An economic analysis of water use in the Scotland river basin district

1. There is evidence that coal has been mined in Scotland since Roman times but it was the 18th century before coal production was carried out on a large scale as coal became the catalyst of the industrial revolution, which resulted in today’s modern civilised society. Coal has been supported by legislation and Government policy since the 13th Century, when a charter gave the monks the right to dig coal in Fife, right up to the current Government policy of supporting the extraction of indigenous coal to provide security of energy supply.

2. Over the years the majority of coal produced in Scotland has been produced from underground mines. In common with the rest of the UK, underground coal mining in Scotland declined throughout the latter part of the 20th Century, with deep mining continuing in Scotland until 2002 when the last working colliery, Longannet Mine, closed. All coal currently mined in Scotland is produced from opencast mines.

3. Opencast mining in Scotland has developed from the small scale operations in the mid-1940’s, due to the post- war demand for coal, to today’s modern industry where modern heavy earthmoving plant has allowed the development of larger, deeper sites. The nature of opencast mining means that water management is a major factor in any site operation, and significant resources are targeted towards this.

4. Currently around 7 million tonnes of coal per annum is produced in Scotland from opencast mines, 4.5 million by Scottish Coal, the majority being directed towards power generation markets both in Scotland and England.

5. The need for coal as a key energy source as well as being supported by Government policy is also reflected in the Town and Country Planning Act which aims to ensure that coal forms part of an overall planning strategy by identifying coal mining areas and avoiding sterilisation of reserves. Support for coal in the UK will continue as coal fired electricity production will, for the foreseeable future, continue to form a major part of energy supply on which modern society is based.

6. Deep mine working of coal historically provided the main source of employment in many communities throughout the Central Belt of Scotland. Although that industry no longer exists, the present opencast coal industry, which is largely located within an area stretching from Fife through to Ayrshire, provides an important source of skilled and semi- skilled employment within many rural communities.

7. The number of sites and those employed fluctuates to a degree year on year as older sites close and new ones open. In 2003 there were 1,300 people employed directly in 26 opencast coal sites within Scotland, the large majority of which are situated within East Ayrshire and South Lanarkshire. There is also significant downstream employment sustained by opencast mining by way of plant and equipment supply & maintenance; coal haulage and the provision of various support and consultancy services.

8. As Scotland’s largest producer of coal, Scottish Coal has a turnover in the region of £110m and an annual direct salary and wages bill (including insurance and pension payments) of £25m and pays some £4m in business rates. It also pays some £850,000 annually into community trusts which provide monies for a variety of community based projects, ranging from environmental initiatives to local community and sports groups. Based on Scottish Coal’s proportion of production, the turnover of the sector would be estimated at c. £180m with labour costs of c. £40m.

9. At a wider level the coal produced from Scotland’s opencast coal sites continues to be supplied to Scotland’s two coal fired power stations at Cockenzie and Longannet. Its generally low sulphur and chlorine properties also make it an attractive product for use in electricity generation plant in England; these exports help sustain employment within Scotland. Opencast coal continues to have a security of supply role amongst the basket of energy sources which are used in UK electricity generation

10. It is perhaps misleading to use the term “use”, as water is not generally used as an inherent part of the industrial process. It is necessary to intercept and divert to allow the extraction of the mineral.

11. The nature of opencast mining operations, which primarily involves substantial excavations of up to 150 metres depth, means that groundwater is encountered on all sites. To facilitate operational requirements the only practical option for environmental purposes, is to carry out dewatering in advance of excavation operations by pumping from boreholes using submersible pumps. This process is only carried out where flooded old mine workings, usually containing contaminated water, are encountered and has long been recognised within the industry and by SEPA as the most advantageous in terms of environmental impact, as well as the safe operation of sites.

12. On sites where no old mine workings are present the ingress of water into the excavation is normally low because of inherent low permeability in the strata and any inflow of water is managed through local pumping to settlement lagoons for discharge via consented discharge points.

13. Approximately 54 million cubic metres of water is intercepted and diverted by Scottish Coal, the majority being produced by advance dewatering wells. There is no abstraction from rivers or surface water bodies. Most of this water is pumped to settlement lagoons for discharge via consented discharge points and only a small percentage is used for site operations.

14. Of the 54 million cubic metres intercepted and diverted, approximately 11.5% is utilised for site operational purposes. These operations consist of coal processing and washing (1%), vehicle washing (0.5%) and dust suppression (10%). All water is returned to the local water environment through evaporation or via consented discharges to local watercourses.

