Europe in Coal Aid Turmoil

A NEW framework under which EC countries can trigger aid payments to their coal producers is being drawn up by Eurocrats.

But non-coal producing EC countries are opposing the scheme due to come into operation new year - and even countries with indigenous coal production will not be required to automatically make aid payments available.

By the time the European Coal and Steel Community Treaty expires in July, about £36,000 million will have been paid during its 50-year operation. Politicians are still arguing on what should replace it.

Jeff Piper of the EC's Coal and Oil Commission Directorate told Coal UK's Conference in London last month that while Britain's coal production costs were "tantalisingly close" to overseas producers, production costs in Germany were three times those of world prices, and even higher in France, Belgium, Portugal and Spain.

He said state handouts had not been successful in providing long term viability to the coal industry. However, a new structure was being debated which could provide aid for closures until December 2007 and support for pits with longer term reserves up to 2010.

Member governments have to decide by October what their position is. But Rob Wright, the Head of Coal at the Dti, said that while the UK government had no plans for a new scheme, it would argue for a flexible approach that sanctioned investment aid - though coal producers would be "lucky" to get up to 20% of qualifying investment costs.

Barnsley MP Michael Clapham said the coal industry was still a major player in the UK economy and particularly in Yorkshire. UK producers had to match the prices of foreign suppliers if they were to be successful, he said, adding that it needed only a small shift in exchange rates to make a large part of Britain's coal production viable.

There was, he said, a need for a new, less rigid aid regime that could be targeted at individual collieries, backed by investment in clean coal technologies which provided the longer term future of the coal industry.

• Coal Authority Chief Executive Ian Roxburgh said that while it was unlikely there would be any new mines developed in the UK in the foreseeable future, where was ample scope for extending the life of existing mines by accessing new reserves.
• Opencast producer Tom Allchurch said surface mining require a planning regime similar to that of the quarrying and aggregate industry where a landbank equivalent to 10 years production is provided by the planning system.