Alex Salmond hails Scottish Resources Group's plans for London listing

SCOTLAND's coal industry is to mark a major milestone next month when Scottish Resources Group, formerly part of British Coal, floats on the London Stock Exchange.

• Alex Salmond

Britain's second-biggest coal producer will be valued at 250 million in a listing that will raise 25m and accelerate the growth of its renewable energy and property interests.

SRG's flotation was backed by First Minister Alex Salmond, who called the group, the UK's biggest surface mining producer, "a dynamic energy company which has increased its workforce by 50 per cent in the past two years".

The company also has 25,000 acres of land in Scotland's Central Belt and a fledgling renewable energy division, which includes developing seven windfarm sites north of the border.

Don Nicolson, group chief executive, said: "We have a strong management team with significant operational experience and a track record of achieving planning consents.

"Our strategic land portfolio offers residential, commercial and renewable energy opportunities in addition to surface mining, which positions us well for the future." Nicolson, 50, previously had a 26 year career with oil giant BP, running major oil and gas businesses in the UK, US and Canada as well as holding senior positions at BP's London HQ.

The group, which operates nine surface mining sites in central Scotland and employs about 1,000 staff, is based at Castle-bridge Business Park near Alloa. It has pending planning applications to build more than 2,000 homes.

Salmond said it was "particularly welcome that SRG is looking to capitalise on the huge growth opportunities in Scotland's renewable energy market and is poised to make its own contribution to our nationa's world-leading climate change targets".

In the year to March 2010, SRG's coal production grew 12 per cent to 3.4 million tonnes, revenues rose 59 per cent to 230m and underlying earnings jumped nearly 200 per cent to 48.2m.

Last year the company had a 20 per cent share of total UK coal production, second only to market leader UK Coal, and a third share of UK surface-mine coal production.

Analysts say one advantage SRG has is that surface mining is deemed to have lower geological risk and lower costs. The company has also built up a board of well-respected veteran directors ahead of its flotation, which is being sponsored by Panmure Gordon, with the pricing of the institutional placing expected to take place in late July.

They include Sir Peter Burt, former chief executive of Bank of Scotland, Charles Hammond, chief executive of Forth Ports, and Brian Wilson, former UK energy minister. SRG, which was formed from the privatisation of British Coal in 1994, sells about 90 per cent of its coal to the UK's six biggest power generators.

It had audited coal reserves and resources of 52.3m tonnes as of March this year. The company is mostly owned by investment vehicles Parkburn and Palmaris Capital, which have held their respective 71 per cent and 16 per cent stakes since privatisation but could sell in the flotation, according to sources. Palmaris in a separate statement said it might sell "most or all of its shareholding", depending on demand for the shares in the flotation.