The comeback of Richard Budge, the mining entrepreneur, was bolstered yesterday with £50 million of funding for Hatfield Colliery.

Mr Budge, who bought the bulk of Britain’s deep mines when they were privatised in 1994, earning him the nickname King Coal, bought Hatfield, near Doncaster, six years ago after he was sacked by the company he had founded, RJB Mining.

Before that, the 99-year-old mine, the scene of some of the fiercest battles of the 1984 miners’ strike, had been idle for 13 years. It remained so after the purchase by Mr Budge, but in April it started limited production.

The prospects for coal have been helped by resurgent prices and a pressing need for energy diversity because of the decline in North Sea oil.

Mr Budge owns 48 per cent of Powerfuel, the parent company of Hatfield, with 52 per cent owned by KRU, Russia’s second-biggest coal company and a big importer in the UK. The £50 million financing has been provided by VTB Bank Europe, a Russian-owned bank that is registered in Britain.

The two companies are aiming to build a clean-coal generator next to the colliery, but this will take more than £1 billion of investment.

Mr Budge said: “It is tremendous that we can go ahead with our plans. Hatfield has some of the best reserves in the country and it is a pleasure to be part of it again.”

Hatfield began mining coal again in April with more than 200 workers. It plans to move to full production by the end of next month, producing 2.2 million tonnes a year with 350 employees. Powerfuel has two seven-year contracts to supply coal to British generators. The company says that it will be one of the lowest-cost coal producers in the country because it is using the latest mining equipment.

There are three other businesses owning Britain’s six other deep coal-mines – UK Coal which owns four, Hargreaves Services, a coal importer and coke operation, which owns one, and Tower Colliery in Mid Glamorgan, which is owned by the workers.

The projected clean coal generator has planning permission for connection with the electricity grid and could be operational by 2011. Mr Budge said that construction work could begin towards the end of next year.

Digging deep

Britain’s deep mines:
Hatfield, South Yorkshire Kellingley, North Yorkshire Maltby, South Yorkshire Thoresby, Nottinghamshire Tower, Mid Glamorgan Welbeck, Nottinghamshire

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