British coal.
Coal industry (United Kingdom)
Ray, George F.
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Name: National Institute Economic Review Publisher: National Institute of Economic and Social Research Audience: Academic Format: Magazine/Journal Subject: Business; Economics Copyright: COPYRIGHT 1989 National Institute of Economic and Social Research ISSN: 0027-9501
Date: Nov, 1989 Source Issue: n130
SIC Code: 5052 Coal and other minerals and ores
Geographic Scope: United Kingdom Geographic Name: United Kingdom; Great Britain

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In view of the abundant resources of coal in the United Kingdom, it was natural that at the time immediately following the first oil shock in 1973 certain hopes were pinned on coal: that coal usage would recover enabling the country to reduce its high reliance on oil. With the benefit of hindsight it is clear by now that whilst the importance of oil in our energy supplies has indeed been reduced, it was not primarily due to any resurgence of the demand for coal. The production and consumption of coal have continued to decline.

Two major planned measures make the survey of recent developments in the coal market topical: the imminent privatisation of the electricity supply industry (ESI), consuming three quarters of the coal produced in this country, and the announcement of the possible privatisation of the coal industry itself, which might take place in the 1990s, if the present government's plans materialise. In this note we survey the historical development of coal mining, focusing in more detail on the changes since 1973 and make an attempt to assess coal's prospects in the forseeable future.

The history in brief

Without coal the industrial revolution and the subsequent rapid industrial and general progress would not have been possible. From small beginnings in earlier times, the output of British coal mines reached 50-60 million tonnes by the middle of the 19th century. Rapid further development followed until production reached and exceeded 250 million tonnes in the years preceding the Great War in 1914. Output peaked in the first three decades of this century; the `record' years were 1913 and 1923, with output reaching around 290 million tonnes, of which between one quarter and one third was exported. The peak in employment was reached in 1920 when the industry employed 1 1/4 million persons.

The penetration of oil into the British energy market began to depress demand for coal during and after the 1939-45 World War; from 1950 onwards the decline of demand for coal in the domestic market became precipitous. By 1987 output was not more than around 100 million tonnes. Previously significant exports--which were already at a much lower level after the war--dwindled to negligible quantities in recent years.

Changes in energy use since 1973

By 1973, oil covered almost one half of UK primary energy consumption; coal's share fell to 38 per cent. In the subsequent fifteen years the share of oil was reduced to about one third, but coal's share in total consumption also fell, albeit moderately, from 38 to 33 per cent (table 1). Natural gas and nuclear electricity (with some help from electricity imports from France) filled the gap. Thus, whilst `energy intensity'--energy consumption related to GDP--improved considerably, indicating that the energy saving in the whole economy in 1988 amounted to about one quarter as compared with 1973, it was not restricted to oil: coal usage also fell considerably in these relative terms.


The relative position of the main primary fuels in the UK market is in sharp contrast to the resource endowment of the country. Recent estimates indicate that the UK's proved reserves of oil and natural gas would not satisfy demand for more than six and fourteen years respectively, whereas coal reserves would last for nearly a whole century (table 2). Reserve estimates are always subject to revision and therefore these data should be treated with caution; nevertheless, they probably truly reflect the present relative proportions.

The UK is not unique; world estimates reflect the same paradox, albeit on a different scale; world reserves of coal, in terms of their lifetime on the basis of present exploitation, would last four times as long as oil or gas reserves (which are highly concentrated in specific areas, such as the Middle East for oil and the USSR for gas). The proportions of the main types of energy in world consumption (table 3) are not dissimilar from those in the UK.

Changes in the coal market since 1973

Deep mined production fell by 36 million tonnes from 1973 to 1988, from 119 to 83 million tonnes. Open cast output, by far the cheapest in the UK, increased by almost 8 million tonnes to 18 million tonnes in 1988, but its quantity is small and could not prevent total supply declining by over one fifth in fifteen years.

Imports, which were marginal in 1973, rose to around 12 million tonnes whilst exports remained almost negligible. The only noteworthy increase in consumption appears in the case of the CEGB (though not the Scottish boards). In all other cases, with the minor exception of the chemical industry, coal usage fell. The fall was most noteworthy in industrial and domestic use: the first fell by one third and second by one half.

These changes resulted in a considerably altered pattern of the coal market in the UK. In 1973, the ESI accounted for 58 per cent of domestic coal use, but by 1988 its share rose to three quarters (table 4). Other secondary producers--mainly coke ovens but also processed fuel plants--reduced their consumption by about one half. Household use of coal fell similarly and there was a decline, albeit somewhat less, in industry use as well. As the table shows, these changes add up to a total decline of the demand for coal of about 21 million tonnes or 16 per cent.

