ONE of the few remaining deep coal mines in the UK is at risk of closure because of major geological problems, its owner has warned.

Maltby Colliery in Rotherham, South Yorkshire has been producing coal for more than 100 years, but the presence of gas, water and oil in the development of a new face has fuelled uncertainty over the site.

The fate of about 500 workers will be decided next month when owner Hargreaves Services will decide whether to proceed or shut down operations.

"Our shareholders have made it very clear that they don't like deep mines," said a spokesman.

Commenting on the firm's record profits, Chairman Tim Ross said: "The Group has had another successful year, with a strong performance resulting in record profits. The developments at Maltby were unexpected and we are closely assessing the implications of those developments. However the overall progress we have made across all our divisions is encouraging and gives us confidence in further growth in the business going forward. I can report that the Group is trading strongly. Based on early trading, setting Maltby aside, and despite a slow start to production at Tower, we are cautiously optimistic that we will meet or even exceed our overall budget for this financial year."

Maltby produces more than one million tonnes of coal per year, with about 60 per cent of its total output supplied under a long-term contract with Drax, Europe's largest coal-fired power plant. Further investigations wil take place at the coal deposit, known as T125, by mining experts and independent experts before a final decision is made.

The company first disclosed the problems at Maltby in May, describing the conditions as unprecedented. It warend yesterday that it expects to take an £8m hit because of problems in T125 production.

Hargreaves said it was confident that it had found international coals, including supplies from the US with a very similar, although not identical, specification to Maltby coal.