed to trading losses and significant cash flow pressures. Despite significant efforts in recent months, the company was unable to secure the level of investment required to enable the business to continue”
Analysis undertaken by the Loose Anti Opencast Network can throw further light onto the reasons that have led to the demise of the Scottish Coal Company Ltd (SCCL)
Firstly, all of the Scottish Surface Mine industry faces the prospect of an increase in rail freight charges from 2016 that would significantly increase the cost of transporting coal from Scotland to England. Starting from 2016, over a three year period, the cost will rise from £2.83 a tonne to £4.04 per tonne. Last year the Office of the Rail Regulator conducted a consultation exercise over its proposal to increase its freight charges. In reply, SCCL indicated that it would be especially hard hit if these charges were introduced and that it would lead to the:
“Closure of all Scottish coal mines supplying the power generation market in England…”
This would according to the same letter reduce the demand for its coal by 50%
Secondly, Scottish Coal was sending so much of its coal to England because its quality was too poor to service the Scottish market. In the same letter, Scottish Coal explains:
“SCCL currently has the potential to provide coal which could generate about 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.”
However, when Scottish Coal wrote this letter, it knew that this English market for its coal was about to disappear as these more polluting power stations, Didcot, Kingsnorth, Ferrybridge (part), and Ironbridge were about to close because they did not meet the requirements of the Large Combustion Plant Directive. The implication was that by the end of 2015, this decline in capacity to burn the quality of coal Scottish Coal was producing, along with the closure of the Cockenzie power station near Edinburgh for the same reason, would have had a severe impact on Scottish Coal’s operations.
Thirdly, given this degree of uncertainty over the future market for its coal, the cost of transporting this coal plus the looming problem of possibly being forced to begin the costly process of having to restore a number of opencast sites who’s coal reserves had been exhausted, it is no wonder that financiers would not advance further monies to the Scottish Coal Company. In some quarters, some of these problems were well known, with at least two news articles highlighting the implications especially that the increased rail freight charges could decimate the industry:
‘MP says rail freight charges will threaten local jobs’ (Carrick Gazette, 25/1/13) @
http://www.carricktoday.co.uk/news/local-headlines/mp-says-rail-freight-charges-will-threaten-local-jobs-1-2753462
‘New cost ‘will lead to more coal lorries’ (Scottish Herald, 18/2/13) @
http://www.heraldscotland.com/mobile/news/transport/new-cost-will-lead-to-more-coal-lorries.20242993?_=c17ece1ef4818595d96d145b0b62751779d67f63
Steve Leary, for the Loose Anti Opencast Network, a UK wide organisation which supports local groups campaigning against inappropriate opencast mine applications, said:
“If this analysis of the broader set of issues facing SCCL is correct, then it suggests that the same set of issues face other Scottish surface mining firms. In addition to SCCL going into liquidation, ATH Resources has also recently gone into receivership. These longer term issues highlighted here raise longer term questions over the economic viability of the industry. It has already left a legacy of a number of derelict opencast sites across the central belt of Scotland, many of them the responsibility of the activities of SCCL in the past.
“If opencast mining is to continue in Scotland, we would like to see the economic viability of each application more vigorously tested than it is now, plus the provision of a fully funded Restoration Bond ‘up front’ before any work on any new site starts to prevent new eyesores from being created.”
NOTE: Part of this press release is based on research undertaken for LAON entitled “The Rail Regulator, Scottish Freight Charges and the expected effect of an increase in Freight Charges, on the Scottish Coal Industry.” If anyone would like a free copy of this research please email infoatlaon@yahoo.com
INFORMATION ABOUT LAON
The Loose Anti-Opencast Network (LAON) has been in existence since 2009. It functions as a medium through which to oppose open cast mine applications and works with groups where local people feel that such a development is inappropriate.
CONTACTING LAON
Steve Leary, LAON’S Co-ordinator, at infoatlaon@yahoo.com
You can now follow LAON on twitter @ http://twitter.com/seftonchase
Scottish Government’s Secret Talks to Save Scottish Coal
It has recently emerged that Fergus Ewing MSP, the SNP government’s Energy Minister, has been holding secret talks with Scottish Coal to find solutions to the cmpany’s financial difficulties, which currently see it in the hands of its bankers Lloyds TSB. As part of these talks the government has been consulting industry deregulation guru Professor Russel Griggs on issues of opencast restoration. Despite there being no information publicly available about these talks, and every door closed to communities in terms of their involvement in current decision-making, Ewing and Griggs will be briefing MSPs on their proposals at Holyrood on Wednesday 17th April. In order for the industry to be profitable again it must be deregulated – meaning no restoration, no community fund payments and no environmental mitigation – but will the Scottish Government sell communities out for the benefit of a failing company? See http://coalactionscotland.org.uk/2013/04/scottish-governments-secret-talks-to-save-scottish-coal/.