MINE operator Hargreaves Services has said as many as 170 Scottish jobs could be cut by the end of the summer as it accelerates its withdrawal from the thermal coal market.
The company operates seven opencast coal sites in Scotland, but production is being wound down and it has targeted producing coal at just one Scottish site by the end of the summer. It is currently undertaking restorations works at six sites.
Finance director Iain Cockburn said 60 of the company’s 330 Scottish staff are currently under consultation and added that this could be reduced to around 160 to 180 when restoration works are complete. “We are unfortunately scaling back. We’ve done our best to avoid it but we are naturally winding down due to attrition.”
Its House of Water site in Ayrshire will remain open, switching focus to produce specialist coal for the industrial and domestic market. “We’ve invested a million in trying to improve the yield [at that site],” said Mr Cockburn.
A small volume of coal is also being produced at Glenmuckloch in Dumfries & Galloway, but that will cease by the end of summer.
Having taken the seven sites out of administration in 2013, the company has battled against a struggling market that has seen prices drop to £32 per tonne, resulting in a £15 per tonne loss on thermal coal production. These problems have been accelerated by weak gas prices and an accelerated programme of UK coal generation plant closures, the company said in a trading statement.
“It is not possible to produce power station coal at a profit and there's no market for it,” said Mr Cockburn.
Mr Cockburn revealed that the company was tendering for further restoration work and if successful, would be able to redeploy a number of staff from current sites.
In its interim results for the period ending November 30, the company posted a 50 per cent reduction in revenue to £178.4m and a profit before tax of £800,000, down 95 per cent from £15.2m.
In a trading statement, Hargreaves Services said it would continue to “seek all possible overhead reduction opportunities”, adding that it expects to have largely completed its restructuring before the end of this financial year. The following year is expected to be a year of consolidation.
Gordon Banham, group chief executive said the company had reached an important turning point. “After eighteen months of market turmoil, we are finally completing a challenging phase of restructuring to move away from our traditional areas of focus and reposition the Group.”
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