ONE of the region’s last surviving coal miners took a £1.6m redundancy hit from the closure of Redcar’s steelworks but says it resilience will surmount further “tumultuous” trading.

Hargreaves Services says its fortitude, coupled with a business reorganisation, will help it bridge “tough and challenging” markets.

The company, based in Esh Winning, County Durham, has been impeded by falling coal demand in recent months, with power station closures augmenting what it claims has been a Government determination to cut fossil fuel use.

It was also forced to pay out £1.6m in redundancy and site closure costs after Thai-owned Redcar steelmaker SSI UK went into liquidation last October.

According to its latest results, Hargreaves’ overall continuing revenue tumbled by nearly half in the year to May 31 to £340.7m, while operating profit dropped 86 per cent to £5.2m.

Coal distribution revenues fell from £485.9m to £179.3m, with production returns dropping from £96.4m to £46m.

The firm, which will stop mining at its Welsh Tower project in March next year following energy operator RWE’s decision to cease coal buying, said the cash falls reflected a challenging two years, wherein thermal coal production and trading has reduced amid lower prices and demand.

However, bosses said they are confident transformative plans, which include switching to more niche supply areas and a deal to buy Essex’s CA Blackwell Group to extend further into civil engineering, will provide a solid foundation for future growth.

Gordon Banham, chief executive, said: “Our focus has been to reduce exposure to thermal coal and power station closures, and continuing falls in prices and demand have hastened scaling-down of operations.

“A strengthening of Government sentiment against coal-fired generation (also) increases the probability of further power station closures.

“However, we have started to see the benefits materialise from two years of restructuring and have three businesses complementing coal distribution.

“Our heritage in coal production left us with skills and equipment necessary to undertake contract mining and earthworks and the acquisition of Blackwell establishes a new specialist earthworks division.”

Around 150 Hargreaves staff lost their jobs in the aftermath of SSI’s demise, though the firm’s insistence on a cash-on-delivery arrangement protected its industrial services division from further major losses.

Hargreaves delivered supplies for the steel operator’s machinery, including its £38m pulverised coal injection plant, installed to increase iron production.

Mr Banham said its industrial services division was particularly hit by SSI’s demise, saying its loss, allied to uncertainty over Tata Steel’s Scunthorpe and Port Talbot works, and the closure of Ferrybridge’s coal-fired power station, in West Yorkshire, caused UK revenues to dip from £120.9m to £69m.

However, he said plans are in place to help the operation make a £2m operating profit from new business in the next year.

He added its coal distribution operation will also focus on more niche areas, such as prison boilers, cement makers and steam railways, but acknowledged the switch will not be without issues.

He said: “The speciality coal markets offer a long-term return, but we are aware the visibility of prices, costs and margins in the next two years is very low.”