ENERGY services group Hargreaves is aiming to open three new surface mines in the North East after finally getting its Welsh opencast project off the ground.
Final permission for the Tower Colliery site in the Rhondda Valley was granted in December after a drawn-out planning process but production is now ahead of schedule.
Esh Winning-based Hargreaves, which operates collieries, cokeworks, international mineral trading and transport, has already started production from the site and secured a customer for its output.
Chief executive Gordon Banham said: “The team has done a great job, the first coal has come to the surface already – we’ve got a big pile of it. It’s there, it’s coming up. It’s ahead of what we originally budgeted for.”
Hargreaves has invested £17.9m into the site, the last deep coal mine in Wales which was bought by its miners after the Government’s pit closure programme.
The Durham company has signed a three-year deal with an option for a further 12-month extension to sell Tower’s coal to Aberthaw Power Station.
The smooth start to the scheme has encouraged Hargreaves to actively seek out other surface mining opportunities, of which the initial three are in the region. The company aims to invest around £1.8m in its opencast plans in the next two years.
“We’re applied for a small opencast site near Morpeth,” said Banham. “There are two other sites in the North East that we’ve got options on with around one million tonnes of coal.
“We are hoping to put them into planning in 2012/13. This is a North East company aiming to create North East jobs.” He expects to hear the outcome of the Northumberland planning application within six months. The site has around 130,000 tonnes of coal.
Hargreaves expanded on its opencast ambitions as it published its interim results for the six months to the end of November.
Revenues jumped by 27% to £322.8m but pre-tax profits dipped by 16% to £13.6m. The group is confident that strong trading in the first three months of the second half means it will hit its annual profit targets, boosted by the quick start to Tower’s production.
Banham said: “When we drew up the budgets, we hadn’t got planning; we got planning in December. In the second half, we’ll see the benefits of those profits.”
Hargreaves also pointed to its exceptional success in the steel sector, winning contracts worth more than £80m at three UK plants including the SSI site on Teesside, which will shortly be restarting production.
Banham said: “Redcar is coming online in March and we have signed a contract with SSI worth £12m a year for the next five years. That’s been great for us. It’s two North East companies working closely together.”
The interim profits were dragged down by issues at Maltby colliery in Yorkshire, Banham said.
“The group’s on course to deliver another good solid set of results this year. The future is really exciting. Around 3,000 people work here now; it’s a great success for the North East. It’s down to the people we employ.”
Analyst Charles Stanley Securities said: “Tower Colliery is coming on stream ahead of expectations and its 2012 output has been successfully contracted.
“Trading has been strong in the second half to date and the group is confident of meeting its FY targets. We are forecasting PBT normalised of £47.7m for FY2012.”