British Coal: Competition (Hansard, 18 March 1991)

§ Lord Cavendish of Furness
My Lords, coal can he transported over long distances at very low cost. The cost of shipping coal from Australia, for instance, to European deep-water ports is currently £10 per tonne as compared with about £5 per tonne for shipping coal from the North East of England to the Thames. In addition, coal can be mined in countries with favourable geology, such as Australia, often at less than half the average pithead cost of British deep-mined coal.

§ Lord Boyd-Carpenter
My Lords, while I thank my noble friend for that interesting reply, is he really satisfied that it is appropriate to charge half as much for shipping coal from the North East to the South of England as from Australia to the South of England? Is that really an indication that the system is working properly?

§ Lord Cavendish of Furness
My Lords, I do not know whether it is a matter of appropriateness. It is a matter of the costs incurred by modern vessels transporting this kind of material over long distances.

§ Lord Mason of Barnsley
My Lords, is the Minister aware that at the moment 12 million tonnes of cheap imported coal are entering this country, and that we have lost 12,000 miners' jobs as a result? The coal that comes in from abroad is quarried and not mined. Other factors influencing the price of imported coal are cheap labour and the fact that some foreign countries, especially those in Eastern Europe, subsidise their coal exports to this country. A permutation of these factors and the Government's connivance as regards the importing of cheap coal is killing off the British industry. Perhaps the Minister might inform his noble friend Lord Boyd-Carpenter of some of those factors.

§ Lord Cavendish of Furness
My Lords, I agree with some but not all of the points made by the noble Lord, Lord Mason. However, it is not the Government's policy to prevent coal users from purchasing from a source of their choice. Moreover, I do not believe that lack of competition would be in the best long-term interests of the security of the British coal industry. The best protection is to produce reliable supplies which are competitive in world markets. We estimate 388 that the amount of subsidised coal entering this country may be in the region of 3 per cent., although it is very difficult to obtain an accurate figure.

§ Lord Ezra
My Lords, does not the noble Lord agree that there are many uncertainties attached to the importing of coal on a large scale; that, for example, at the moment US coal is only competitive on the British market because of the low value of the dollar? Polish and Russian coal have totally disappeared from the market because of the troubles in those countries. The Minister referred to Australian coal. Is he not aware that Australia mainly sends its coal to Japan and not to the UK? Other suppliers from time to time also have their problems. Is it not therefore desirable in the interests of security of supply that we have an adequate balance of UK sources as opposed to uncertain foreign sources?

§ Lord Cavendish of Furness
My Lords, much of what the noble Lord, Lord Ezra, says is true. We expect the electricity generators to appreciate the value of having a secure indigenous source of coal which is priced in sterling and is therefore not subject to the uncertainties of currency fluctuations.

§ Lord Dormand of Easington
My Lords, is the Minister aware that we are now importing coal from no fewer than 19 countries? In some of those countries, for example Colombia, child labour is employed. In other countries non-union labour is employed and, almost by definition, that means that production is low cost. Does the Minister agree that a number of countries are dumping coal in this country, despite the anti-dumping regulations? How can British Coal hope to compete in those circumstances?

§ Lord Cavendish of Furness
My Lords, it is often difficult to establish the source of coal, particularly as much of it comes into Rotterdam and becomes European coal. It is for the European Commission to decide whether to investigate British Coal's complaint about dumping. The imports that are complained of currently amount to between 2 and 4 million tonnes per year out of total imports of 15 million tonnes. That compares with sales of about 90 million tonnes per year by British Coal.

§ Lord Boyd-Carpenter
My Lords, will my noble friend break the news to the noble Lord, Lord Mason, that Australian coal is not the product of cheap labour but rather of very expensive labour? It is also the product of efficient organisation.

§ Lord Cavendish of Furness
My Lords, I entirely agree with my noble friend. Moreover, far from being subsidised, I believe there is a tax on Australian coal.

§ Lord Peston
My Lords, the noble Lord said that it was the Government's view that we need a reliable supply which is competitive on world markets. It has been at least strongly argued that British deep-mined coal is, hopelessly uncompetitive at present world prices. Only two pits in this country would survive if their coal had to be sold at world prices". Is it the Government's policy that only two pits of deep-mined coal should survive in this country?

§ Lord Cavendish of Furness
My Lords, production from British Coal's opencast mines and its best performance deep mines is competitive with imported coal at inland power stations. British Coal is making remarkable progress in raising productivity and cutting production costs in its efforts to retain a significant share of the UK market. This move towards increased productivity will improve and it will help British Coal retain its share of the market, even as regards deep-mined coal.

§ Lord Dean of Beswick
My Lords, is the Minister not aware that there are different qualities and grades of coal and that the coal mined here is among the best in the world, while the coal from Australia is of poor quality and can be used only for specific purposes? Is it not true that we are not comparing like with like in many cases?

§ Lord Cavendish of Furness
My Lords, I am not sure that I understood all of the question. It is true that there are variations in quality. One of the reasons for importing is that much of the imported coal is of low sulphur content.