Industry news: May 2010
- UK aggregates industry unable to replenish reserves
- Cornwall’s South Crofty seeks investors
- Welbeck Colliery ceases production after almost a century
- UK Coal puts merger plans on hold
- A new oil strike in...Britain?
- Lafarge launches UK's groundbreaking collection and recycling service
- MPA urges new government to invest in construction
- QPANI calls for fast–tracking of renewable energy projects
- Call for clear national strategic planning policy
- Galantas reports markedly improved net income in first quarter 2010
A recent analysis by industry marketing consultancy BDS Marketing Research Ltd has shown that the UK aggregates industry continues to be unable to replenish its output with new reserves, despite markets falling by 25 per cent during 2009. Aggregates companies obtained consents for around 115 million tonnes of new reserves in 2009, compared with actual production of around 135 million tonnes during the year. Over the last decade, the only year in which the industry managed to replenish reserves to the level taken out was in 2006. Net reserves of aggregates fell by 40 per cent in 2009. The South East region has the most acute shortage of reserves, although in 2009 it did manage to replenish the production extracted. Yorkshire and Scotland were the only regions where consents exceeded production in 2009. The South West, West Midlands, East Midlands, North West and Wales all saw less than half of production replaced with new reserves.
Western United Mines Limited (WUM) plans to extract other base metals as well as tin at their South Crofty Mine in Cornwall. Chief Operating Officer, John Webster, has stated that the company is planning to develop and restart the mine in the next couple of years and they are currently seeking to secure more investment. The company is looking to develop metals such as copper and zinc in addition to tin because a multi-metal mine may be less risky and more attractive to investors than a single metal mine. Underground drilling has been going on at South Crofty for the last two years and two new drills have been purchased to speed up the process. According to Webster, the deposit is five to six kilometres wide, and 15 to 20 kilometres long with 50 to 60 thousand tonnes of tin. WUM is also expanding its areas of operations. It has rights to around 150 square kilometres of land, and in the next few weeks hopes to double this.
Webster recently announced that they have found traces of gold while carrying out exploratory drilling and are now identifying gold targets. ‘This is the first time gold has been looked for and found as far as we know at South Crofty’, says Webster. The highest grade of gold found so far is 1.2 grams per tonne.
Source: Barbara O’Donovan, Metal Bulletin, Monday 26 April 2010, page 4; http://www.guardian.co.uk/business/2010/may/06/cornwall-gold-mine-south-crofty
Coal production ended at Welbeck Colliery near Meden Vale in North Nottinghamshire on May 11th after almost a century of coal production. Mine operator UK Coal announced the closure of the mine back in 2005 due to a lack of viable reserves. Although production has ceased, coal washing and blending operations will continue at Welbeck for several months. The products will be transported by rail to nearby power stations for electricity generation. About 70 of the 410 employees who worked there in recent years will remain to recover equipment worth around £6 000 000, and to safely seal off and decommission the mine. UK Coal has offered all Welbeck mineworkers jobs at its three ongoing collieries. At its height, Welbeck employed about 1,400 miners and had an annual output of around 1.5 million tonnes. UK Coal Chief Executive Jon Lloyd, said ‘This is a sad day for UK Coal, the coal industry and the communities which have had an association with Welbeck for almost a century. But being an extractive industry, this day was an inevitability’.
Talks of a merger between UK Coal plc and Hargreaves Services plc have been put on hold after UK Coal announced their preliminary financial results for 2009. UK Coal experienced what Chairman David Jones described as an ‘extremely challenging year’ in 2009, with a reported pre-tax loss of £129.1 million. These results were primarily due to geological issues in the deep mines combined with a subdued market price for coal in Europe. UK Coal announced last month that it had received a tentative merger approach from Hargreaves, the UK’s leading energy support services provider. But the company has not handed over detailed financial information requested by Hargreaves to allow it to begin due diligence. UK Coal is interested in a tie-up, partly to reduce its reliance on its deep mines, which are very expensive to maintain and are unpredictable to run because of unforeseen geological problems like those experienced during 2009. Hargreaves has stated that ‘Discussions remain at a very preliminary stage and there is no certainty that any transaction will take place’.
