Trading Statement

UK Coal PLC
20 July 2004


                                                                  20th July 2004

                                  UK COAL PLC

                               TRADING STATEMENT

UK COAL is hosting a visit for analysts to Maltby Colliery in Yorkshire on
Tuesday 20th and Wednesday 21st July. In line with best practice, the Company is
issuing the following trading statement prior to this visit and the publication
of its interim results for the 6 months ended 30th June 2004 on 8th September
2004.

Sales volumes in the first 6 months were 7.4 million tonnes (2003: 9.9 million
tonnes) which reflects the lower level of output from deep and surface mines.
Unit income has been £1.17 per gigajoule (2003: £1.15/Gj) reflecting long-term
contract prices.

Production for the first six months was disappointing at 7.2 million tonnes
(2003: 9.7 million tonnes) with 6.0 million tonnes (2003 7.9 million tonnes)
from deep mines and 1.2 million tonnes (2003: 1.8 million tonnes) from surface
mines. (note 1)

The trading statement issued at the AGM noted the disappointing lower production
at the deep mines compared to 2003. This has been the result of reduced deep
mine operational performance and gaps in production due to face changes together
with industrial action at Kellingley which has resulted in a 10 per cent
increase in unit costs compared to 2003.

Production has improved at the collieries that experienced face changes in the
first half and output in the deep mines returned to expected levels in the first
few weeks of July. Daw Mill is now consistently producing around 60,000 tonnes
per week. New working arrangements have been agreed at Kellingley Colliery and
the industrial action has been withdrawn. UK Coal continues to work on the
Project 105 initiatives to improve operational performances across the business.

In the deep mines the Selby Complex will cease operations shortly. In the first
half of 2004 the Selby Complex produced 2.1 million tonnes (2003: 1.9 million
tonnes).

Surface mine output in the period reduced as longer standing sites exhausted
reserves. No new planning approvals were received and while several applications
are awaiting approval, the planning environment remains difficult.

UK COAL has agreed heads of terms with Drax Power Ltd, for the supply of almost
14 million tonnes of coal over a five-year period. The value of the contract has
linkages to international prices between limits to protect both parties from
extreme fluctuations in price and will range from almost £400 million to around
£450 million before inflation. Deliveries will begin to phase in from January
next year, with 0.5 million tonnes to be supplied in 2005, increasing to four
million tonnes by 2007, and extends to December 2009. Together with existing
contracts, this will result in UK COAL supplying a total of 18 million tonnes to
Drax over the five years.

Applications for £37.5 million of Investment Grant aid relating to accessing
coal reserves at the Group's ongoing deep mines have been approved by the
Department of Trade and Industry. Applications for a further £16.7 million of
Investment Grant aid have been submitted in respect of the Group's deep mines
investments in 2005.

Property activities have continued to make good progress. Planning approvals in
respect of an additional 40 acres of former colliery and surface mine land were
approved in the first half year. Property sales in the first half-year were £1.9
million (2003: £8.3 million). Surveyors have been instructed to carry out a full
property valuation to be published with the full years results.

International coal prices have remained high throughout the period and whilst
production performance was disappointing in the first half year increasing unit
costs, new contracts should reflect favourably in proceeds during 2005 and
beyond. The second half performance should improve with fewer production gaps at
the deep mines, and a return to full production at Kellingley Colliery. We
continue to work to mitigate the effect of cost increases through Project 105
and other initiatives.

UK COAL PLC

Gordon McPhie,                                     01302 751 751
Chief Executive

Financial
Gavin Anderson & Company
Liz Morley                                         020 7554 1400

Operational
Stuart Oliver                                      01525 381 759



Note 1

Production - 6 months to June 2004              H1 2004 (mt)       H1 2003 (mt)
Deep Mines
Ongoing Collieries

Daw Mill                                                1.4                1.0
Ellington                                               0.3                0.4
Harworth                                                0.5                0.5
Kellingley                                              0.3                0.9
Maltby                                                  0.4                0.8
Rossington                                              0.2                0.5
Thoresby                                                0.4                0.9
Welbeck                                                 0.4                0.8
Sub Total                                               3.9                5.8
Selby Complex                                           2.1                1.9
Closed Collieries                                       Nil                0.2
Total Deep Mines                                        6.0                7.9
Surface Mines                                           1.2                1.8
Total Production                                        7.2                9.7




                      This information is provided by RNS
            The company news service from the London Stock Exchange