The ESI, the largest fuel user in the country, raised somewhat its coal usage, whilst its oil consumption fell sharply, replaced largely by electricity generated in nuclear reactors and imported from France (table 5).

Employment and productivity

In 1973, the number of wage earners in Britain's coal mines exceeded 1/4 million; now this number has dropped to well under one hundred thousand. The productivity of labour--far the most important item in the current costs of production--rose significantly in the fifteen years to 1988. Production increased by 140 per cent per man shift in production and its rise overall was 73 per cent. The increase was particularly rapid after 1986 (table 6). The improvements were due to the closing of uneconomic pits, to the introduction of new technology and the further mechanisation and partial automation of the remaining mines, as well as the coming on stream of new `supermines' such as Selby. In recent years changes in work practices and labour relations, as well as improved incentive payments also helped to raise labour productivity (Richardson and Wood, 1989, Glyn, 1988).

Differences by area are, however, just as great as they were fifteen years ago. Yorkshire, Nottinghamshire and the Central area operate at better than average productivity, whilst the Scottish and Welsh mines show lower productivity results (with the smaller area, Kent, the worst) (table 7).

Imported coal

Coal imports to the UK have fluctuated appreciably in recent years, partly because of the coalminer's strike in 1984-5. In 1983 Britain was still a net coal exporter. Exports fell from about 7 million tonnes in 1983-4 to around 2 million tonnes a year, whilst imports rose to almost 13 million tonnes in 1985, declining to around 10 million tonnes in the subsequent two years and rising again to 12 million tonnes in 1988.

Disregarding the years hit by strikes (and remembering that in view of the gradually declining domestic supply of coking coal, imports of this special quality coal seem necessary) the explanation of growing imports is obviously the lower price of internationally traded coal. Calculations of the International Energy Agency (1988) indicate that the cif price of imported coal is considerably lower than the average price of coal produced in the UK.

This is not unique to Britain. Chart 1 indicates that imported steam coal was consistently cheaper than steam coal produced within the EC (disregarding, of course, transhipment and other expenses specifically emerging when imported coal is used). It also shows that the collapse of the price of heavy fuel oil in 1986 greatly improved the competitive strength of oil versus coal.

Further analysis is provided in chart 2 which compares the average prices of British coal and of Australian steam coal, considered as fairly representative of international coal prices. The noteworthy point is not just the growing gap between the two prices but the very different behaviour of the two price curves. Whilst UK prices continued to rise uninterrupted from 1973-87, the price of Australian coal in US $, after rising in the two years immediately after the 1973-4 oil shock, remained flat until 1980, rose again following the second oil price hike in 1980 and then fell gradually in the years 1981-7. When the same price is converted to [pounds] equivalent, the movements are modified by the considerable fluctuations in the $ value of the [pounds]; in these terms the fall of the Australian coal price after 1984 is even more pronounced.

Coal in the EC, North America and Japan

The only European country with a comparable economic system and a large coal mining industry is the Federal Republic of Germany. Straight comparability is nevertheless qualified by the very different structure of the coal mining industry itself; this is because apart from the chiefly deep mined hard coal, concentrated mainly in the Ruhr area but with smaller production in the Saar and around Aachen, Germany operates extensive and mainly open cast lignite production. This lignite (including brown coal) is almost entirely consumed by electricity generating companies; more than 100 million tonnes a year are mined, mostly in the Rhine area. Because of the very close links between lignite production and the electricity utilities (who are committed by very long-term contracts to buy fixed large quantities and some also own lignite mines), lignite consumption avoided the fate of hard coal. The situation of the latter, however, was similar to that in Britain: coal production fell from 110 million tonnes in 1970 to 75 million tonnes in 1987.

Some of the main energy indicators for Germany are included in table 8. The trends are very similar to those indicated for the UK: hard coal output fell by one fifth from 1973-87, nuclear electricity rose even more than in the UK. The decline of oil usage and the rise of natural gas consumption followed the same lines as in the UK. Solid fuel consumption also declined but--because of lignite--less than here. Despite the importance of lignite, the share of solid fuels is somewhat lower than in Britain and so is solid fuel's share in the energy input for electricity generation: just over one half as compared to three quarters in the UK. German energy intensity also declined, though somewhat less than in Britain.

