The closure of Thorseby coal mine in Nottinghamshire and Kellingley coal mine in Yorkshire may cost taxpayers up to £75m, according to a report titled Merits of UK Coal State Aid Application, commissioned by UK’s national trade union centre (TUC).
The UK Government has permitted the closure of two of Britain’s last three coal mines by the end of 2015, following which only Hatfield Colliery deep pit mine will be left in Britain.
The closure is expected to cause 1,300 skilled job losses and many more in supply chain jobs linked to the mines, the report claimed.
TUC has urged the government to sanction an EU state aid that will not only allow both mines to operate until 2018 but will also secure the future of the UK coal mining industry and save taxpayers’ money.
In a letter to Energy Minister Michael Fallon and Business Secretary Vince Cable, the TUC has warned that closure of the two mines without state aid would threaten the UK’s energy security, as it is highly dependent on Russia for the energy source.
TUC general secretary Frances O’Grady said that recent events in the Ukraine should have made clear the importance of having a secure domestic energy supply.
"Instead, the government is allowing two of Britain’s three remaining coal mines to close, causing the unnecessary loss of 1,300 skilled jobs and leaving us even more exposed to fluctuations in the price of imported coal," O’Grady said.
"But British coal mining does have a future if the government wants it to. An application for state aid would be cost neutral, save jobs and help ensure that UK mined coal supports our emerging CCS (carbon capture and storage) industry. The profits from extra coal production would save the taxpayer money too."
"With thousands of jobs and the UK’s energy security at stake, ministers must put aside their reluctance to intervene and apply for EU state aid. It would be madness to allow the closure of British mines when countries like Germany and Spain are using far greater amounts of state aid to bolster their own domestic coal supply."
The TUC’s report also states that the cost of state aid, which is expected to be between £63m and £74m, can be easily recovered from the £86m of extra profits generated between 2015 and 2018, and from more than £500m in coal revenues.
The UK Coal Producers’ Association, CoalPro, director Phil Garner said there is a strong case for the UK Government to provide financial aid to their remaining underground coal mines.
"This would maintain access to significant coal reserves, ensure that the employees continued in work and provide additional security of supply of fuel. If we are to develop CCS projects it would be ironic if there were no indigenous coal to supply them," Garner said.
"Market prices will change and UK production can help to ensure that consumers are not exposed to coal price spikes in the future."