MORE than 500 mining jobs are being safeguarded in the Selby area with a £50 million investment in new reserves at Kellingley mine and a major new contract for pit owners UK Coal.

And the company says it believes that coal is now set to play a key role in electricity production for at least the next two decades.

Scores of miners from Selby transferred to Kellingley when the last of the Selby coalfield pits closed down some years ago.

Existing seams have become exhausted, reducing output in recent months, but the company revealed today it was on track to start exploiting new reserves later this year.

“This will enable improved volume, cost efficiency and reliability of production,” said a spokesman.

He said the company had also secured a significant new core customer, Scottish and Southern Energy, to supply 3.5 million tonnes of coal to its power station at Ferrybridge.

It had also successfully negotiated new or amended long-term supply contracts with its core electricity generator customers, Drax, Eon and EDF Energy.

“These contracts materially increase our long-term contracted coal prices and our short-term cash flows,” he said. “They improve our mining economics, place the funding of our investments on a more secure footing and enable us better to plan the future development of the group.”

He said it was increasingly clear from Government statements and analyst research that coal would play a major role in the UK’s energy mix for the next two decades and beyond. “The formation in October 2008 of a new Government Department for Energy and Climate Change (DECC) is welcomed, as is the Secretary of State’s commitment to a strategic energy policy with an acknowledgment of energy security and affordability at its heart. “We are well placed to play the leading role in the production of indigenous coal for Britain, and Government clearly recognises this.

“There will always be unpredictabilities in mining; but the new coal contracts, as well as the planned impact of our deep mines investment programmes and the growing strength of our surface mining provide a more positive and more financially underpinned outlook.

“Together with our property business outperforming the market and its substantial future value creation to look forward to, our long-term growth platform remains absolutely in place and we continue to face the future with confidence.”