Select Committee on Welsh Affairs Written Evidence


Memorandum submitted by Miller Argent

1.  PERSONAL INTRODUCTION

  1.1  My name is James Thomas Poyner; I am a director of a number of mining and associated companies within The Miller Group Limited.

  1.2  I am also a director of "Miller Argent (South Wales) Limited" which is a Joint Venture Company between: The Miller Group Limited, Argent Group plc and Mr Bernard J Llewellyn. This company was specifically set up to carry out the Ffos-y-fran Land Reclamation Scheme in Merthyr Tydfil, South Wales. This scheme represents the largest authorised coal mining reserve in South Wales.

  1.3  I have specific responsibility for all mining matters of The Miller Group Limited and together with my co-directors I have responsibility for the management of Miller Argent (South Wales) Limited.

  1.4  I have over 40 years experience in the Building, Civil Engineering and Opencast Coal Mining Industries. My experience and expertise covers the planning, operation and management of large-scale building, civil engineering, opencast mining and land reclamation projects.

2.  COMPANY INTRODUCTION

  2.1  Miller Argent (South Wales) Limited, (Miller Argent), is the General Partner company of the Ffos-y-fran Limited Partnership and is owned by the following three companies:

    2.1.1  The Miller Group Limited; the UK's largest privately owned Housebuilding, Property Development and Construction business. The Miller Group has over 60 years experience in working large-scale land reclamation and opencast coal mining projects in the UK and overseas. The mining division of the Miller Group was the first company in the world to receive BSI Third Party accreditation to BS 5750 for the design, management and operation of opencast coal sites. The Miller Group has an annual turnover in excess of £1.2 billion and has net assets in excess of £250 million.

    2.1.2  Argent Group PLC; a successful London based Property Development Company with unrivalled expertise in large-scale urban regeneration projects throughout the UK. Argent Group PLC has net assets in excess of £140 million and is a wholly owned subsidiary of British Telecom Pension Scheme, with net assets in excess of £25 billion; and

    2.1.3  Cwmbargoed Mining Limited, a privately owned local company representing the interests of the Llewellyn family who have been involved in coal mining in South Wales for a hundred years.

  2.2  The company Miller Argent has been specifically set up to work the Ffos-y-fran Land Reclamation Scheme. The partners of the company have been actively involved in this project since the time of the privatisation of British Coal and have already spent many millions of pounds in taking the project forward to where it is today.

  2.3  The Ffos-y-fran Land Reclamation Scheme is in effect the finessing of the third phase of the East Merthyr Land Reclamation Scheme, which has been promoted by the local authority since its conception in 1983. The scheme provides for the reclamation of over 1,000 acres of acutely derelict and unsafe land. The reclamation scheme is paid for entirely by the recovery of the underlying coal, which is to be extracted by opencast methods. No monies will be used from the public purse.

  2.4  Miller Argent (South Wales) Limited has BS EN ISO 9001:2000 accreditation for the design, management and operation of opencast mining sites.

3.  SCOPE OF EVIDENCE

  3.1  I have been requested to give evidence to the Welsh Affairs Select Committee on the subject of Energy in Wales in general and Opencast Coal in particular and I am pleased to have been given that opportunity.

  3.2  The purpose of my evidence is to provide the Welsh Affairs Select Committee, and other interested parties, with a clear explanation of (i) the workings of the Opencast Coal Industry, (ii) the methodologies employed, and (iii) the industry view on the energy situation, in an attempt to assist in the general understanding of the contribution the Industry has and continues to make in terms of the UK plc's energy portfolio.

  3.3  I have to stress from the outset that although I am obviously pro coal I am not against other sources of fuel from which electricity can be produced and industry can be serviced. In fact I wholeheartedly support a balanced, mixed energy portfolio.

  3.4  I also do not deny the fact that global warming and climate change is a reality and that mankind must introduce new measures to combat the effects of the industrialised world.

  3.5  However, I am concerned that there is a great deal of misunderstanding in the public domain and that there is a danger that decisions germane to the production of electricity in the UK may be made that are not necessarily in the best interests of the people of the UK.

