UK Coal could close Daw Mill Colliery in Coventry in 2014

800 workers could lose their jobs as UK Coal announce they are closing Daw Mill Colliery Credit: ITV Central

UK Coal has announced today that it will close Daw Mill Colliery in Coventry in two years.

800 people could lose their jobs under the plans to close the UK's biggest coal mine.

The group says the closure comes because current coal panels will be exhausted by early 2014.

UK Coal is a major supplier to Britain's coal-fired power stations from three deep mines and six surface mines.

Daw Mill has considerable long-term resources but production is 175,000 tonnes behind budget.

The company returned to profit earlier this year for the first time in four years but chairman Jonson Cox recently said Daw Mill was the greatest risk to output this year due to a change in the coal face.

The pit has been dogged by productivity problems in recent years, including a four-month gap in production which cost it £75 million two years ago.

UK Coal said an increase in production and a fall in operating costs in coming months could secure its future but added that the mine would only be sustainable under a "lower risk operating model".

The company said it has also entered into negotiations with its main banker, Lloyds, and that it was confident it will be able secure new facilities on the back of its restructuring plans.