Table 9 contains selected coal indicators for the other EC countries, North America and Japan. By 1986, output in France and Belgium was just over one half of the 1973 quantity (and continued to decline after 1986); none of the other original EC countries had any sizeable coal industry except the Netherlands and that had by then ceased production. Among the newer members, Greek and particularly Spanish coal production increased markedly. The US and Canadian mines increased output, whilst Japan reduced production.

Coal consumption, on the other hand, was higher than in 1973 almost everywhere, with the exception of France, Belgium and Luxembourg. This was most notable for some of the non-producers, such as Italy, the Netherlands, Portugal and particularly Denmark (whose deliberate policy has been to convert power stations to coal firing). In this sense the endeavour to replace oil partly by coal has, to an extent, been successful. This is reflected by the third pair of columns in the table: coal's share in total primary energy use was higher in 1986 than in 1973 in all the countries listed, with the exception of Belgium and France (mainly because of nuclear power) and Luxembourg.

Thus, the UK's experience has been similar to that of the traditional coal producing European countries--Germany, France and Belgium--but it was not shared by the other industrial countries.

Although the data presented for the United States appear favourable for coal, a recent analytical report (Landsberg, 1989) found US coal use badly lagging behind the target of the 1977 national energy plan. Only one among several reasons was unique to the US, namely that the coal-based synthetic fuel plans failed to materialise. Otherwise, the position of coal in the US is not dissimilar to that in the UK: 85 per cent of all domestically consumed coal now goes to the generation of electric power (and electricity demand did not rise nearly as fast as envisaged in the 1977 plan); demand by other sectors, including industry, has been disappointing not so much because of price considerations, but rather because `coal is the dirty fuel par excellence'.

Coal and the environment

Environmental issues are of great importance to both the ESI and the coal industry. The main problems arise from the sulphur, nitrogen and carbon dioxide emission from coal-burning, particularly at generating stations. The first two--sulphur and nitrogen--gave rise to the acid rain problem; improvement in this area as well as the reduction of carbon dioxide from coal burning are internationally accepted aims which will be strictly monitored by the EC and others. Although the technology for reaching the required lower standard is available, the ESI in this country still has a long way to go in order to reduce carbon dioxide emission to an acceptable level. This aspect favours energy sources cleaner than coal, such as gas (and of course imported electricity)--whilst the nuclear option, once believed the `environment-friendliest' has become the subject of increasing controversy, not to mention the uncertainties surrounding the dismantling of obsolete reactors. Therefore any major technological progress favouring coal--making it `less dirty' and environmentally more acceptable--could help stimulate the use of coal.

Other environmental aspects, more directly affect the location of new mines including strip-mining, as well as normal operations and the closure of pits or open cast sites (such as land reclamation).

The effects of privatisation

There are several factors which further complicate an assessment of the prospects for British coal. Most of these are connected with the past, imminent and planned privatisation of the national energy corporations. As a result, the competitive position of British coals is likely to change very considerably. Among the changes in ownership which have already occurred it was that of British Gas that may have implications for coal's prospects; the most important factor likely to influence the demand for coal is the privatisation of the ESI which has already been announced; and the intended privatisation of the coal industry itself will probably also have certain effects. Each of these is discussed in some detail below.

British Gas is now a private company. So far the use of natural gas in power generation has been negligible. In the future however, when both the gas industry as supplier and the ESI as potential customer will be free from government directives, natural gas is likely to join other fuels as a possible source for generation, thus becoming a new competitor with coal.

More important, however, is the change in the structure and ownership of the ESI, which is the consumer of three quarters of the coal produced in this country. Similarly, coal accounts for a comparable share of all the fuels used by the Central Electricity Generating Board (CEGB) and more than one half of the fuel use of the South of Scotland Electricity Board (SSEB). (Bailey, 1988). `Successive governments have used electricity generators as an instrument in support programmes for the coal industry' (Robinson, 1989). A series of government condoned `Joint Understandings' have given British Coal guaranteed sales of very large quantities to the CEGB (and smaller volumes to the SSEB); the most recent of these `understandings' required 95 per cent of the CEGB's coal needs to be purchased from British Coal.

