UK Coal, Britain's largest coal producer, slid into the red last year after geological problems, an industrial dispute and costs at its Prince of Wales mine damaged figures.

The group, formerly RJB Mining, operates Ellington Colliery, the North-East's last deep mine, and open cast sites in the region, including Eldon Deep, in Bishop Auckland.

It reported a pre-tax loss for the year to December 31 of £26.5m against a profit of £17.8m the previous year.

It said geological problems, operating difficulties at several collieries and an industrial dispute at its Rossington mine near Doncaster, now resolved, resulted in its deep mines sustaining an operating loss.

It was also hit by £15.8m of costs incurred in developing the Went Edge reserves at Prince of Wales Colliery, West Yorkshire, spent before the group announced it would close the colliery, which employs 500.

The figures include Operating Aid income from the Government of £21.7m last year and £53.3m in 2000. This brings money received up to the £75m cap set by the Government. UK Coal is not expecting to receive any more.

Commercial director Mel Garness said: "We have to manage the business as a commercial enterprise. We are not expecting the Government to give us any more. We would never say no but we are not expecting any more."

It has also launched Project 105, a scheme to reduce costs and increase productivity, which it is aiming to complete by the end of next year.