  3.6  Climate change and global warming are linked and constitute a very complex and involved structure. It is far too easy to blame the burning of fossil fuels and to concentrate efforts on legislating against fossil fuels believing that that will solve the problem—it will not.

  3.7  The prime reason for mankind's contribution to climate change is attributable to POPULTION INCREASE and consequential POVERTY. The world's population is expected to rise from the current 6.5 billion to 9.1 billion by 2050.

  3.8  The population in the UK has broken the 60 million barrier and is expected to rise to c 68 million by 2030.

UK POPULATION (ESTIMATED)
Population (millions)

Source: Office for National Statistics

  3.9  "Global economic growth, the primary driver of energy demand, is conservatively forecast to average 3.2% per annum between 2002 and 2030. Population growth will continue, with the world population expected to reach over 8 billion by 2030, from its current level of 6.4 billion.

  Fossil fuels will continue to dominate energy consumption—accounting for around 85% of the increase in world primary energy demand over the next 30 years.

  The forecast growth in demand will not alleviate the major concerns around energy poverty. In 2000 only one in six people worldwide had the access to energy required to provide the high living standards enjoyed in the developed world. These one billion people consumed over 50% of the world's energy supply, while the one billion poorest used only 4%.

  Energy is essential to poverty alleviation. All fuel sources will be needed—but as the most abundant and affordable of all the fossil fuels, the role of coal will be vital.

  The world currently relies on coal for 40% of its electricity and 66% of steel production is dependent on coal". [World Coal Institute]

  3.10  According to the International Energy Agency (IEA), there are currently 1.6 billion people (25% of the global population) without any access to electricity. The IEA state that without global radical new policies, 1.4 billion people will still lack access to electricity in 30 years time.

4.  THE OPENCAST COAL INDUSTRY IN THE UK

  4.1  Coal has been extracted by opencast methods as far back as the bronze age and many records exist of coal being recovered in early Roman times, when coal was extracted where it outcropped on hill sides.

  4.2  The UK Opencast Coal Industry was formalized in 1942 when the then Ministry of Fuel and Power invited a select group of Civil Engineering Contractors to recover coal by opencast methods as a wartime expedient. In December 1942 responsibility for opencast work carried out by civil engineering contractors shifted to a newly formed Directorate of Opencast Coal Production (DOCP)  within the Ministry of Works and Planning, acting as agent for the Ministry of Fuel and Power which purchased and disposed of output. The industry in the UK has continued ever since, making a very valuable and significant contribution to the UK economy.

  4.3  The Coal Industry was nationalized in 1947 and the National Coal Board (NCB) was formed. The NCB was split into two working sections: Deep Mines and Opencast. The opencast was run by the NCB Opencast Executive.

  4.4  A subtle and significant difference between Deep Mines and Opencast is that the NCB never mined a single ton of opencast coal themselves. The works were always put out to tender and were always mined by the successful Contractor to a site specific tender.

  4.5  However the NCB, who later traded as British Coal (1987), retained the skills and responsibility for: (a) the national identification and assessment of coal reserves including exploration; (b) land management and acquisition; (c) planning applications; (d) project management of the extraction contracts; and (e) the sale and distribution of the coal.

  4.6  Coals recovered by opencast were often blended with deep mined coal in order to improve the quality of the deep mined coal. It is possible to recover coal by opencast methods more cleanly than by deep mine methods.

  4.7  Opencast coal schemes were often used to bring about reclamation of brown field sites, often a legacy of previous deep mine or industrial activity.

  4.8  British Coal was privatized at the end of 1994 and the industry became a number of smaller private entities. The three successor companies to British Coal acted independently and in fact in competition with each other. As a result the industry no longer had a national strategy and became fragmented and of reduced substance (in relative terms).

  4.9  The successor companies to British Coal no longer let out opencast coaling contracts to other contractors, preferring to self mine. This has resulted in many firms exiting the industry as contractors, with only a few of them branching out into private opencast mining in their own right.

