A £20 million plan to delay the shutdown of two of Britain's last three deep-pit coal mines was scuppered today after one of its private backers pulled out of talks.
It means workers at Kellingley in North Yorkshire and Thoresby in Nottinghamshire face deepening uncertainty over their immediate future following the "managed closure" programme announced by the Government in April.
The plan involved a £10 million loan from the Government, with the rest split between rival mining group Hargreaves Services and Harworth Estates, landlord of the two mines.
Together the sites, operated by Britain's largest coal producer, UK Coal, employ 1,300 people. Under the plan, they are to be wound down by autumn 2015.
Hargreaves today said it was pulling out of the deal. But the Whitehall cash is still on the table with officials ready to look at backing from other parties, and UK Coal said it was still pursuing alternative options.
In a statement, Hargreaves said: "It has not been possible to secure a plan that it is able to support. In these circumstances the company is no longer able to provide loan finance and has now withdrawn from the process."
Chief executive Gordon Banham said: "It is with great regret that this announcement is made today.
"However we would like to recognise the help and efforts of the Government, unions and other stakeholders including Harworth Estates, in trying to develop a plan that we could support."
A Government spokesman said: "The Government is continuing to do everything it can to help in this challenging and unique situation.
"The £10 million we put forward, as part of a private sector led initiative, remains on the table to assist a managed closure of the deep mines.
"We are open to exploring proposals put forward by any parties, but any use of taxpayers' money will of course need to represent value for money."
UK Coal said: "Disappointing as it is to lose one of the parties at this stage, UK Coal is pursuing options around alternative solutions to secure the managed closure plan.
"UK Coal will continue to work with Government, Harworth Estates, employees and the trade unions and will provide an update in the coming days."
In April, four days after details of the "managed closure" plan was announced in Parliament, UK Coal said a branch meeting of the National Union of Mineworkers had indicated a "reluctance to accept" the package.
It warned that without the deal the business was "likely to enter insolvency in the coming days".
The Government has said the prospect of immediate insolvency would cost the Treasury "significant losses and liabilities" from redundancies and unpaid taxes.
But energy minister Michael Fallon said there was no case for investment in the "inherently risky business" to keep the two sites open in the long-term.
The proposal would see the deep pits face a phased shutdown and UK Coal's six surface mines sold off.
It has already begun consulting on plans to shut Kellingley, which employs 700 people, and Thoresby, which employs 600. Jobs are also likely to go at its head office in Doncaster. The company currently employs about 2,000 people.
It will leave employee-owned Hatfield colliery in South Yorkshire as Britain's last remaining deep-pit mine - leaving a once-mighty industry on the edge of extinction.
UK Coal has been hit by a strong pound and the increasing availability of cheap coal imports - especially from the US, where the shale gas boom has forced producers to find new international markets.