The CEGB fairly faithfully observed this non-contractual commitment; not even during the 1984/5 miners' strike did it choose (or perhaps was unable) to import extra coal. In the years 1985-7, when imports amounted to between 10 and 13 million tonnes a year, the bulk of imports was speciality coking coal for the British Steel Corporation, the majority of the remainder was imported for use by industries other than the electricity industry, whilst the CEGB's imports did not exceed a couple of million tonnes. Most of the latter were delivered to the Thameside stations of the CEGB, which have the necessary docking facilities; shipments arrived there from the ARA (Amsterdam-Rotterdam-Antwerp) ports, the West European centres of the international coal trade. (Robinson and Sykes, 1987). Thus, coal supplies and electricity generation are strongly bound together by a practice that has been in operation for several decades and was based on geography, by the mechanism of production, transportation, the handling of coal and other aspects. This is a relationship that cannot be changed in the very short term; other arrangements are certainly not inconceivable in the medium/longer term, though not without facing some difficulties of any such transition.

As and when the privatised generating companies feel free to manage their affairs, including procurement, they are unlikely to continue observing the Joint Understanding or renew it. Apart from domestic coal, they will have three choices: natural gas, which was virtually banned from power station use, heavy fuel oil and imported coal; they can also raise the import of electricity from France (which may be their cheapest source).

So far governments have been unwilling to allow the CEGB to switch to oil at times when fuel oil prices have fallen. This influence may be disregarded in future. In recent years (apart from those hit by the strike in 1984/5) generally less than 10 per cent of power generation was based on oil, usually `helping out' at peak times. Between 20 and 25 per cent of the existing generating capacity in the country could use oil in power stations that are equipped for oil and dual (coal/oil) burning, if so decided. (Bailey, 1988). This is of particular interest now, as the price of heavy fuel oil fell to a spectacularly low level (chart 1).

Fuel costs are the most important single factor in the total costs of power generation. According to the Annual Report of the CEGB the cost of fuel supply is about 55 per cent of total costs, which include depreciation and also the very high cost of grid maintenance. The share of fuel costs in the current variables costs of production is higher (Prior, 1989). Fuel costs are, therefore, of crucial importance to the private generating companies and this is why the question of imported coal comes to the fore. This raises a number of important points.

From the point of view of the domestic coal industry, the proposed changes hardly alter the present organisation: the CEGB will be replaced by two big corporations. Disregarding the SSEB, and the possibly emerging independent generating stations, the monopsony will be succeeded by duopsony. The buyers, however, will have the choice of purchasing (apart from gas, fuel oil and French electricity) either domestic or imported coal. The pros and cons to be considered are formidable.

Imported coal offers significant apparent price advantages but these cannot easily be converted into cost advantages. Various forms of transportation costs affect the calculation in the first place. With the possible exception of Poland, shipments from the main coal exporting countries reach North/West Europe in very large vessels. Few ports have the capacity to receive them and handle the huge quantity of coal delivered by each of these supercarriers. For practical purposes, these are the ARA ports.

The only UK port that can handle large carriers of 2-300,000 tonnes is Hunterston in Scotland; Immingham and Port Talbot are equipped to deal with vessels of around 100,000 tonnes. However, none of these has free capacity for major steam coal imports: Hunterston and Port Talbot handle the importation of iron ore and coking coal for British Steel, whilst Immingham, apart from being similarly occupied, also acts as the exporting port of British coal. The potential of other ports is much smaller, suitable only for coal carriers of smaller capacity.

Thus, the present situation in the ports excludes the possibility of major supplies of coal for electricity generation imported in large coal carriers. It also excludes the benefit of low shipping rates applicable to direct shipments from faraway sources. What is therefore required is transloading coal at one of the ARA ports, usually Rotterdam, into smaller vessels. As a consequence, the additional costs of trans-Channel delivery, of the handling of coal at the ARA port and at the receiving end, harbour dues, piloting charges and so on add markedly to the otherwise apparently low `cif ARA' price. Then, apart from coastal stations with rare docking facilities, further transportation to inland power stations follows. With all these, the price advantage of imported coal quickly diminishes the further inland the coal has to go. The total increment on ARA price for a power station 60 km from a suitable port may amount to 20 [pounds] per tonne of coal, on the basis of the rail tariff and the exchange rate in the first quarter of 1989 (and more at a less favourable exchange rate). This may raise the ARA price by more than 50 per cent. (Prior 1989).

The present port situation, may, of course, change. Various minor improvements are in hand and planned, raising somewhat the receiving capacity of some of the minor ports, but in order to enable the electricity industry to rely on major quantities of imported coal new deep-sea port(s) are needed which can handle supplies arriving in supercarriers. The building of such a harbour, with the handling facilities and railway link, would take several years. This, therefore, is a long-term problem, with the additional complexity of its likely effect on the price of imported coal.

