EAST AYRSHIRE COUNCIL
CABINET – 1 APRIL 2015
UPDATE REPORT - DUNSTONHILL AND NETHERTON OPENCAST COAL
SITES – REVISED RESTORATION SCHEMES.
Report by the Chief Governance Officer
PURPOSE OF REPORT
1. The purpose of this report is to advise Cabinet of the current position in relation
to proposals to secure and deliver revised restoration schemes in respect of
(First) Dunstonhill Opencast site at Patna; and (Second) Netherton Opencast
site at Skares; and to seek authority for the proposed course of action.
BACKGROUND
2. Dunstonhill Opencast Site, Patna
3. On 4 June 2014 Cabinet considered a report entitled “Update Report Dunstonhill and Ponesk Opencast Sites Restoration Bonds” (dated 28 May
2014). The Report set out the updated position, at that time, in relation to
ongoing bond negotiations between the Council and the Bond provider for those
sites and advised that a cumulative offer had been made to the Council by the
Bond provider, Euler Hermes, of £6 million in full and final settlement of both of
those Bonds. The Report recommended, for the reasons set out in the Report,
that Cabinet should accept the settlement offer.
4. Cabinet agreed to (i) note the position in respect of the restoration bonds
relative to Dunstonhill and Ponesk Opencast site; (ii) agree that the revised
settlement offer made by the Bond provider’s agents for the Restoration Bonds
be accepted; and (iii) note that if Cabinet is minded to approve (ii) a further
report would be presented to Cabinet and the Planning Committee, as
appropriate, in due course, seeking authority for a proposed alternative
restoration scheme for each site and the associated expenditure of each
scheme; and (iv) otherwise to note the contents of that Report.
5. Since that date officers have been working with relevant stakeholders to
determine the most appropriate apportionment of the Bond monies for these
two sites. It is considered that an appropriate apportionment, should be an
equal division of the monies to each site, namely £3m each.
6. The assessed restoration value for the Dunstonhill site was £10.241m and the
assessed restoration for the Ponesk site was £13.762m. It is considered that
Bond settlement monies of £3m could be used for a revised restoration scheme
at the Dunstonhill Site which would provide an acceptable restoration solution
for that site. The Dunstonhill site has only one other Bond available to be used
towards aftercare work at the site; Dunstonhill is a standalone opencast site
and not part of a larger complex and while the proposed Bond monies will not
allow restoration in terms of the original consented scheme, it is considered
that it will provide a revised restoration scheme which addresses the safety and
environmental issues pertaining to the site and provides an acceptable level of
restoration to the site.
7. Ponesk, in contrast, presents additional challenges, it is part of the larger
Spireslack complex with total assessed restoration costs of £27.894m. While
there are some additional Bond monies available for that complex, the Ponesk
Bond monies will make up the largest part of available bond monies; the land
owners, Mines Restoration Ltd (MRL), are considering alternative future uses
of the site, which may in the future, offer an alternative restoration solution for
the site. This includes the major void at Spireslack having been reviewed by the
British Geological Survey and consideration by the land owner as a Geopark in
its present state and this has been progressed by the commissioning of a
feasibility study for the site. It is considered therefore that £3m would allow
Dunstonhill to be restored to an acceptable level, while leaving as much bond
monies as possible, to be used towards restoration at the larger
Ponesk/Spireslack Complex.
8. Having assessed that £3m was the appropriate apportionment for the
Dunstonhill site, officers conducted a competitive tendering exercise. The
scope of the tender was to design and deliver a revised restoration scheme for
Open Cast Mining Land at Dunstonhill, Patna to the value of £3m. As part of
the finalisation of the restoration design specification, the land owners namely
MRL, the Poll Estate and Forestry Commission Scotland (FCS) were consulted
and agreed on the terms of the finalised tender scheme. The tender exercise
took place from 15 December 2014 until 26 January 2015.
