The listed mining group looks likely to announce the terms of a deal on Wednesday after negotiations with SRG’s liquidator as well as the Scottish Government’s Scottish Open Cast Mining Taskforce.
SRG’s Scottish Coal, founded in 1994 following the privatisation of British Coal, operates six open-cast coal mines in East Ayrshire, Fife and South Lanarkshire.
It is thought Hargreaves has been working to buy the working Scottish Coal mines, leaving the remaining 11 sites that have had coal extracted but which have not been restored.
A spokesman for liquidator KPMG said: “The sites most likely to sell as a going concern are those with remaining coal reserves. However, the firm is exploring every possible avenue to find a long-term solution for the remaining assets and land.”
Hargreaves raised £42 million last month through a shares offer to buy open-cast coal assets. In March, the company rescued ATH – another open-cast mining firm which owns mines in Scotland – from administration with a debt buy-back deal. Its chief executive, Gordon Banham, said at the time that the firm had been “actively seeking our own opportunities to invest in surface mining in Scotland”.
More recently, Hargreaves chairman Tim Ross said it was interested in expanding its role in the UK open-cast industry even further. He told a trade magazine that: “The UK coal industry is undergoing a major restructuring and we believe this provides Hargreaves with an exceptional opportunity to acquire surface coal mining assets.”
Blair Nimmo of KPMG, who was appointed to sell the company, said the Scottish Coal owner had been hit by “a combination of falling coal prices and rising operational costs… and a number of Scottish Coal sites exhausting their reserves has contributed to trading losses and significant cash flow pressures”.
Earlier this week, the Scottish Government convened the Scottish Open Cast Mining Taskforce in an effort to prevent the loss of 590 jobs at the failed Scottish Coal.
Energy minister Fergus Ewing, who chaired the group, said the task force’s aim was to save coal mining jobs, as well as ensure the sale of Scottish Coal to a “substantial, well capitalised company” that would be able to secure the company’s workforce, meet “environmental obligations” and not “cherry-pick” assets.
Campaigners have criticised Scottish Coal boss Colin Cornes, the firm’s reclusive millionaire owner, after it emerged 11 former coal mines have been only partially restored or not restored at all.
Sources have suggested these sites represent significant liabilities, as the cost of restoring them will exceed their value.
The problem has spurred the government to establish the Scottish Mines Restoration Trust “to help facilitate the restoration of old open-cast coal mines across Scotland”.
Paul Jones, an analyst at Panmure Gordon, said a deal to buy Scottish Coal’s assets from the liquidator would be “positive for Hargreaves”.
He added: “Hargreaves are close to a number of deals. They have raised money with a view to spending it fairly quickly.”