5.  GRAPHS RELATING TO COAL PRODUCTION AND SUPPLY IN THE UK

  5.1  Total tonnage of coal consumed in the UK:

  5.2  Graph showing relationship with UK deep mined, opencast and imported coal:

  5.3  Graph showing coal production in Wales:

  5.4  Coal Production in the UK from 1700 to 2006:


6.  THE ISSUES FOR THE UK OPENCAST COAL INDUSTRY

  6.1  In my opinion the issues facing the UK are actually very straight forward and are set around the Government's four long term goals:

    6.1.1  to put the UK on a path to cut our carbon dioxide emissions by some 60% by about 2050, with real progress by 2020;

    6.1.2  to maintain reliable energy supplies;

    6.1.3  to promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve productivity; and

    6.1.4  to ensure that every home is adequately and affordably heated.

  6.2  I unequivocally support all of the above mentioned goals.

  6.3  Whatever decisions are taken now by Government with regard to future electricity generation they will by necessity take time to deliver, eg it will take approximately 12 years to bring a nuclear power station into production from the day it is decided to go ahead with a scheme. In many ways there is valid criticism that the UK is far too late in addressing its energy problems.

  6.4  Therefore the second goal of Government—"To maintain reliable energy supplies" [ 5.1.2] is paramount. This is made even more sensitive having in mind the absolute need to replace the ageing fleet of our power stations and to provide for the increase in demand for electricity.

  6.5  Whether we like it or not, the UK relies on coal for a third of its electricity, in fact over the winter months it relies on coal for half its electricity. This reliance will not change in the short to medium term.

  6.6  "Coal is the fastest growing energy source in the world, with coal use increasing by 25% for the three year period ending in December 2004" [BP Statistical Energy Review, June 2005]. Coal is the preferred source of fuel for the generation of electricity throughout the world and its use is set to further increase dramatically. More coal is being consumed today than at any other time in history. Unless and until alternatives are in place coal will continue to be used in the UK otherwise the lights will go out and our economy will crash.

  6.7  The decision Government has to make is what proportion of the coal the UK consumes will be indigenous.

  6.8  It is already too late to argue that indigenous coal can provide our full needs—regrettably it cannot. However, the UK Coal Industry can make a significant contribution to our needs—somewhere between a third and a half of all coals consumed could be supplied by the UK Coal Industry. It simply does not make sense not to do so. If the UK Coal Industry was allowed to die then all we would be doing would be to import the coal from elsewhere in the world, which would result in exporting both the jobs and the environmental problems. The carbon footprint would be greater because by necessity we would be transporting coal unnecessarily around the world. This would be in direct contradiction to the statement included in "Minerals Policy Statement 1: Planning and Minerals" as published in November 2006 by the Department for Communities and Local Government, wherein at page 9, item 15, second bullet point, it states:

    "aim to source mineral supplies indigenously, to avoid exporting potential environmental damage, whilst recognising the primary role that market conditions play;"

    [My emphasis added]

  6.9  In the November/December 2006 issue of "The Monitor—Blue Skies Supplement", it is stated:

    "There are however, two fundamental impediments that need to be addressed if the UK is to maintain its level of indigenous coal production. The country needs a commercial regime that attracts investment to access deep mine reserves, and an urgent need to change the present planning regime that discriminates against surface mining".

    "The presumption against opencast mining, contained within the guidance to planning authorities, has resulted in a significant slump in consents for replacement sites and the loss of outputs and jobs. As a consequence, coal imports have soared, often from surface-mine production in countries with far less exacting environmental constraints and health and safety considerations than those imposed on UK producers".

    "UK coal producers believe the annual production of around 20 million tonnes of coal is sustainable for the foreseeable future, and should become a cornerstone of the government's energy policy".

    I entirely agree with these statements.

  6.10  "In 1996 it was estimated that there was around one exagram (1 x 1015 kg or 1 trillion tonnes) of total global coal reserves accessible using current mining technology. ... In theory there is enough coal to last for 300 years ..." based on present day consumption.

  6.11  It is assessed that there is still 190 billion tonnes of coal within the UK. Of that quantity approximately 1 billion tonnes is accessible and economically extractable based on current prices and technology.

  6.12  The UK cannot solve the world's problems but it can show initiative and leadership by example. Globally coal is here and is here to stay. The world's coal industries and governments should work together to continue to improve coal's environmental performance by ensuring that coal is produced and used efficiently and that the technological advancements are fully and vigorously pursued.

