Mining group UK Coal today moved to focus on its British operations after agreeing to sell its mining interests in Australia.

The Doncaster-based firm plans to dispose of its 97% stake in New South Wales-based Gloucester Coal to investment bank ABN Amro Rothschild for £21.5 million.

UK Coal said it would use the cash for general purposes and to pay for new coalface equipment at two of its collieries at Daw Mill, Warwickshire and Kellingley, North Yorkshire.

The group, formerly known as RJB Mining, has been trying to sell Gloucester Coal for around two years.

It paid £12 million for a 12% stake in the Australian group - then known as CIM Resources - in May 1996 and increased its interest to more than 80% in October 1999.

UK Coal made the acquisition to get a feel for pricing patterns in the international market, which was then fiercely competitive.

However, the market has since become more predictable and more price information has become available.

"At that time, it was helpful to have an inside track on the market," a spokesman said.

The sale will enable the group to concentrate on further improving performance in its UK business.

It said in September that pre-tax profits before one-off charges in the six months to June 30 rose to £1.3 million from £500,000 in the same period last year.

The group has an annual turnover of £550 million and employs more than 6,000 people at 12 deep pits and a similar number of open cast mines, which together produce about 18 million tonnes of coal a year.

Friday April 02, 2004