London (Platts)--10Aug2012/658 am EDT/1058 GMT
British miner UK Coal said Friday a poor performance at its Daw Mill mine and falling international coal prices led to a GBP20.6 million ($32.05 million) pre-tax loss in the first half of 2012, compared with a GBP22.11 million profit in the same period last year. The miner's first-half output fell 19.5% year on year to 3.3 million mt, with its three deep mines producing a combined 2.4 million mt. UK Coal said that while the Kellingley site achieved higher year-on-year output, both Daw Mill and Thoresby saw a drop in production. UK Coal said Daw Mill remains on course to close in early 2014, or before, unless it can achieve key targets. Surface mining production in the January-June period fell to 900,000 mt from 1 million mt a year earlier. Struggling with debt and persistent losses over the last few years, UK Coal said it had agreed in principle a restructuring plan with key stakeholders, including pension funds, customers and its main banking partners. "Without a restructuring, the Group will remain exposed to significant risk on its financial headroom and covenants," UK Coal chairman Jonson Cox said. "Principal operational issues continue to be the level of production risk in the deep mines, at Daw Mill in particular, the price of coal and the reduction of operating costs at the mines." UK Coal's H1 revenue fell 23% to GBP198.3 million, with the firm citing significantly lower sales volumes at slightly higher average realized prices of GBP2.43/GJ ($71.22/mt), up from GBP2.36/GJ a year earlier. FALLING INTERNATIONAL PRICES Cox added that international coal prices had fallen significantly since the highs of 2011 when they averaged GBP3.01/GJ for the year compared with GBP2.40/GJ for the first six months of 2012, having dropped as low as GBP2.13/GJ in May. "This follows the rise in shale gas production in North America, and the consequential falls in US gas and coal prices, which has resulted in US-supplied coal further depressing the market in NW Europe, that was already affected by economic worries," he said, adding that forward coal prices "show some signs of strengthening over the remainder of 2012 and through 2013." --Gareth Carpenter, gareth_carpenter@platts.com--Edited by Jonathan Fox, jonathan_fox@platts.com