THE LOOSE ANTI OPENCAST NETWORK

LAON PR 4 -2014 7/4/14

ERIC PICKLES: PLEASE IMPOSE A MORATORIUM ON PROCESSING ALL UK COAL APPLICATIONS FOR NEW OPENCAST SITES

The crisis engulfing UK Coal Mining Holdings (UK Coal) has so far only been discussed as a financial problem concerning the closure of two deep mines and the regrettable loss of 1200 jobs. The Loose Anti Opencast Network (LAON) believes that it is also potentially an environmental and planning crisis.

This is why (LAON) has written to the Secretary of State for Communities and Local Government, Eric Pickles, asking him to impose a blanket moratorium on all current and potential planning applications being proposed by UK Coal. If the proposal is accepted, it would affect the following proposals:

Bradley, nr Consett, Co Durham, Deanfield, nr Sharlston, Wakefield, Great Oak, nr Audley, Staffordshire, Hoods Close nr Whittonstall, Northumberland, Shortwood Farm, Trowell, nr Nottingham, Marley Hill Colliery Reclamation, Sunnyside, nr Gateshead and Bebside, nr Blyth, Northumberland.

We are asking for these moratoriums for the following reasons, which are explain in further detail in a copy of the letter which accompanies this press release.

• There is great uncertainty over who will actually be responsible for operating these sites should planning permission be granted for any one of them.

• We question suggestions that have been noted in some of the press comments, that the Department of Energy and Climate Change think that surface mining operations are economically viable, as the current priced being quoted for coal deliveries up to 2015, are below the production costs quoted by UK Coal plc, the company that preceded the current UK Coal, in its last Annual Report in 2011.

• As a consequence we suggest that should planning permission be granted in the present circumstances, for any one of the above sites and subsequently, UK Coal go into administration, the English taxpayer would be facing the cost of restoring these sites, as their Scottish counterparts may have to do. Last year in Scotland, two undercapitalised opencast operators went bankrupt, leaving the taxpayer with a £200m bill to restore up to 32 un-restored sites.

• We also argue that the evidence suggests that Local Authorities are ill equipped to assess the financial viability of companies applying for planning permission to operate new opencast mines and therefore in this instance, to protect the countryside from the risk of environmental damage, a blanket moratorium affecting all the listed sites, be imposed.

• Lastly, our letter argues that a recent statement in the House of Commons, made by the Secretary of State for Energy and Climate Change, Mr Edward Davey, suggests that imposing such a moratorium would not threaten the UK’s energy security situation, when he answered a question on this issue put by Ian Lavery MP with this answer:

“We do not see a security of supply problem here, but the Government need to engage with all parties to determine what we can do, and we have been incredibly active in doing so.”

Steve Leary, the Co-ordinator for the Loose Anti Opencast Network said

“ The longer it takes to resolve the financial crisis affecting UK Coal, the bigger the risk that the Company will continue to pursue planning applications for any of the above sites, as gaining planning permission will temporally enhance the Company’s value.

However, were this to be the case, our evidence suggests that given the current prices reigning for coal, there is a very real risk that soon, operating the sites would become uneconomic, raising the possibility that the operator of such sites would face severe financial problems and either have to mothball the site indefinitely or, should the operator go into administration, leave the site abandoned.

Then, if the debt to restore the site is too large, even with a restoration bond, the liquidators can apply to the Bankruptcy Court to be allowed to disclaim from having the financial responsibility to restore the site or sites, as has happen recently in Scotland.

This risk already applies to the six sites currently in operation:

Butterwell, near Morpeth in Northumberland,
Huntington Lane, near Telford in Shropshire,
Park Wall North, near Crook in County Durham,
Potland Burn, near Ashington in Northumberland,
Lodge House, near Ilkeston in Derbyshire and
Minorca, near Measham in Leicestershire.

We therefore argue that the prudent course of action would be to limit the risk of extending the degree of environmental damage from spreading any further, by imposing this blanket planning moratorium now, until such time as any operator, who wants to apply for planning permission to open a new surface mine, can demonstrate that they have sufficient capital resources to meet the financial risks involved. “

END END END END

This is a copy of the letter sent to Eric Pickles, referred to in the Press Release. If you want the fully referenced copy write to  infoatlaon@yahoo.com


THE LOOSE ANTI OPENCAST NETWORK

A REQUEST TO THE Rt. Hon. ERIC PICKLES MP, SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT,TO IMPOSE A MORATORIUM ON THE DETERMINATION OF NEW PLANNING APPLICATIONS FOR SURFACE MINE SITES THAT HAVE BEEN SUBMITED BY UK COAL SURFACE MINING LTD OR ANY OF THE COMPANIES IT IS ASSOCIATED WITH.

