Operations

Mining

The surface coal mining industry in the UK commenced in the 1940s. With the privatisation of British Coal in the mid 1990s, the industry became open to competition and a number of operators developed larger mines, which, prior to privatisation, had largely been the preserve of British Coal. The surface coal mining industry produced approximately 9.7 million tonnes of coal in 2009; approximately 6 million tonnes of this production was from surface mining in Scotland and comprised 35 per cent of total UK coal production.

Surface mining utilises some of Britain's largest hydraulic excavators to remove the material that overlies the coal. This material is transported by large off-road dump trucks into the previously worked out area to effect continuous restoration.

Once exposed, the coal is won using smaller equipment and transported to an on-site processing facility.

At the processing facility the coal is washed, sized and blended prior to despatch to market.

The majority of the coal is used in power generation and is transported by rail either from ATH's rail loading facility at New Cumnock or via third party railheads. A significant proportion of coal is also processed for sale to the domestic and industrial markets making the Group one of the largest producers of house coal in Britain.

The Group has three operational mines in Ayrshire; Skares, Duncanziemere and Netherton; one in Dumfries and Galloway; Glenmuckloch and one in Fife; Muir Dean. You can find out more about all of the locations on our locations page.

Markets

The total market for coal in the UK is just under 50 million tonnes per annum, coal is a major energy source in the UK. Around 80% is used in the production of electricity with the remaining 20% being used in the industrial and domestic sectors.

ATH Resources supplies all three of these markets as detailed below:

Electricity Supply Industry (ESI)

Around a third of the electricity produced in the UK is generated from coal. This market alone accounts for almost 40million tonnes per year and is forecast to remain around this level  as our demand for electricity continues to grow.

With the reduction in coal production from UK sources in recent years, principally from underground mine closures, over 50% of Britain's coal requirement is now imported from overseas producers such as Russia, Columbia, South Africa and USA.

ATH Resources supplies coal to power stations fitted with flue gas de-sulphurisation equipment, (FGD), this technology extracts the sulphur from flue gases and so reduces the impact upon the environment. The ESI market accounts for well over 60% of our annual production.

The Group has supply agreements with Drax Power, E.ON UK plc, Scottish Power and EdF. These supply agreements are for varying periods, but typically the Group contracts the majority of coal production from a site.

Due to the flexibility of coal fired electricity generation, the ESI coal burn is higher in winter with coal fired generation meeting peak demands. Despite this seasonality, our supplies to the generators tend to be even spread throughout the year to facilitate power station stock build for the winter period.

The coal is supplied to the various power stations by rail with each train carrying over 1,400 tonnes.

Industrial

Around 20% of the Group's coal production is supplied to industrial customers. The fuel is used mainly by cement works and sugar processors in their production process and also by local authorities including schools, hospitals and prisons for the purposes of heating.

The requirements of the cement manufacturers are not seasonal whereas sugar processors have a processing season following the sugar beet harvest during the autumn and winter.

Domestic

The domestic market for house coal remains a very important market. The Group supplies coal to factors and wholesalers who then supply local coal merchants. The market requires a consistent and high quality product. The Group has a long history of supply into this sector and has always focused effort on ensuring that it supplies a premium product that is well known and received within this market.

The market for domestic coal is to an extent seasonal and follows the UK weather pattern with an increased demand during the winter months. However, as with the ESI market, coal wholesalers tend to require supplies throughout the year to ensure that they have the stocks available to meet the higher winter demand.

Statistics on the various uses of coal and the Generation market within the UK may be obtained from the DECC Website.