‘Don’t let businessman off the hook for £100m mine remediation’

Martin Shipton

A campaigning organisation has urged councillors to reject a planning application it believes could let a mining company off the hook for remediation costs totalling around £100m.

In 2024 the Senedd’s Climate Change, Environment and Infrastructure Committee published a report that described the “epic mismanagement” of the Ffos-y-Fran mine at Merthyr Tydfil, saying nothing similar must be allowed to happen in any community in Wales.

The licence to extract coal from Ffos-y-Fran expired in September 2022 but local residents reported that the mine was still operating – illegally – many months after this before the site was closed in November 2023.

When it first opened, the company running the mine, Merthyr (South Wales) Ltd, pledged to fully restore the site after it finished operations.

The committee heard evidence that since 2017, the company has paid out nearly £50m in dividends and royalties out of the business.

But with current restoration costs estimated at between £50m to £120m, and despite the original restoration promises, the company has since claimed that it was unable to afford this.

There are therefore concerns that the company will seek to evade its financial responsibilities and the cost of restoring the land will fall on the public sector.

Conviction

Earlier this year Nation.Cymru revealed how David Lewis, the sole director of Merthyr (South Wales) Ltd, had a conviction for defrauding a bank of £88,000 to fund his gambling addiction and how recently he had assaulted an elderly solicitor outside his Newport office.

The company has applied for planning permission to undertake a scaled-down remediation of the Ffos-y-Fran site, and under planning law councillors at Merthyr Tydfil council should make a decision by the end of October.

The Coal Action Network (CAN), an organisation that campaigns against harm to the environment and communities caused by extractive industries, has called for the application to be rejected.

A briefing document produced by CAN states: “If Merthyr Tydfil County Borough Council approves Merthyr (South Wales) Ltd’s new application, the 58,000 residents of Merthyr Tydfil will lose nearly £100m in restoration works promised to them, and allow that to be siphoned into windfall profits for a private company that would leave behind three more coal tips to blight South Wales’ landscape, burden the tax payer, and drive fear into the communities living close by.”

Minimal works

According to CAN, the new application offers minimal works which the company will not provide additional funding for – it would be funded by a comparatively small £15m fund held jointly by the council in an escrow account. CAN states: “This fund was intended to be used to carry out only critical works in case the operator abandons the site entirely. The council changed the terms of this fund in 2024 so it could be released to the company, probably to prevent the company abandoning the site – a concern the council voiced to Welsh Government Ministers in 2023. To reduce the restoration from £75-£120 million down to £15m, the new plan would:

Abandon the mining void recently flooded by Merthyr (South Wales) Ltd. This could reach 1.14 million cubic metres of mine water – or, adjusting for the potential effects of climate change, 1.5 million cubic metres of mine water. The flooded void could reach an elevation of 286 metres. The closest edge of the flooded void to inhabitants’ homes is 320 metres.

Leave behind three coal tips that comprise a total of 37m square metres of colliery spoil, soil, and other material. These coal tips tower above nearby residents of Merthyr Tydfil by up to 210 metres. The closest edge of tip 1 is just 600 metres from inhabitants’ homes and has already suffered substantial collapse on one side.

Leave an excavated and exposed coal face cliff with a sheer drop of around 150 metres into the flooded void.

Profits

Referring to windfall profits made by the company, the briefing document states: “Merthyr (South Wales) Ltd’s most recent, publicly available, financial report states: “During the year the directors again reassessed the restoration provision based on current operating costs in particular diesel prices which have decreased significantly and increased plant hire costs, which as a result increased the restoration provision by £0.2m to £91.2m”, by December 31 2023, indicating record profits the year before.

Its ultimate parent company, Gwent Holdings Ltd, whose two directors are David Lewis’s wife Jayne and brother Andrew, reported “The average coal price achieved increased by 94% to £151.66 per tonne” in its 2022 filing. For the complete avoidance of doubt that Merthyr (South Wales) Ltd fully budgeted to fund the agreed restoration, its 2022 financial report states: “The total costs of reinstatement of soil excavation and of surface restoration are recognised as a provision at site commissioning when the obligation arises. The amount provided represents the present value of the expected costs.”

Illegal mining

The briefing document states: “The funding for Ffos-y-fran’s restoration was based on the sales of coal up until the end of its planning permission in September 2022 – but Merthyr (South Wales) Ltd continued illegally mining and selling coal for over a year after that, even outside its licensed area, profiting from an extra 640,000 tonnes of coal. It is therefore, even less credible that the company is unable to fund the standard of restoration it agreed to deliver.

“In the face of all this, and with no evidence made public, Merthyr (South Wales) Ltd’s representative claims: ‘It was established that there are insufficient funds available to achieve the 2015 restoration strategy and therefore an alternative scheme is required.’

“In an attempt to greenwash the new application to evade the cost of returning the coal tips to fill in the mining void, the company points to the emissions saved by earth-moving HGVs burning diesel. However, the emissions spared by leaving behind three colossal coal tips overshadowing 58,000 people would amount to just 2% of the illegal coal mining Merthyr (South Wales) Ltd did over 15 months after its planning permission expired. If the void is filled in with the coal tips, as per the agreed restoration plan, it would also provide a greater carbon sink cancelling out theCO2 of these earthworks even more.”

The briefing document concludes: “The new downgrade proposes to permanently leave huge health and safety hazards in a landscape that is in easy walking distance from the population of Merthyr Tydfil, even encouraging the public into this area.

“There are tangible risks to life and limb from a very deep flooded void, to a sheer cliff edge and massive coal tips, one of which has already suffered a large slip.

“The flooded quarry Dorothea in Talysarn, Gwynedd is an abandoned quarry left in a similar state to what is now being proposed for Ffos-y-fran.

Since 1990, there have been over 20 tragic deaths at Dorothea Quarry despite fencing and warning signage.”