Dear Eric Pickles

I am writing to you on behalf of The Loose Anti Opencast Network (LAON) to request that you consider imposing a moratorium on processing and the determination of all new planning applications that have been submitted by UK Coal Surface Mining Ltd (UKCSM) or its associated companies for new surface mine sites, until the uncertainty over the financial state of the applicant has been resolved (1).

As you will be aware, this uncertainty has resulted in discussions between UKCSM’s parent company, UK Coal Mining Holdings and the Department of Energy and Climate Change over the financial future of the parent Company. If UK Coal Mining Holdings went into receivership, this would affect six and possibly seven planning applications currently before Local Authorities in England as follows:

• BRADLEY (nr. Consett) (Co Durham) (Entered Public Domain: June 2007) (Planning Inspectorate: 2nd Public Inquiry Appeal Ref: APP/X1355/A/11/2150277) (UK Coal) (500,000) (68 hectares)

• DEANFIELD (West of New Sharlston, Wakefield Council Ref No 13/00006/MIN) (Entered the Public Domain: October 2012) (Application Rejected, waiting to see if UK Coal are to appeal over the decision) (UK Coal) 1.180,000 tonnes) (138 hectares)

• GREAT OAK, AUDLEY, STAFFORDSHIRE (Staffordshire County Council: Reference No. SCO.55/2013 M) (Application) (UK Coal Surface Mining) (450,000) (84 Hectares)

• HOODS CLOSE WHITTONSTALL (Northumberland County Council Ref No C/10/00255/CCMEIA) (Entered the Public Domain: August 2009) (Application) (UK Coal) (2,200,000 (208 hectares)

• SHORTWOOD FARM (Trowell, nr Nottingham, Nottinghamshire) (Entered the Public Domain : October 2010 (Application Approved by Nottingham County Council in December, 2013, but a request has been made by Anna Soubry MP that the Secretary of State for Communities and Local Government, ‘Call In’ the application) (UK Coal) (1,275,000) ) (130 hectares)

• MARLEY HILL COLLIERY RECLAMATION (Sunnyside, Gateshead Ref No DC/12/01349/MIN (Co Durham also affected), (Entered the Public Domain: May 2012) (Application) (UK Coal) (c1.0m) (118 hectares) (Case Officer for Gateshead: Ian Armstrong, Case Officer for Co Durham, Clare Teasdale.

In addition, UK Coal has recently announced their intention to apply for a new site in Northumberland, at Bebside. These are the details that we have on this suggestion:

• BEBSIDE (Between Blyth and Bedlington, west of the A 189), (860,000tonnes), (158 hectares.) (UK Coal) (2)

The reasons for requesting a moratorium are:

1) UNCERTAINTY OVER WHO WILL BE THE SITE OPERATOR

I attended a Public Meeting, called by Audley Parish Council in Staffordshire, to discuss the Great Oak application recently, on Wednesday 2nd April. Two representatives from UK Coal Surface Mining were present. However, they could give no assurances whether it would be UK Coal Surface Mining who would be working the site, should the application be successful. One of the company’s representatives made the comment that he might not be in a job in a week’s time. The whole event had a surreal feel about it, since no assurances could be given by the Company’s representatives. This inability to ensure that it will be UK Coal Surface Mining who will be the company which takes responsibility for operating all the above sites, should planning approval be granted, must already be delaying progressing the planning applications listed above.

2) THE ECONOMIC VIABILITY OF FUTURE SURFACE MINE OPERATIONS

According to a news story on this issue (3), officials from the Department of Energy and Climate Change are confident that UK Coal Mine Holding’s surface mines are an ongoing viable operation. We would suggest that this is not the case. The current prices for coal in North West Europe are known as ARA prices, since the bulk of the coal used is landed at the ports of Antwerp, Rotterdam or Amsterdam. The prices for the bulk of UK used coal are based on these prices. On Thursday 3/4/14, these were the prices for coal being traded for delivery on the following dates (based on an exchange rate of $1.66 / £1)

DATE DOLLAR POUND
APRIL 14 76.45 46.05
MAY 14 74.55 44.91
Q2 14 75.15 45.27
Q3 14 74.90 45.12
Q4 14 77.30 46.57
Q1 15 78.70 47.41
2015 80.23 48.33

If it is thought that these prices should instil confidence in the viability of future English surface mine operations, they should be compared with the surface mine coal production cost figures contained in the last full Annual Report produced by this Company’s predecessor, UK Coal plc for the year ending December 2011. The table on p 13 entitled ‘Surface Mines Key Performance Indicators’ contains the following information. In 2011 1.8m tonnes of coal were produced from their surface mines, the operating costs were £87.7m. This indicates that in 2011, it cost c £48.72 to produce each tonne of surface mined coal. (4) When compared to current European prices for this coal as outlined above, confidence that current surface mine operations are economically viable, appears to be misplaced.

