By Susanna Twidale
LONDON (Reuters) - Banks Group plans to open a surface coal mine in Britain in 2018, it said after securing permission for the project this week, hoping to fill a gap in domestic supply left by the closure of the country's last deep-cast coal mine last year.
The site, at Highthorn in Northumberland, northeast England, is expected to produce 3 million tonnes of coal over the six- to seven-year life of the mine.
"Now we have secured planning permission (for Highthorn) we will move to the next stage, towards making a final investment decision and expect to begin operation in 2018," Barney Pilgrim, projects director at British development firm Banks, said in an interview with Reuters.
Demand for coal in the country has dwindled over the last decade as coal-fired power stations close due to environmental regulations and industrial sources of demand such as steel decline.
But domestic supply is also expected to shrink this year after Britain's last deep-cast coal mine closed in December, resulting in the loss of around 450 jobs.
Pilgrim said there is enough domestic demand for the new site to be viable, and that it could help to meet demand from coal-fired power stations ahead of their expected closure in 2025.
"There is still demand in the UK for coal from both the power and industrial sectors, and in terms of security of supply it is better that this demand is met through indigenous production," he said.
Surface coal-mining is typically cheaper than deep-cast coal mining since the reserves are nearer the surface and require less excavation.
Pilgrim did not say which companies were likely to buy the coal.
EDF Energy, the UK arm of France's EDF (PA:EDF), operates two large coal-fired power stations in Britain and lobbied for the mine's approval.
A spokesman for Drax (L:DRX), Britain's largest coal-fired power generator, said it did not plan to buy coal from the Highthorn site.
Britain's coal demand was 37 million tonnes in 2015, down more than 40 percent on 2006 levels, data from the Department of Energy and Climate Change showed.
Last year 65 percent of the demand was met by imported coal, with 23 percent from domestic sources and the remaining supply coming from existing stocks.
The company did not specify how much the mine will cost but said it would invest around 120 million pounds ($156 million) in the northeast economy through the project.
Environmental groups Friends of the Earth and Greenpeace have campaigned against the mine, saying it is at odds with the country's climate targets and could damage the landscape and tourism in the area.
Pilgrim said land would be restored after the mine's closure and a new area of wetland and wildlife habitats equivalent to the size of 160 football pitches would be created.
Northumberland County Council's planning officers on Tuesday gave the go-ahead for the project, which Pilgrim said will create around 50 jobs.