North-East Business
Hargreaves wins deal to fuel Redcar steelworks
8:00am Wednesday 15th February 2012
A MULTI-MILLION pounds contract to fire Redcar steelworks back into life is fuelling growth at one of the region's biggest private employers.
Up to 200 jobs could be created at County Durham based Hargreaves Services following the award of an initial £12m, five year deal by steelmakers Sahaviriya Steel Industries UK (SSI).
The contract to supply coal and coke to the former Corus plant, which will lead to an additional five years of work if performance targets are met, was among the ambitious plans unveiled by Hargreaves yesterday.
The energy services group hopes to push through proposals to open three new surface coal mines in this region - with sites in County Durham and Northumberland earmarked - and it has also started work to expand the floor space of its head office in Esh Winning by 20 per cent.
The company, which employs about a third of its 3,000 workers in the North-East, is also eyeing growth overseas.
It is opening a new office in Poland as its operations across Europe are ramped up, as well as strengthening links with energy giants in Asia where demand for fossil fuel is soaring.
"We are a North-East business with a global outlook," said Gordon Banham, Hargreaves chief Executive.
"As we expand our operations it is inevitable that we will need more people at our HQ, which is good news for this region. We are proud to be a North-East company and having such a highly skilled, loyal workforce in this region allows us to win new customers at home and abroad," said Mr Banham, who confirmed that in addition to the SSI contract the company had struck deals with Tata to supply its steel plants in Scunthorpe and Port Talbot, and it was set to win more work with Honk Kong-based China Light & Power Company (CLP).
"We have been in contact with SSI for some time now," added Mr Banham. "To be asked to supply such a landmark project is a real honour. It is very pleasing to see one North-East business working closely with another," he said. Furthermore, Hargreaves has signed a deal with a Welsh power station to sell all the coal from its Tower Colliery project for at least the next three years. Production from the surface coal mine is set to start more quickly than expected and the County Durham business aims to reach full production before the end of the financial year.
Hargreaves said it remains confident of achieving its full year profit targets as published its interim results for the six months ended November 30.
The group, which owns Yorkshires Maltby Colliery and operates the Hatfield deep mine near Doncaster, saw group revenue increase by £68.9m from £253.9m to £322.8m, mainly as a result of higher commodity prices and higher shipments of coal to power stations.
Underlying operating profit for the group decreased by £2m or 9.8 per cent to £18.9m due partly to lower yields from Maltby. Reported profit before tax decreased by £16.1 per cent from £16.1m to £13.6m.