  6.13  There are three essential core elements common to all users of coal throughout the world:

    6.13.1  Reduction of pollutant emissions such as particulate matter and oxides of sulphur and nitrogen (SOx and NOx) to near zero levels. This has largely been achieved and is now "off the shelf technology".

    6.13.2  Increasing thermal efficiency to reduce CO2 and other emissions per unit of electricity generated. Major gains have already been achieved and further potential can be realised.

    6.13.3  Reducing CO2 emissions to near zero levels. The development of near zero emission technologies has commenced and is accelerating rapidly. The UK must play its part.

7.  COAL IN WALES

  7.1  There are two coal fired power stations in Wales: Uskmouth and Aberthaw. Combined they have the ability to burn c 4 million tonnes of coal per year.

  7.2  Aberthaw Power Station was specifically built to burn Welsh Dry Steam Coal. It is the ONLY coal fired power station in the UK designed to burn low to mid volatile coal. There is ONLY the South Wales Coal Field in the UK that can supply coal of the correct specification that can be burnt satisfactorily without considerable blending at Aberthaw Power Station. Compliant coal for Aberthaw power station is not readily available throughout the world and currently RWE (the owners of Aberthaw Power Station) obtain most of their imported coal for this power station from Russia. Mr Putin has already made his intentions known with regard to his aspirations for control of energy sources.

  7.3  The South Wales Opencast Coal Industry has the ability to supply up to 50% of South Wales's requirement for coal for the foreseeable future, subject to planning.

  7.4  The unanswered question is how much coal there is remaining in South Wales. Coal is an asset of the UK; it belongs to the country and it is regrettable that government has not quantified, with some commercial accuracy, the amount of coal that is economically viable and accessible.

  7.5  In very general terms, based on current pricing and current technology, it is estimated that there is approximately 1 billion tonnes of economically viable and accessible coal reserves remaining in the UK. Of that tonnage approximately 400 million tonnes is deep mine coal and 600 million tonne is opencast. It is estimated that 20% of the potential for opencast is to be found in South Wales.

  7.6  In terms of my company's contribution, the following graph details our anticipated coal production in South Wales as at today's date.

  7.7  The planning policy for coal recovery in Wales is basically covered under the general Minerals Planning Policy. There is no specific guidance for coal other than a DRAFT Minerals Planning Policy Technical Advice Note on Coal that was issued as a consultation document in January 2006. Miller Argent (South Wales) Limited participated in that consultation process and a copy of its response is attached to this document, as is its response to the Energy Review consultation "Our Energy Challenge".

  7.8  The National Assembly has yet to issue its findings on the Coal TAN despite enormous pressure from all sides.

8.  EUROPEAN COMMISSION TO BACK DEVELOPMENT OF CLEAN COAL TECHNOLOGIES ... [NEWSBRIEF ISSUE 81—10 JANUARY 2007]

  8.1  The European Commission wants to see up to 12 large-scale demonstrations of sustainable fossil fuel technologies in commercial power generation by member States by 2015.

  8.2  In a communication issued in January 2007 as part of its Energy Policy for Europe, the EC said the new policy would enable coal to maintain its important contribution to "secure and competitive energy supplies for Europe".

  8.3  The January 2007 policy communication states: "Coal and gas account for over 50% of the EU's electricity supply and will remain an important part of our energy mix. If the EU is to achieve its long term climate change objectives, much cleaner coal technologies and a significant reduction of CO2 emission will be necessary. Furthermore, developing clean coal and carbon capture and storage technologies is crucial at the international level; it is expected that twice as much electricity as today will be produced world-wide from coal by 2030. This will in turn bring new opportunities for European export as well.

  8.4  "In order to make sustainable fossil fuels a reality after 2020, the EU must establish a favourable regulatory framework for the development of these novel technologies, invest more, and more efficiently, into research, as well as take international action. The EU Emission Trading Scheme will also need to incorporate capture and storage in the future".

  8.5  The communication states that in 2007, the Commission will start work to:

    8.5.1  design a mechanism to stimulate the construction and operation by 2015 of up to 12 large-scale demonstrations of sustainable fossil fuel technologies in commercial power generation in the EU; and

    8.5.2  provide a clear perspective when coal and gas fired power plants will need to install CO2 capture and storage. Today, the Commission believes that by 2020 all new coal-fired plants should include CO2 capture and storage technologies and existing plants should then progressively follow the same approach.

