UK Coal said a 45% rise in the market price of coal since the start of the year had transformed the outlook for its mining operation. The operator of four deep pits reported half-year losses but said “significantly higher production at a significantly higher sales price” left it on course to meet market hopes for full-year profits of around £70 million. The company is Britain’s biggest producer of coal, supplying around 15% of all the coal burned – equivalent to the energy needed to provide 5% of the country’s electricity needs. It also owns 46,500 acres of land, of which around 3,700 acres are currently targeted for development. UK Coal said demand remained strong because UK electricity generators viewed coal as more profitable to burn than gas. The average sale price in the first half of the year rose 18% to £1.79 per gigajoule, but UK Coal said some production sold on the open market for up to £4. The expected average price for the second half is near £2. Total sales of 3.7 million tonnes was down in the first half, which UK Coal said reflected the timing of face changes at Kellingley, West Yorkshire and Welbeck, Nottinghamshire. Output was also committed to satisfying older contracts, limiting the benefit of higher prices. Bottom-line losses for the half year were £9.9 million against profits of £40.6 million in the same period a year earlier. UK Coal chairman David Jones said the company was confident of meeting expectations for the full year and viewed the future with optimism. He added: “The sharp increase in the market price of coal, up around 45% from the start of the year to the end of July, and its strong forward curve, transforms the outlook for our mining operations.”

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