The international coal trade, despite its growth in the past 10-15 years, still is relatively small. Additional demand by the British electricity industry of not more than--say--15 million tonnes would add some 10 per cent to world trade raising the international price of coal sizeably above the price level where it would otherwise be. The CEGB suggested in its evidence to the House of Commons Select Committee on Energy that if all restrictions were lifted, 30 million tonnes of coal might enter the UK; this would add another 20 per cent to world coal trade. There is certainly sufficient capacity in the major exporting countries to satisfy this new demand but the impact on price would be heavy, very significantly reducing the attraction of imported coal. The likely impact on shipping rates would have additional effects in the same direction.

At least two more factors colour the outlook for imports: quality and reliability. Coal is not a commodity as homogeneous as fuel oil or gas. The properties of coal from various origins vary considerably, requiring certain adjustment in the daily use of coal and also particular attention in view of environmental considerations.

Reliability of supplies is difficult to assess in the international setting but despite the possibility of diversifying imports, in view of the fair number of potential exporters, remains nevertheless a point to be considered, especially in the shadow of the 1984/5 miners' strike which attaches a question mark to the security of domestic supplies as well. The scene is not free from potential dangers: the Polish coal industry collapsed in 1980 and its reliability as a supplier is, to some extent, still dependent on political developments; the South African internal uncertainties may have an obvious influence on coal supplies from there; the US and Australian sources now appear fairly safe although union scenes in earlier years were `tempestuous' according to one study (Turner, 1984) and there is no guarantee against a repetition of the troubles; whilst the coal industry in Colombia is too young to assess from this angle.

There is, moreover, the risk of exchange-rate changes that make the attraction of imports questionable, a risk that does not arise in the same way for domestic coal.

It cannot be denied that lifting restrictions on imported coal for the electricity industry could have certain longer-term advantages: as long as imports offer considerable cost advantage it is in the interest of the electricity industry and of the general public; it sharpens the impact of competition on the British coal industry; and--particularly if additional coal-importing facilities are created--it would ensure, to an extent, against unforeseeable calamities, such as another oil crisis, a future major coal strike in the UK, or a nuclear disaster (none of them unheard of). But whether--after the government's withdrawal from the energy scene--the private sector might be interested in promoting any of these ideas to the extent of investing in them (for example, developing a major deep-sea port for receiving substantial supplies) is a very different question. It remains undeniable however that the privatisation of the ESI has opened the door for increased coal imports.

The outlook for British coal

The privatisation of the British Coal Corporation is not yet on the agenda of the present government but may become imminent if they are returned to office at the next election. The timing and important details (for example, the future organisation of the British coal mining industry) are as yet unknown. Considering these and other uncertainties it seems impossible at this moment to forecast the future of British coal mining with any claim to accuracy. There are, nevertheless, points worth pondering which may help to assess at least the main directions.

First among these is the unanswerable question of the continuation of government support. This has been significant and has taken different forms: direct financial aid to the industry, government-sponsored `Joint Understandings' securing a safe market for coal in the ESI, the virtual ban on the use of natural gas, the tax on fuel oil from 1961 onwards and unwillingness to allow the CEGB to switch to oil regardless of its price, the limitation of coal imports and so forth. The International Energy Agency estimated that the `producer subsidy equivalent' received by the British coal industry in 1988 amounted to US $ 21 per tonne; it is questionable to what extent and in what form this will continue after privatisation of the coal industry--if at all. (In any case it should be added that the same calculation of the International Energy Agency indicated much higher `producer subsidy equivalent' for other countries such as US $ 95 in Belgium, $ 81 in Germany, $ 125 in Japan and $ 17 in Spain all per tonne, (Wigley, 1989).)

The second, similarly unanswerable, question is the future parity of the [pound] mainly against the US $ which is the currency governing the coal market. Downward movement in the exchange rate makes imported coal less competitive.

The competitive strength of British coal is also likely to improve for at least two reasons. Production will be more and more concentrated on the most economic pits: the new `supermines' will produce more and the least economic pits will be gradually taken out of production; and by the extension of up-to-date technology, productivity will be raised (and thereby labour costs reduced) in any case. There is scope for further improvement: according to one expert view, `British Coal's underground mines are a long way behind private sector companies (in so far as labour productivity is concerned) mining coal under similar geological conditions in the USA and Australia' (Sykes, 1989).