  8.6  Adds the statement: "Fossil fuels represent an important element of the energy mix of the European Union as well as in many other economies. Coal is traditionally the key fossil fuel in power generation and by far the most carbon-intensive one. Coal can contribute to the security of energy supply and the economy of the EU and the world only with technologies allowing for a drastic reduction of its harmful environmental effects."

  8.7  "Clean Coal technologies, which increase efficiency and reduce polluting emissions, are widely used in the power generation sector of the most advanced countries today. Further progress towards novel technological solutions, which also incorporate the concepts of CO2 capture and storage in coal-based power generation, is anticipated by 2020 so that after 2020, `near zero emission' power generation can be systematically used in the EU and in the world".

  8.8  It is essential that the UK plays it part in this initiative.

9.  THE ISSUES FOR THE UK ENERGY INDUSTRY

  9.1  The biggest problem the UK Energy Industry faces is that much of its electricity generating capacity is too old or is ageing fast. In very broad terms we have a generation capacity of c. 74 GW, of which:

    9.1.1  23GW is coal fired.

    9.1.2  3GW is oil fired.

    9.1.3  5GW is mixed or dual fired.

    9.1.4  26GW is gas.

    9.1.5  1GW is gas turbines and oil engines.

    9.1.6  12GW is nuclear.

    9.1.7  4GW is Hydro and other renewables.

  9.2  Over the next decade virtually all of the nuclear stations will be phased out, as will a number of the coal fired stations, either by age or by ability to meet new legislation.

  9.3  The demand for electricity is set to rise year on year.

  9.4  Plant margin (an excess of potential generating capacity over maximum demand) is crucial to the security of electricity supply, as generating units are not available 100% of the time due to breakdowns and the need for maintenance and repair. It is generally agreed that a minimum plant margin of 15% should be in place over the peak demand during the winter months in order to maintain a secure supply of electricity.

  9.5  Security of supply of fuel source is now also a major parameter in determining the flavour of future generation plants. Diversification has got to be the order of the day and the three major reliable, proven, means of power generation are: gas; coal; and nuclear.

  9.6  It appears now to be accepted that it would be folly to rely on gas for 80% of our future generation capacity (as was suggested earlier by Government). Given all the circumstances a dependence on gas would leave the UK vulnerable to interruptions to supply caused by: (a) political, (b) terrorist action, and/or (c) market dislocating price shocks.

  9.7  Too much dependence on nuclear would present an unacceptable terrorist target and also exacerbate the so far unanswered problem of treatment and disposal of nuclear waste.

  9.8  The technology does not exist to promote "Renewables" as being a major contributor. This does not mean to say that research and development should not be accelerated, but there is nothing currently out there that can be relied upon as a true alternative to what already exists.

  9.9  Hydro and biomass co-firing make a worthwhile, but nevertheless small, contribution to the renewable element of the UK's total capability to generate electricity.

  9.10  In environmental terms coal is now burnt in a way which reduces its acid rain potential to minimal levels, whilst the retrofitting of clean coal technologies to existing coal fired plant and the development of Carbon Capture and Sequestration (CCS) strategies can make coal increasingly Kyoto friendly. Coal is competitive on price, it is readily available from at least 70 different countries in the world (a wide variety of politically stable countries), there is a ready indigenous supply, it is easy and safe to transport, store and use.

  9.11  Indigenous coal can provide the electricity needed for all our emergency services, hospitals, government etc. in times of a national emergency without the reliance on any other country, should such a situation ever exist.

10.  BACKGROUND AND HISTORY RELATING TO THE FFOS-Y -FRAN LAND RECLAMATION SCHEME

  10.1  In accordance with Government policy following the Aberfan disaster, local authorities were required to undertake surveys of derelict land within their areas and adopt programmes for the progressive reclamation of the identified derelict and/or unsafe land.

  10.2  The former Merthyr Tydfil County Borough Council joined with 11 other local authorities under the auspices of the Monmouthshire Derelict Land Reclamation Joint Committee.