15. All water that is discharged from opencast sites is via discharge points consented by SEPA. During the planning stage water management plans are developed and agreed with SEPA prior to consent to discharge applications being submitted. During site operations water management plans are developed to include an inspection and monitoring regime aimed at compliance with consents.

16. Consents to discharge normally have fixed parameters for suspended solids, pH and iron content as well as maximum flow rates and also prohibit visible traces of oil in the discharge. Water is treated in conventional settlement lagoons with chemical treatment where necessary, however additional facilities such as oil interceptors, cascades etc. are incorporated as appropriate.

17. When the requirement for pumping has ended groundwater is allowed to recover to its natural state. At this stage restoration landforms can be created to encompass environmental benefits by introducing passive water treatment systems such as reed beds, wetlands etc. with the additional benefit of creating wildlife habitats.

18. One of the unique advantages of opencast coal mining is that given the usual range of mineral to overburden ratios, overburden replaced following extraction can be designed to at least recreate the topography of what was there before. Experience within the industry has shown that through consultation with wildlife and ecology experts, the restoration can be enhanced further to create new habitats.

19. The interception and diversion of water in the opencast mining industry is already adequately covered by existing legislation, namely the Control of Pollution Act 1974 and the Groundwater Regulations 1998. The latter has recently been supplemented by a Scottish Executive Code of Practice for Mineral Operators, which reflects current industry best practice. The industry is aware of the Water Environment and Water Services Act (Scotland) 2003 and is concerned about potential financial implications and in particular those relating to charges for abstraction if these were to be confused with interception and diversion. Such charges could have a serious impact on the viability of certain sites. These sites will typically be the larger production sites which by the nature of the reserves are required to operate at greater depth. The industry is keen to point out that the interception and diversion of water during mining operations is primarily to gain access to strategically important energy reserves, not to use the water for any financial benefit.

20. The costs of water interception and diversion are not separately identifiable for the sector but can be estimated for Scottish Coal at an average annual cost of:-

This would suggest a figure of c. £1m for the sector.

21. The basic interaction between water and the opencast coal industry is unlikely to change to any degree. However, volumes affected will generally vary in proportion to overall production.

22. It is perhaps a statement of the obvious, but it must be borne in mind, that coal is only capable of being worked where it occurs. Opencast sites, by their nature, are inherently a temporary feature, the timescale dictated by the size of the resource and its accessibility within the economic and planning disciplines.

23. Opencast working is simply another method of extracting a mineral resource. The method involves the removal of non-mineral, usually termed as “overburden”, which is temporarily stored within the site boundary, to access the mineral. The acceptable ratio of mineral to overburden is broadly governed by prevailing economic factors, linked to the value of the mineral set against the cost of extraction. Water is not used in the accepted sense but is intercepted and diverted, as such, there is little or no scope for varying the location and methodology of opencast coal extraction.

24. Whilst not disagreeing with the main objectives of the Water Framework Directive, it is vital that the effectiveness of existing legislation and regulation is appreciated and dual regulation avoided.

25. The logic of applying a reasonable charge to allow SEPA to carry out additional monitoring found to be necessary is accepted under the “polluter pays” principle. However, the application of any future charges must recognise and differentiate between the economic use of water as an inherent part of a process, or indeed a raw material, and circumstances such as the opencast sector finds itself, i.e. intercepting and diverting water in order to access a national energy resource, before returning unpolluted water to its natural environment.

26. It should be noted that opencast mining operations can create environmental improvement by the application of modern mining practices and best available water management techniques, e.g. improving the quality of ferruginous water pumped from old mine workings during site operations and innovative restoration schemes, for example, reed beds and wetlands which can create diverse wildlife habitats for various species, particularly birds. Improved water quality leads to an increase in fresh water invertebrates, increased fish population and mammals such as otters.

27. The interception and diversion of water by the opencast industry is essential to access the nation’s strategic coal reserves but is not necessarily detrimental to the environment. With the application of best available techniques in its operational activities the opencast sector can often provide a net benefit to the water environment. However, given the volume of water intercepted and diverted by the sector, and the fact that it is not being used as a commodity, confusion with any proposals to charge for abstraction on a volumetric basis is likely to involve a disproportionate economic effect on the industry and those it employs.