LONDON (Reuters) - Solid fuels supplier Hargreaves Services (L:HASE) could close its Monckton coke manufacturing plant in Britain because of the poor outlook for coke demand and prices.
The company has started a 45-day consultation process, which may lead to the redundancy of 120 employees at the south Yorkshire plant that produces coke used to make glass, steel and detergents.
The Monckton plant is set to make a 2 million pound ($3.2 million) profit this year thanks to long-term contracts, but the company said that contract cancellations mean the outlook beyond this year is so poor that closure is likely.
"Although discussions continue with key export customers, asignificant change in both market conditions and customer demand would be required to secure the plant's future," Hargreaves said in a statement.
A potential closure would free up more than 22 million pounds in working capital in 2015 and 2016, while the company would incur costs of 4.8 million pounds in closure and remediation expenses.
Separately, Hargreaves announced an increase in dividend payouts to 40 percent of underlying profit and the launch of a share buyback programme.
The company may buy further shares once it has made a decision on whether to close the Monckton plant, it said.
(1 US dollar = 0.6212 British pound)
(Reporting by Karolin Schaps; Editing by David Goodman)