  10.3  The committee identified a substantial area of derelict land that subsequently formed part of Phase III of the East Merthyr Land Reclamation Scheme (EMRS).

  10.4  The Ffos-y-fran Land Reclamation Scheme encompasses the third Phase of the East Merthyr Land Reclamation Scheme. The essence of the Scheme is to reclaim approximately 400.6 hectares of land, 317 hectares of which are classed as derelict land (with inherent dangers) and to restore it to safe and beneficial use. The financial means and process of achieving this reclamation is by the incorporation of the extraction of the underlying strategic coal reserve by opencast methods.

  10.5  The Ffos-y-fran Land Reclamation Scheme is the largest authorised coal reserve in South Wales. The scheme has been delayed by legal challenges which have cost many millions of pounds. Not only has the developer been subjected to excessive and unforeseen costs but so have the authorities who have had to defend their position and also the tax payer by way of publicly funded legal aid given to the objectors.

  10.6  The scheme will provide direct employment for 200 people and will secure the employment for approximately a further 400 people in support occupations. Skills training will be available to all employees wishing to advance themselves. These are extremely important factors as Merthyr Tydfil has the highest rate of unemployment in the UK.

  10.7  Over £80 million (at today's value) will be paid out in wages to those directly employed and statistically every pound earned in a community is spent and spent again many times within that community.

11.  OPENCAST SITE SAFETY, LEGISLATION AND PROCEDURES

  11.1  Land reclamation and opencast coal mining sites can be dangerous places to work and visit, particularly to the uninitiated. Therefore safety is of paramount importance specifically for the people employed and the general public affected by the operations.

  11.2  The working areas are fenced to discourage trespass and warning signs are posted and maintained at regular intervals around the site boundary.

  11.3  All employees undergo an induction course which addresses safety and environmental issues as well as company procedures. Safety awareness courses are held every year for the entire workforce and toolbox talks are given at more frequent intervals.

  11.4  Risk assessments are carried out on all site operations and are effectively communicated to all those involved. All drivers are individually tested before being authorised to drive any item of plant on site. Site licences are issued authorising drivers to operate the items of plant for which they have been satisfactory tested.

  11.5  Each operating company has: (i) a Safety Management Procedures Manual, (ii) a Plant Procedures Manual, and (iii) a General Management Procedures Manual, all of which will be effectively communicated, implemented, audited and controlled.

  11.6  Under the Quarries Regulations 1999 it is the duty of the operator to be able to demonstrate that sufficient competent persons are employed to operate the opencast site and that everyone who works at the site is competent to do the job they do, unless it is someone undergoing training and under the direct supervision and control of a competent person.

  11.7  The philosophy of continuous improvement and lifelong learning is encouraged within the industry and every opportunity is given to those employees wishing to develop new skills and advance themselves in the workplace.

  11.8  There is considerable legislation governing the works to be carried out on site including but not limited to: Health and Safety at Work Act 1974, Regulations Made Under HSWA and Supply of Machinery Regulations, Management of Health and Safety at Work (MHSW) Regulations 1999,Provision and Use of Work Equipment Regulations 1998, Workplace (Health, Safety and Welfare) Regulations 1992, Manual Handling Operations Regulations 1992, Personal Protective Equipment at Work Regulations 1992, Health and Safety (Display Screen Equipment) Regulations 1992, The Supply of Machinery (Safety) Regulations 1992, Control of Substances Hazardous to Health (COSHH) Regulations 1999, Quarries Regulations 1999, The Noise at Work Regulations 1989, The Electricity at Work Regulations 1989, Confined Spaces regulations 1997, Borehole Sites and Operations Regulations 1995, Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR), The Health and Safety (First Aid) Regulations 1981, The Health and Safety (Safety Signs and Signals) Regulations 1996, Safety Representatives and Safety Committees Regulations 1977, Construction (Design and Management) Regulations 1994, The Ammonium Nitrate Mixtures Exemption Order 1967, Pressure Systems Safety Regulations 2000, The Control of Explosives Regulations 1991 etc.

  11.9  The UK Opencast Coal Industry has a proven track record of high health and safety standards.

James T Poyner

23 January 2007





 
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