9. A number of bids were received. A tendering panel was set up consisting of
relevant stakeholders, namely senior Council Officers, the Council’s
Independent Mining Engineers, namely Dalgleish Associates Ltd (DAL),
members of Patna Community Council, the landowners for the Dunstonhill site
and statutory bodies (SEPA and SNH). The panel met to consider bids on 4th
March 2015 and this was supported by a site visit at Dunstonhill prior to the
evaluation commencing. From the evaluation of the bids, the Panel concluded
that the scheme promoted by Hargreaves Surface Mining Limited (HSML) was
considered to be the most appropriate to deliver the design specification and
re-profile the landscape while managing the environmental issues and making
the site safe to future public access. The final restoration complies with the
Councils Steps to Recovery theme of “Make Safe, Make Good, Make New”.
10. While HSML are the preferred bidder no contract has to date been awarded as
(first) Cabinet approval is required for the associated expenditure of the
scheme; and (second) Planning Committee approval is required for the
proposed revised restoration scheme; should Cabinet and the Planning
Committee approve these matters, then it is intended that the contract would
be awarded to HSML thereafter, with the owners of the site being asked to sign
the contract as party consenters.
11. Having regard to Planning Committee approval for the proposed revised
restoration scheme, Cabinet are advised that the proposed statutory framework
to be used to secure terms of the revised restoration scheme, would be through
serving an Enforcement Notice on the owners and interested parties of the site
(which would also include HSML if the tender contract is concluded with them).
12. The Enforcement Notice will set out in detail the restoration works to be
undertaken; the timescales for delivery of the scheme; an activity schedule;
progress plans; and associated operative conditions. DAL will also undertake
the Compliance Monitoring arrangements on site on behalf of the Council and
through the monthly assessment of works carried will advise the Planning
Authority on the contract administration of staged payments to HSML for
restoration works completed during the preceding month. The site will also be
subject to a Technical Working Group and a Community Liaison Committee
which will be made up from local residents directly adjacent to the site, the
Community Council and ward councillors. Subject to Cabinet approval of this
Report, it is intended that the Enforcement Notice will be considered by the
Planning Committee on 2 April 2015.
13. The Enforcement Notice will set out in detail a revised restoration scheme for
the site, which will be a variation to the restoration scheme originally approved
under Planning Permission for Dunstonhill (08/0783/FL) granted on 29 March
2010. The Enforcement Notice will impose upon owners and interested parties
an obligation to deliver the revised restoration of the site.
14. In agreeing the terms of revised restoration scheme officers have engaged with
relevant stakeholders (including landowners, SEPA and SNH and the
Community Council) and sought their views on the restoration scheme
proposed.
15. Netherton Opencast Site, Skares
16. On 13 August 2014 Cabinet considered a report entitled “Update Report –
Netherton Opencast Coal Site Restoration Bond” (dated 7 August 2014). The
purpose of that Report was to advise Cabinet of a settlement agreement which
had been concluded in respect of the Restoration Bond for the Netherton
Opencast site, in accordance with the powers afforded the Chief Executive
within the approved Scheme of Delegation. The Performance Bond for
Netherton had been called by officers on 30 September 2013; there had
thereafter been ongoing negotiations between officers and the Bond provider,
ACE which culminated in a settlement proposal of £3.96m being agreed in full
and final settlement of the Bond.
17. On 13 August 2014 Cabinet agreed to (i) note the action taken by the Chief
Executive on the recommendation of the Chief Governance Officer, to authorise
conclusion to have settlement negotiations with the Bond provider for the
Netherton Site; (ii) note that the proposed revised restoration scheme for the
Netherton site would be presented to the Planning Committee for consideration
in early course; (iii) note that, entirely subject to any decision which may be
taken by the Planning Committee under recommendation (ii) above, a further
report would also be presented to Cabinet seeking authority to negotiate a
contract with the current site operator for delivery of those elements of the
overall restoration works to be funded by the Council from the recovered Bond
monies; and (iv) otherwise, to note the contents of the Report.
18. Cabinet will recall that from the date of the liquidation of Aardvark TMC Ltd, the
previous operator at the site, OCCW (Netherton) Limited had taken control of
the site and coaling operations had continued, with HMSL carrying out this
work, as contractors of OCCW (Netherton) Limited.