3. THE RISK OF UNSECURED POTENTIAL LIABILITIES AND CONSEQUENT WIDESPREAD UNRESTORED ENVIRONMENTALA DAMAGE

You will know from the recent circumstances in Scotland, that this diminished economic viability would then flow through to undermine the Restoration Bonds applicants may have been required to provide, risking ongoing environmental damage at these seven sites and huge potential financial liabilities that would fall on the public authorities The size of site ranges from 68 to 208 hectares.

Should no moratorium be put in place now, England risks experiencing the kind of environmental damage now being witnessed by people in Scotland, across these swathes of the English countryside. In Scotland, two undercapitalised opencast operators went into liquidation last year, leaving at least 32 un-restored surface mine sites, which will, it is estimated, cost the taxpayer over £200m to restore.

It may be thought that requesting that the operator provides for a Restoration Bond, which is made a condition should the Company gain planning permission, offers local communities some security that should bankruptcy occur, the sites will be restored. We can provide evidence that this is not always the case.

The Scottish example has already been cited. The £200m bill that the taxpayer is expected to meet is the net cost of restoring these 32 sites, after just £28m has been recovered from various forms of Restoration Bonds. The Scottish Government has recently carried out a consultation exercise on what action should be taken to ensure that new sites get restored, partly because the Insurance Market for Restoration Bonds has now collapsed.

The second example is the saga associated with the Keekle Head opencast site in Cumbria, which was worked in the 1990’s. It had, I believe, two Restoration Bonds attached to it. The operator went bankrupt, the Bonds proved to be inadequate, the site was left derelict for years. Recently the site has been the subject of a Public Inquiry Appeal on whether it should be used as a site in which to store Low Radioactive Waste. The appeal was rejected in 2012 and the site still lies derelict (5).

4. EXISTING GUIDANCE ON LOCAL AUTHORITES SEEKING FINANCIAL REASSURANCE FROM APPLICANTS APPEARS TO BE INADEQUATE.

Financial considerations can already be a material consideration in a minerals planning application according to paragraph 50 of the Technical Guidance to the National Planning Policy Framework, which states the following about the need for a Restoration Bond:

“....50. Exceptional cases where it will be reasonable for a minerals planning authority to seek a financial guarantee to cover restoration (including aftercare) costs, through a voluntary agreement/planning obligation at the time a planning permission is given include: “

“•....... where there is reliable evidence of the likelihood of either financial or technical failure, but these concerns are not such as to justify refusal of permission. “ (6)

The Deanfield site in Wakefield, was refused planning permission by Wakefield Council on Thursday 27/3/14, just five days before the Financial Times broke the story about UK Coal Mining Holdings financial crisis. Although the application was rejected, issues about the financial viability of UK Coal Surface Mining do seem to have been an issue which was discussed (7). However local planning authorities may not have the capacity to explore the ‘reliable evidence of financial failure’ mentioned in the guidance.

This guidance does imply that financial concerns, if they are serious enough, can justify rejecting a planning application. Therefore, we believe that the current situation is now so serious that a blanket moratorium should be applied to processing all of these applications and that it is now incumbent on you to act.

5. ENERGY SECURITY AND THE NEED FOR UK PRODUCED COAL

Historically, one of the main arguments put forwards by UK Coal Operators to justify the granting of new planning permissions for surface mine sites has been that producing this coal contributes to the UK’s energy security. An exchange in the House of Commons on 3/4/14, suggests that this is no longer the case:

“Ian Lavery (Wansbeck) (Lab): Does the Secretary of State agree that security of supply will not be enhanced by the closure of two of the last three deep mines, Kellingley and Thoresby, and open-cast mines? Bearing in mind the fact that the Government have taken £4.5 billion from the mineworkers’ pension scheme, including £700 million this year, surely it is not beyond their imagination to use the miners’ own money to support what is left of the industry.

Mr Davey: We do not see a security of supply problem here, but the Government need to engage with all parties to determine what we can do, and we have been incredibly active in doing so.” (8)

The suggestion contained in this request, is that imposing such a moratorium would not conflict with the Government’s Energy Policy.

CONCLUSION

For these various reasons, the Government needs to act now to impose a moratorium on the processing of the above planning applications, until the applicant for such planning permissions can demonstrate that it is reasonably capitalised.

Yours sincerely

Stephen Leary, Co-ordinator, The Loose Anti Opencast Network

INFORMATION ABOUT THE LOOSE ANTI OPENCAST NETWORK
The Loose Anti-Opencast Network (LAON) has been in existence since 2009. It is a UK and Northern Ireland wide network of 30 local community groups opposed to local opencast mine proposals / operations. It functions as a medium through which to oppose open cast mine applications and works with groups where local people feel that such a development is inappropriate.

CONTACTING LAON

Steve Leary, LAON’S Co-ordinator, at  infoatlaon@yahoo.com

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