Finally, demand for coal will play an important part in shaping coal's future. Requirements of the ESI for domestic coal are of obvious paramount importance not only because they now account for three quarters of UK coal production and are going to be the most vulnerable to penetration of competing fuels but also in view of the decreasing use of coal in other sectors, a trend that is unlikely to stop.

Much will also depend on the pricing policy of the coal industry. At the moment, for the period 1986-91, a five-year `accord' is in force according to which there are three prices agreed between British Coal and the CEGB, concerning 75 million tonnes of steam coal. In 1987/8 the highest price was paid by the CEGB for 45 million tonnes `top tier' coal (48 1/2 [pounds] per tonne), an interim price of 35 [pounds] for the mid-tier of 14 million tonnes and the lowest price, 26 [pounds], for the bottom tier of 16 million tonnes. The take of the top and mid tier quantities is guaranteed (this is a condition of the agreement), whilst the low price of the bottom tier provides protection against imports. It remains to be seen whether anything similar will succeed the present agreement after the privatisation of the ESI, or its expiry in March 1991--and whether it will give enough protection to domestic coal not only against imported coal but also vis-a-vis other competing fuels.

1992 and beyond

The early 1990s will see two major changes likely to influence the future of British coal: the creation by 1992 of the single European (EC) market and the opening of the Channel Tunnel. The EC will be pushing for `transparent' prices (that is, market prices with no subsidies, open or hidden); this will have a small effect on the price of UK coal, marginally worsening its position against imported coal, but making it probably cheaper--and possibly much cheaper--than any other coal produced elsewhere in the EC. (Bailey 1989).

The direct rail link through the Tunnel will further add to the cost advantage of UK coal in the heavily industrialised area reasonably near to it. Thus, a potential new market will be opened up for UK coal. There may indeed be some pressure from Brussels on the UK, best endowed with energy resources within the EC--12, to supply continental needs.

On the other hand, there is also a possibility, admittedly more remote, that the existing continental Euro-Gas pipeline grid may be extended to the UK before or around the end of the century. This would provide easy access to additional quantities of natural gas (coming from Norway, Holland and mainly from the Soviet Union) offering yet another alternative fuel, presumably instead of coal, for power generation.

Thus, uncertainties in the longer term add to those already perceivable in the shorter term.


A recently published report (Power in Europe, 1989) discussed the (unconfirmed) contents of a leaked government document which--among other things--contained hints at possible future developments with a major impact on the future of British coalmining: that the two privatised generating companies `are seeking immediately to reduce their take of British coal from 75 million tonnes per year to a maximum of 60 million tonnes (though they may be persuaded to phase this reduction over three years following vesting day)'.

The report added that, in view of the build-up of production at such new pits as Selby, a loss of sales on this scale would require the closure of some 20-25 million tonnes of present capacity--a very considerable part, about one third, of British Coal's remaining deep mines. It would also involve `a reduction in the workforce up to 18,000 men in addition to the loss of some 12,000 men which may occur over the period even if sales to the electricity industry are maintained at their present level.'

The origin of these statements has so far remained unconfirmed. In view of the considerable technical difficulties involved an immediate reduction on this scale of the ESI's coal take seems highly unlikely. Over the relatively short period of three years such a reduction in the ESI's purchases of British coal does not appear impossible--if all other possibilities, such as natural gas, fuel oil, imports of French electric power as well as foreign coal are considered--but it would require a conversion of such significant proportions in the very first years of the two private generating companies that the likelihood of its actually taking place may be questioned. If realised, it would mean a reduction in the demand for British coal (assuming all other requirements remain unchanged) of 15 million tonnes.

Such a major change should be seen in perspective, however. Leaving the strike-hit years, 1984 and 1985 apart, in the three-year period 1983--6 British coal output fell by 11 million tonnes; in 1986--8 it fell by a further 7 million tonnes. An additional loss of 15 million tonnes would no doubt be painful.

In the same two periods the number of wage earners on colliery books at BCC mines declined by 78,000 (1983-6) and 33,000 (1986-8) respectively. The report cited expects a further fall of 12,000 `if sales to the ESI are maintained at their present level'--in other words, as the result of productivity improvement--and the loss of 15 million tonnes would reduce the workforce by further 18,000 men. This is crudely in proportion with the reduction in output. It probably considerably exceeds the number of those who would leave the industry as the consequence of natural wastage and voluntary redundancies. [Tabular Data 1 to 9 Omitted] [Chart 1 and 2 Omitted]
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