19. Cabinet will also recall that the Report to Cabinet of 13 August 2014
acknowledged that the Bond monies would be insufficient to deliver the original
approved restoration scheme for Netherton; however, £3.96m would be
sufficient to allow the Council, working in conjunction with HSML, to deliver a
revised restoration scheme for the site, which on completion of coaling
operations, would restore the whole of the Netherton Site to a suitable and
acceptable level; it was also noted that the Council would ringfence the £3.96m
against future expenditure on the site and make staged payments under a
contract to be negotiated with HSML to carry out specified elements of the
overall revised restoration programme in return for payment of the bond funds;
all such staged payments would only be made when certified as due under the
contract, the Council’s Independent Mining Engineers.
20. In terms of the Council’s Standing Orders relating to Contracts, paragraph
21(1), requires Cabinet authority be sought when an Executive Director/Head
of Services considers that a tender should be negotiated with one person. In
this regard the Chief Governance Officer considers that circumstances
currently exist in relation to delivering a revised restoration scheme for the
Netherton site which engages paragraph 21(1) of the Standing Orders.
21. It is considered that a tender contract should be negotiated with HSML only, for
the reasons being that:
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HSML are currently working on the site with coaling which is due to finish
in September 2015; HMSL’s workforce and machinery are currently in
situ, which will provide a saving on significant mobilisation costs when
delivering the revised restoration scheme;
HMSL will provide a seamless transition from coaling to restoration of
the site with no break in operations (where any such break could
increase restoration costs);
the Council’s Independent Mining Engineers have been involved in the
Compliance Monitoring of current coal and restoration works and also
assessing the revised restoration scheme proposed by HMSL and their
associated Bill of Quantities, to assess the acceptability of the scheme
and the reasonableness of the costs of works proposed;
and given the outcome of the Dunstonhill tender the Council has had the
opportunity to compare the rates for Netherton with those successfully
tendered by HSML for Dunstonhill to ensure these compare favourably
and demonstrate value for money.
22. As stated in the preceding paragraph negotiations have taken place between
officers and HSML and these have been scrutinised by the Council’s
Independent Mining Engineers, in order that the Council can be satisfied that
the revised restoration scheme is acceptable in engineering terms and delivers
value for money as a whole.
23. It is considered that the proposed revised restoration scheme negotiated with
HSML offers best value to the Council and provides an expedited process to
obtain restoration at the Netherton site, particularly when staff, plant and
equipment are on site under the coal operations.
24. If (first) Cabinet approves the recommendation that the Chief Governance
Officer can proceed to negotiate a tender with HMSL; and (second) the
Planning Committee approve the terms of the Enforcement Notice, then a
contract, Restoration Services Agreement, will be progressed to conclusion
between the Council and HSML, with the owners of the site being asked to sign
the Agreement as party consenters.
25. Having regard to Planning Committee approval being required for the proposed
revised restoration scheme, Cabinet are advised that the proposed statutory
framework to be used to secure terms of the revised restoration scheme works,
would be through serving an Enforcement Notice on the owners and interested
parties of the site (which would also include HSML as owners and contractors
at the site).
26. The Enforcement Notice will set out in detail the restoration works to be
undertaken; the timescales for delivery of the scheme; activity schedule;
progress plans; and associated operative conditions. DAL have been
undertaking the Compliance Monitoring arrangements on site on behalf of the
Council and through the monthly assessment of works carried out will advise
the Planning Authority on the contract administration of staged payments to
HSML for restoration works completed during the preceding month. The site is
also subject to both a Technical Working Group and a Community Liaison
Committee and both these groups have been involved in the review of the final
restoration scheme. Subject to Cabinet approval of this Report, it is intended
that the Enforcement Notice will be considered by the Planning Committee on
2 April 2015.
27. The Enforcement Notice will set out in detail a revised restoration scheme for
the site, which will be a variation to the restoration scheme originally approved
under Planning Permission for Netherton (09/0891/PP) granted on 19 October
2010. The Enforcement Notice will impose upon owners and interested parties
an obligation to deliver the revised restoration of the site.
28. In agreeing the terms of revised restoration scheme officers have engaged with
relevant stakeholders (including landowners, SEPA and SNH and
representatives from the Community Council and local residents) and sought
their views on the restoration scheme proposed though discussion with
stakeholders at the ongoing Netherton Technical Working Group and
Community Liaison Group which have been held during HSML’s coaling
operations at the site.
