Soaring world coal prices, which have almost doubled over the past year, are breathing life back into Britain's diminished coal industry.

Yesterday, UK Coal said that it may consider re-opening a closed colliery because the market for coal had “created a more positive backcloth than at any time in UK Coal's corporate life”.

Profits at UK Coal leapt nearly fourfold last year as the company benefited from property sales, higher coal prices and smoother mining operations.

The Doncaster-based business, which operates four deep collieries and several surface mines, reported that pre-tax profits had jumped by 292 per cent to £69 million in the year to December 31.

UK Coal said that the improved coal prices meant that it would review the future of Harworth colliery, near Doncaster, South Yorkshire, which it closed last year, although a decision will not be made for some time.

Two other UK Coal mines - Thorsby and Kellingley - will have their lives extended by a decade with a £100 million three-year investment programme to develop new seams.

The move to boost coal production comes after UK Coal sold the Maltby colliery last year.

In addition, Energybuild, which owns two deep mines in South Wales, will begin full mechanised mining at one, Aberpergwm, next week.

The company, which floated on AIM last summer, aims to increase production at Aberpergwm tenfold over the next five years.

It hopes to sell more coal to the nearby Aberthaw power station, which is owned by NationalPower, and to Corus's steel plant at Port Talbot.

The company, which is led by Rhidian Davies, a former miner, is hopeful that more domestic customers will want to source locally rather than import amid an increasingly tight world coal market.

Energybuild can begin full mechanised mining after buying equipment from the defunct Tower Colliery near by.

Energybuild has been using explosives to extract partially mined coal left over from the ownership by British Coal.

Tower, which was a workers' co-operative, closed last Christmas when it ran out of reserves.

UK Coal's deep mine division was loss-making for the full year in 2007, but it moved into profit in the second half. Overall, it lost £14.6 million.

Surface mining profits rose from £500,000 in 2006 to £8.5 million last year as the company brought its prices more into line with world prices.

Last year, UK Coal enjoyed an average sale price rise of 15 per cent to £1.62 per gigajoule.

Most of the company's coal production is contracted in the long term, so it has limited scope to raise prices quickly.

However, it said that negotiations with customers had been successful and that more of its contracts reflected an element of market prices.

David Jones, the chairman, said: “In mining last year the world coal price has almost doubled.

"We have successfully moved our overall sales prices closer to the market price and we are progressively securing a balance of contracts at floating, capped and collared, and fixed prices.

"This is significantly altering the underlying economics of our mining operations and enabling us to invest in accessing more reserves in both our deep and surface mines.”

Despite the optimism over coal in the future, property remained the driver of UK Coal's profits last year as it drew on its large portfolio of land from former mining sites for development and sale.

Despite the leap in profits, UK Coal proposed no dividend - to “preserve financial flexibility”.

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