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New Four Year Coal Contract with EDF Energy

Thursday, December 13th, 2007

UK COAL PLC, the country’s biggest producer of coal and the developer of one of Britain’s largest brownfield property estates, announce an important new contract to supply coal from its Thoresby Colliery in North Nottinghamshire to power generator EDF Energy.
The contract enables UK COAL to commit to a £55 million investment programme at Thoresby, to access a further 12 million tonnes of reserves and extend the life of the colliery by around 10 years.
The contract with EDF Energy is for the delivery of four million tonnes of coal between 2009 and 2012 from Thoresby to EDF Energy’s Nottinghamshire power stations, Cottam and West Burton. After 2012, UK COAL will continue production at Thoresby for a further estimated six years, with the flexibility to agree new long term supply contracts, make “spot sales,” or a combination of the two.
EDF Energy is a long standing core customer of UK COAL. Today’s announcement follows last month’s agreement with EDF Energy for the supply, over the next two years, of substantially all of the remaining planned production from UK COAL’s Welbeck Colliery, Nottinghamshire; and October’s agreement for the supply of almost six million tonnes of coal to E.ON’s Ratcliffe station, near Nottingham, over the next five years. Most of the E.ON coal will be supplied by UK COAL’s Daw Mill Colliery in the West Midlands.
Nearly all the coal will be supplied to the EDF Energy and E.ON power stations by rail.
Jon Lloyd, UK COAL Chief Executive, said:
“This is excellent news for all parties. For EDF Energy, it secures a continued guaranteed source of quality coal produced on the doorstep of its power stations. For UK COAL, it is a further significant advance towards us achieving market price for our coal production; it enables us to invest in profitably opening-up major new reserves at Thoresby, and it thereby extends the life of the mine and the jobs of its employees for 10 years longer than had until now been planned.”
Guy Buckenham, EDF Energy’s Managing Director, Wholesale Markets, said:
“Cottam and West Burton power stations have a key role to play in meeting the needs of our customers. We are delighted that this coal supply agreement with UK COAL ensures that a significant proportion of our coal requirements will continue to be met by coal produced and supplied by local collieries.”
UK COAL is also planning market priced “spot sales” for coal produced across its portfolio of deep and surface mines. The delivered cost of internationally traded coal has almost doubled over the last 12 months.
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