FINANCIAL IMPLICATIONS
29. A tender process had been undertaken seeking to award a contract to deliver
a revised restoration scheme for the Dunstonhill Open Cast site from Bond
monies to the value of £3 million. These funds currently held by the Council will
be used to carry out the restoration under a contract to be formally awarded to
HSML. The details of the restoration scheme will be set out in an Enforcement
Notice; and all staged payments will only be made when certified as due, under
the contract, by the Council’s Independent Mining Engineers.
30. Officers have been negotiating the terms of the revised restoration scheme for
the Netherton Site with HSML. Subject to approval of this Report, the Netherton
Bond monies to the value of £3.96m would be used to fund the delivery of the
restoration under a contract to be awarded to HSML. The details of the
restoration scheme will be set out in the Enforcement Notice and all staged
payments will only be made when certified as due, under the contract, by the
Council’s Independent Mining Engineers.
LEGAL AND RISK IMPLICATIONS
31. The Council’s Standing Orders in relation to contracts (paragraph 21(1)) require
Cabinet approval to be sought before tender negotiations can take place with a
single contractor.
32. In concluding these contractual agreements and utilising the funds to fully
restore the site to a safe and suitable and therefore acceptable level the Council
will ensure that any responsibilities it may have under the Environmental
Protection Act 1990 in respect of Statutory Nuisance and in certain
circumstances contamination issues will be fulfilled in respect of these sites to
the extent that they may be applicable.
COMMUNITY PLANNING
33. Restoration of the Dunstonhill and Netherton sites is compliant with the
Community Plan local outcome to protect, conserve and enhance the natural
environment.
CONCLUSION
34. For the reasons and considerations set out within the Report it was considered
appropriate to undertake a compulsory tendering process for the Dunstonhill
site, and to award a contract to deliver a restoration scheme to the value of
£3m; and to negotiate with HSML only, to deliver a revised restoration scheme
for the Netherton site to the value of £3.96m. Relevant stakeholders for each
site have been consulted about the proposed revised restoration schemes and
their views considered by officers. The delivery of restoration schemes would
be regulated through statutory Enforcement Notice procedure and associated
contracts, with bond monies being paid out through staged payments monitored
by the Council’s Independent Mining Engineers. Progress of the site restoration
will be reported to the Planning Committee through the quarterly Compliance
monitoring report of Environmental projects and members will have an
opportunity to attend visits at these sites to view progress.
RECOMMENDATIONS
35. Cabinet is asked to:i. agree the apportionment of the Dunstonhill/ Ponesk Bond monies, of £3m to
each site;
ii. note the competitive tendering process which has been completed to design
and deliver a restoration scheme for the Dunstonhill opencast site to the value
of £3m and that the preferred bidder is Hargreaves Surface Mining Limited;
iii. subject to Cabinet agreement of (i) above, note that a Report on the proposed
Enforcement Notice for the revised restoration scheme for Dunstonhill shall
be submitted to the Planning Committee for its consideration on 2nd April
2015;
iv. note that if the Planning Committee approve the recommendation in (iii)
above, then the Chief Governance Officer will proceed to award the
restoration contract to its preferred bidder, HMSL in accordance with the
earlier competitive tender exercise;
v. give approval for the Chief Governance Officer to negotiate a contract with
HMSL to deliver elements of a restoration scheme to the value of £3.96m to
the Netherton opencast site, in accordance with paragraph 21 (1) of the
Council’s Standing Orders relating to Contracts;
vi. and subject to Cabinet agreement of (v) above, note that a Report on the
proposed Enforcement Notice for the revised restoration scheme for
Netherton shall be submitted to the Planning Committee for its consideration
on 2nd April 2015;
vii. note that if the Planning Committee approve the recommendation in (vi)
above, then the Chief Governance Officer will proceed to conclude a contract
with HMSL in accordance with paragraph 21 (1) of the Council’s Standing
Orders relating to Contracts; and
viii. to otherwise note the contents of the Report.
David Mitchell
Chief Governance Officer
26 March 2015
LIST OF BACKGROUND PAPERS
Nil
Members requiring further information should contact David Mitchell, Chief
Governance Officer, Tel No 01563 576061.
IMPLEMENTATION OFFICER: David Mitchell