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Hargreaves vows to keep investing in Scottish mines

HARGREAVES Services has emphasised its commitment to coal-mining sites in Scotland, though the firm is weighing up whether to close some of its other UK operations.

The logistics company joined the Scottish mining industry by taking over several open-cast mines from the Scottish Coal Company and a subsidiary of ATH Resources when both firms collapsed into administration last year.

In July, Hargreaves met its goal to employ 500 people in Scotland, just over a year after the rescue deals.

"These surface assets were acquired at prices that represent good long term value for the group and the group remains committed to the development of surface mining opportunities in the UK and building on its strong pipeline of sites," the company said in a trading update yesterday.

However, the firm is reviewing whether to keep open its Monckton coke production plant near Barnsley, with a decision on the possible closure or reduced investment due "in the coming weeks".

The Durham-based company intends to cut its overall production by 1.5 million tonnes a year in order to lower spending.

Hargreaves yesterday announced the sale of its Imperial Tankers subsidiary to Suttons Transport Group for £26.9m. It paid £6.3m for Imperial when it bought the firm in 2007.

Hargreaves said it will continue to review and sell any part of the business that no longer offers sustainable growth in what the board sees as core markets.

"The board remains of the opinion that coal will continue to be an important constituent of the UK energy mix for many years to come. Indigenous coal will continue to be an important element of this mix," it said.

Its sites in Scotland include Broken Cross in South Lanarkshire, Damside in North Lanarkshire, St Ninian's in Fife, and House of Water and Chalmerston in East Ayrshire.

Hargreaves said it was facing several short-term pricing pressures, though the group added that it "expects some recovery in the foreseeable future".

The price of coal in pounds sterling has dropped from £55 per tonne when Hargreaves entered Scotland to £46 currently, and tougher environmental rules affecting fossil fuels as well as an influx of shale gas are stirring further volatility in the market.

The uncertain fate of UK Coal, which Hargreaves had planned to offer a loan before it withdrew from the rescue in June, was cited by the firm as another sign of instability across the industry.

London-listed shares in Hargreaves closed 9.6 per cent lower at 715.5p yesterday.

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