Scottish Coal liquidation prompts effort to revive shuttered mines

April 22, 2013 at 12:06 AM
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EDINBURGH, Scotland, April 22 (UPI) -- Scotland says it is setting up a new trust to revive shuttered coal mines across the country in the wake of the liquidation of Scottish Coal.

Scottish Energy Minister Fergus Ewing announced Saturday the Scottish Mines Restoration Trust has been established after Scottish Coal, which operated six open-pit mines in East Ayrshire, South Lanarkshire and Fife, was put into liquidation, resulting in the loss of 590 jobs.

Court-appointed liquidators KPMG revealed only 142 of company's workers would be retained after cash flow problems brought on by falling coal prices, rising fuel prices and exhausted coal reserves prompted the decision to liquidate the assets of parent company Scottish Resources Group.

Blair Nimmo of KMPG said in a statement the move was made "in light of Scottish Coal's poor trading and financial position," adding, "It is extremely regrettable that we have had to make so many redundancies but have been left with no other option."

In an optimistic note, Nimmo added, "It is still possible that mining operations will continue and offer future employment prospects for at least some of the people who have lost their jobs."

Ewing promised the Scottish government would do everything possible to help the laid-off miners.

"Our concerns remain with the workers and families affected by the decision to make 590 Scottish Coal staff redundant," he said. "However I very much welcome the view from the liquidators that there is a possibility that mining operations may continue.

"The Scottish government will do everything we can to secure the continued operation of the business on a sustainable basis and we are in contact with both the liquidators and the trade unions in this regard."

He said the new mines restoration trust would "engage with local councils, landowners, and coal operators to ensure the best possible outcome for local communities and the effective restoration of old open cast mines."

Russel Griggs, chairman of a government commission to reform the country's regulatory environment, has agreed to lead the trust following six months of studying issues facing Scotland's coal industry, including concerns over effects on the environment of reopening shuttered coal mines.

While committed to retaining the maximum possible number of jobs at Scottish Coal -- the country's last remaining domestic coal company -- the government will shift its focus to the restoration of shuttered mines, which, Ewing said, is "expected, over time, to create hundreds of jobs across the country, as well as restoring the local environment."

The liquidation of Scottish Coal came after company owner Colin Cornes failed to raise a hoped-for $38 million through in a 2011 stock offering, despite the support of Scottish First Minister Alex Salmond, The Scotsman reported.

That was followed by news the company had sustained a 90 percent drop in 2011 profits due to lower coal prices and increased costs.

The miners' union blasted the decision to liquidate Scottish Coal.

Nicky Wilson, Scottish organizer for the National Union of Mineworkers, told STV News the way the liquidation was handled was "the worst occasion I can ever remember" among many previous instances of mineworkers being laid off in Britain.

The Scottish coal industry provides 4,500 direct and indirect jobs and is worth $760 million per year, the BBC reported.

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