Source: Mining Journal, 20 April 2010, p30; http://www.guardian.co.uk/business/2010/apr/26/uk-coal-merger-postponed
Australian oil and gas explorer Norwest Energy have confirmed that evaluation of early ground surveys and seismic studies of Southwest England indicate oil reserves of somewhere between 3.4 million and 53.9 million barrels. This is across seven different prospects, in three permit areas the company holds with partner Wessex Exploration. However, the project is in the early stages and it may be another two years before drilling can confirm the estimates. The Wessex Basin has been a prime target since British Gas discovered the vast field at Wytch Farm in 1973. Wytch Farm is Britain’s largest onshore oil field producing 20 000 barrels per day, and the field has produced more than 400 million barrels of oil since its discovery. The finds by Norwest Energy may be a fraction of the size, but they are part of the same geological formation which could mean both similarly good-quality oil and the potential of other nearby finds. David Bramhill, a director of Wessex Exploration, has said ‘This is only just the beginning of something really big for the Wessex Basin’.
Lafarge UK is to introduce a groundbreaking cement collection and recycling service, in a move to help the construction industry cut waste going to landfill. From this May, Lafarge Cement’s merchant customers in Britain will be able to use their existing ordering system to arrange for out of date packed cement to be collected straight from their yard. Disposal of construction materials has posed a growing problem for merchants, who are faced by escalating landfill taxes. Kieron Hall, Packed Marketing Manager at Lafarge Cement UK, commented: "This is a fantastic initiative on so many levels. For our merchant customers, it saves money on skip hire and landfill charges and removes the problem of having to dispose of out-of-date cement. For the environment, it reduces the amount of construction waste going to landfill and supports local green initiatives in the community around our Works. We're proud to yet again be leading the field in creating an ever-more sustainable construction industry."
The Mineral Products Association (MPA) has released the results of their market analysis for the first quarter of 2010. The analysis indicates that sales of crushed rock and asphalt increased by 6 per cent and 9 per cent, respectively, compared with the first quarter of 2009, but that cement, sand and gravel and ready-mixed concrete sales all declined (by 3 per cent, 6 per cent and 7 per cent respectively). According to the MPA, the positive figures for crushed rock and asphalt are a reflection of progress on national road schemes and work to repair local roads following the freezing weather earlier in the year, although the growth is from historically low market levels. The cement and concrete trends indicate that general construction activity remains very depressed. MPA executive director Simon van der Byl said ‘These results show how sensitive the construction materials and construction markets are to the outcome of the general election’. He added ‘The new government has a clear choice. It can support and promote construction actively through its investment and planning policies and therefore accelerate economic recovery, or it can choose policies which will constrain construction and economic recovery’.
The Quarry Products Association Northern Ireland (QPANI) is encouraging the Department of Enterprise, Trade and Investment (Northern Ireland; DETI) to progress the Strategic Energy Framework as quickly as possible and is stressing that it must include the fast-tracking of land- and sea-based renewable energy projects. QPANI regional director Gordon Best said ‘Given the unprecedented downturn that the aggregates and construction industries have experienced recently, and the significant increases in energy costs and the longer-term uncertainty of overseas energy supply, our Executive must make the fast-tracking of land- and sea-based renewable energy projects, and the urgent upgrade of the electricity transmission grid, a key priority’.
In response to the Queen’s Speech and publication of the coalition’s ‘Programme for Government’ document, the Mineral Products Association (MPA) has said it will work positively with government so that the development which is necessary to help ‘restore economic growth’ is not constrained by a lack of mineral products. The MPA has stressed that it is critical the Decentralisation and Localism Bill, which will ‘devolve greater powers to local councils and neighbourhoods and give local communities control over housing and planning decisions’, is matched by a clear national strategic policy framework and a commitment that ensures that construction and other industries continue to receive a steady and adequate supply of aggregates and other key minerals. Nigel Jackson, chief executive of the MPA, said ‘We have a responsibility to work with local communities constructively and transparently, but government also has a responsibility to ensure that planning decisions are balanced, reasonable and reflect both national and local interests and that there is an appropriate structure to support this.’
Galantas Gold Corporation has published their results for the three months ending March 31, 2010. Galantas owns 100 per cent of Omagh Minerals Ltd which has sole rights to a 189-square-kilometre prospecting license and associated mining leases in County Tyrone, Northern Ireland. Net income for the three months amounted to CA$772 418 compared to a Net Loss of CA$290 013 for the three months ended March 31, 2009. When the Net Income is adjusted for non cash items on the income statement the cash generated from operating activities amounted to CA$728 890 for the first quarter of 2010 compared to CA$54 098 for the first quarter of 2009. The main reason for the improved results in 2010 is due to the increased production levels achieved during the first quarter. Whilst the first quarter performance has reduced the working capital shortfall, the lack of working capital will continue to impact performance and lead to inconsistent results going forward.