COAL and transport firm Hargreaves Services has warned its production division could suffer a shortfall of up to £5m.

Bosses at the company, based in Esh Winning, County Durham, have blamed the results, for the financial year to May 31, on price pressures and bad weather.

Its production arm delivers coke and coal, and supplies Teesside steel maker SSI UK with coke for its Redcar blast furnace.

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A report said: "Coke markets have presented challenging trading conditions and contract renewals have seen continued pricing pressures during the second half of the year.

"While our surface mining operations have performed well since the end of February, and current production run rates are encouraging, the delays in the first half of the year in starting operations and the extremely wet weather in January and February have meant it has not been possible to recover all of the shortfall in production in the period.

"The combined effect of these factors is anticipated to reduce the contribution from the production division in the financial year by between £3m and £5m."