Owned by Richard Budge, the man dubbed King Coal, Hatfield is located near Doncaster in South Yorkshire. Budge’s Coalpower venture acquired Hatfield from liquidators two years ago but, according to media reports, the business ran up losses of £14m before government grants.

Administrators Ernst & Young are now looking for a buyer for Coalpower. Budge, Coalpower's chairman and managing director, is expected to be involved in any potential rescue of the business.

The collapse follows a "sustained period of trading losses and cash flow pressures", the administrators told the UK’s Independent newspaper.

Hunter Kelly, joint administrator at Ernst & Young, said: "The colliery has suffered financially in recent years as a result of geological and mechanical problems on the existing coal face, which has led to significantly lower levels of production than anticipated."

The Labour MP for Doncaster, Kevin Hughes said: "I will be doing all I can to ensure the Hatfield mine continues operating. It has 80 million tonnes of accessible reserves and is important for the UK's electricity generating needs."

Hughes said he had been engaged in detailed discussions with government ministers, including the Prime Minister, to try and put together a financial package that would put the Hatfield mine into a short term viable position. He was also pushing for Coalpower to access the £15m of Coal Investment Aid already earmarked for the pit

“Unfortunately it was made clear that it was not possible for the Government to fund the company outside of the Coal Investment Aid scheme,” Hughes said.