A NORTH-EAST mining and transport company is confident it can weather the storm threatening global coal markets, but bosses warned of possible job cuts.

County Durham’s Hargreaves Services remains upbeat about its future – and reassured workers it is committed to the North-East - despite reporting a sharp drop in revenues and profits.

“The future is bright - there will be a UK coal industry, and it will be Hargreaves,” said chief executive Gordon Banham, as he outlined the combination of factors that meant Hargreaves’ underlying operating profits of £21.9m for the six months to the end of November were down 29.1 per cent on a year ago. Operating profit, meanwhile, dropped 26.1 per cent to £21.5m

Plummeting coal prices – which slumped 25 per cent last year – a fall in demand from power stations, and an oversupply from UK deep mines have created the toughest market conditions Mr Banham has ever seen, a view supported by group chairman Tim Ross, who labelled them “unprecedented and very challenging.”

However, yesterday’s report said the group had delivered a resilient performance with strong cash generation leading to a £28.4m reduction in net debt.

Hargreaves expects demand from the power sector to fall and said it was possible that some stations would buy no more coal this year while they were burning through existing stocks. While coal-burning power stations are scheduled for closure, it is expected before then that demand for British-mined coal was likely to fall faster than demand for imports.

Nevertheless, the Esh Winning business said it was well positioned to take advantage of any upswing in coal prices over the next couple of years. The firm has been slimming down its activities in what it called a ‘simplification programme’ which last year resulted in the sale of the Stockton-based Imperial Tankers business and the closure of Monkton coke works.

“You have to make hard decisions,” said Mr Banham, adding that redundancies were being considered across the group. The firm employs 160 at its depot and offices in Esh.

“We will see a lot of companies go out of business - we already have. But we can reassure our staff, customers and suppliers that Hargreaves is in a good place and will survive,” he said.

The price of coal last month fell to a nine-year low of £39 per tonne, whereas it costs around £50 per tonne to mine. As a result Hargreaves plans to scale back production at its opencast operations that produce thermal coal used by power stations, and focus on mining higher value speciality coals, such as those used by chemicals and cement plans, as well as coal sold on garage forecourts, in DIY stores and supplied to Britain’s steam railways.